Company Law in Portugal

Companies incorporated in Portugal are regulated by the Portuguese Commercial Code, Decree Law 262/86 of 2nd September 1986. Any company with its head office in Portugal, no matter that the activity is located in the country or abroad, is subject to the regulations of the Portuguese Company Law. If the head office is not in Portugal, but the commercial actions that take place in the country for over one year need to register in Portugal and follow the rules of the local Commercial Code. For the incorporation of a company in Portugal, an investor must decide at first which type of company to set up.

TYPES OF COMPANIES

The most common companies in Portugal are Private Limited Companies, Individual Companies and Corporations.

The Portuguese Commercial Code requires at least two individuals for setting up a Private Limited Company, which is preferred for small and medium sized businesses. As a mandatory rule, the company’s name needs to contain the word “Limited”. 

The Individual Stakeholder Company is a form of Private Limited Company.

Corporations need at least five shareholders in order to be incorporated under the Portuguese Commercial Code. Shares may be bearer or nominative. According to the Commercial Code in Portugal, corporations need one of the two types of management systems, either a Board of Directors or a Board of Managers plus Advisory Board.

Public Companies are regulated outside the Portuguese Commercial Company Law.

OTHER RULES

As far as the labour law is concerned, it is mostly inspired by the Labour Code in Portugal, amended by the Law number 7/2009. The text of the Labour Code regulates the employment contracts and professional relationships between employers and employees. Employment contracts for a determined period need to be made in a written form, but the requirement is not mandatory for indefinite period contracts. The Portuguese Labour Code offers protection to employees as far as the working hours, remuneration and holidays or maternity leaves are concerned. However, there are also stipulated some responsibilities and obligations for both the employers and employees in Portugal. Foreign employees with a permit to work in Portugal have the same rights and duties as Portuguese nationals.

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