Setting up a Limited Liability Company (LDA) in Portugal

Portuguese Private Limited Liability Companies are also known as “quota” companies, from the Portuguese name of Sociedadepor quotas de responsabilida delimitada or LDA. This type is the most popular choice for entrepreneurs who want to set up a small or medium business in Portugal.

Capital
The minimum share capital that is required in order to set up a Limited Liability Company in Portugal is 5,000 EUR, with the mention that the minimum value of each quota or share should not be lower than 100 EUR.  If the contribution of the shareholders is in cash, they must pay 50% of the total initial capital prior to registration. If they choose to contribute in assets, these must be first audited and then the full amount must be paid up. There is also the possibility to contribute for the setting up of a LDA with both cash and assets. In this case, the same rules apply, the assets being paid in full and the cash in half.

Shareholders
A quota company in Portugal needs at least two shareholders and there are no restrictions as far as their nationality or residence are concerned. There is however the possibility that only one shareholder founds a LDA, the firm being called SociedadeUnipessoalpor Quotas (SUQ).The liability of the shareholders for company’s debts is limited in Portuguese LDAs.Quotas can be transferred only by public deed in the case of a Limited Liability Company in Portugal.

Management of LDA
A board of directors is not required by law in the structure of a Limited Liability Company in Portugal. Anyhow, a managing director who is responsible to quota holders must be appointed or one person who has been named as a representative. The management structure can therefore be organized in terms of the company’s requirements.

Control
LDA companies also need to have a general meeting for important decisions, which cannot be taken by the director. Auditing is optional, but it is important to have a supervisory board if the total of balance sheet exceeds 1.5 million EUR in two consecutive years. The requirement is also available if the net sales go over 3 million EUR or the average number of employees per year exceeds 50 persons. Two of the above conditions must be met in order to claim for a statutory auditor.

Other requirements
When registering a quota company, the name needs to contain the word Limitada or the abbreviation Lda. For incorporation purposes of Limited Liability companies formed with foreign capital, it is recommended that the shareholders come to Portugal to prove their identity to a notary with ID documents and to open a bank account. However, they can choose to be represented by a person in Portugal under a power of attorney certified with an apostille or legalization by a foreign notary.

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