Portugal joins the UK, Germany, France, USA, and Japan and abolishes the request of the minimum share capital for limited liability companies. The new regulation enters in force on the 6th of April, 2011
Portugal: Share Capital Threshold Abandoned
New Corporate Law Amendments for Limited Liability Companies in Portugal
January 1 , 2011, updated March 16 , 2011
By Inga Kilikeviciene, KPL Legal
Portugal starts the 2011 with new amendments to corporate law: there is no more
minimum share capital for private limited liability companies and depositing the determined
share capital not shall be completed before the initiation of the economic activity but rather by
the end of the first year of operations.
In the very end of last year, on the 30 of December, 2010,
the Council of Ministers of Portugal approved a Decree-Law which
continues implementation of the ambitious bureaucracy simplification
programme conceived by the actual Government and adopts new
measures further simplifying company formation procedures in
Portugal. The actual requirement of the minimum share capital to
establish a limited liability company actually is EUR 5.000 was
abolished and now members of association will have the right to determine the share capital of
their company without any restrictions.
To be more specific, the new rules apply to limited liability companies (Sociedade por
Quotas) and individual shareholder limited companies, or limited liability sole proprietorship
companies (Unipessoal Limitada). The minimum share capital requirement has however been
maintained for public limited companies (Sociedade Anónima) and remains EUR 50.000.
The advantage of the abolishment is long discussed and proven. On one hand, an
established share capital threshold is often an obstacle for individual entrepreneurs and leads to
fewer occupational choices, especially in case of young people without sufficient financial funds.
This is particularly obvious when we talk about services or any home based business where
initial monetary investments are rarely necessary. On the other hand, the share capital is no
more a safety measure against insolvency and thus, does not provide a reliable guarantee for
creditor interests? protection. Indeed, the minimum capital requirement in many countries is so
low (for instance, ca. EUR 1.265, in Poland) that it is difficult to see how it can meet the most
measured financial and operational risks of a company in the modern business life. Further, it
often happens that the subcapitalization rate of companies with remarkable share capital is
higher than the liabilities proportion of small companies. Therefore, creditors employ other
mechanisms to protect their interests rather rely on the authorised capital.
The other very helpful amendment is that the share capital will have to be deposited not
at the moment of the company formation as required before but by the end of the first year of
operations. The two introductions certainly provide a relief of the administration burden for
newly established companies, especially when taking into account quite impressive figures:
there are slightly over 500,000 companies actually active in Portugal and more than 90% of
them are medium, small and micro enterprises,
This development in the share capital policies in Portugal is in line with analogous
practices in a row of other countries: the UK, Germany, France, USA, and Japan, to name a
few. Bulgaria also could join this group with their symbolic amount of approx. EUR 1,00.
Another Decree-Law, approved on the same day of the 30th of December, 2010,
revokes approximately two hundred legal acts, in addition to four hundred legal acts already
revoked in September. This is a programmed advancement in the Simplex programme and in
its sub-programme Simplegis, in particular, aiming for a less complicated and more transparent
legal system in Portugal. Among its objectives is elimination of unnecessary formalities,
procedure simplification or introduction of new services at one-stop-shop or on-line.
Successful examples of this process could be abolition of obligatory deeds for a number
of civil and corporate acts, reduction of deadlines, introduction of internet based services and
simplified information system for companies (IES), and availability of Corporate and Land
Registry certifications on-line. The initiatives On the Spot Firm (Empresa na Hora) and One-
Stop Shop for Land Registry (Casa Pronta) were distinguished by the World Bank Group in the
report Doing Business-2011 as significant success of Portugal in improving its ranking for
business environment conditions.
The main goal of the new rules on the share capital is to promote small and medium
businesses. A very wise and welcome step in the conditions of such a fragile economy as the
Portuguese is at the moment. However, it would be misleading to expect that mere share capital
threshold elimination will boost the country. Tackling business environment restrains in general
and taxing in particular are the next big steps that Portuguese businesses expect from their
The new regulation enters in force on the 6 of April, 2011, thirty days after the Decree-
Law 33/2011 was published.
About the Author: Inga Kilikeviciene is a lawyer graduated from Vilnius University, Lithuania,
and providing business services and legal support for companies in Portugal. Inga has been
living in Portugal for the past 10 years and specializes in Company Law, Commercial Law, IP
and Fiscal Law. Inga can be reached at: email@example.com