Madeira Private Limited
Liability Company
The
Private Limited Liability Company (Sociedad
por quotas de responsibilidade limitida
- Lta) (PLLC) has a minimum of one shareholder
('quota-holder') and minimum capital
('registered quotas') of 5,000 euros.
Prior to the execution of the notarial
deed of incorporation 50% of the share
capital of the company or another amount
designated by the authorities (previously
400,000 escudos), whichever is the lesser,
must be deposited with a bank. This
sum can be withdrawn for corporate purposes
after the execution of the deed.
PLLCs
are not permitted to have bearer shares
but nominees are permitted (even though
Madeira is a civil law jurisdiction
which does not recognize the concept
of a bare trust). The minimum number
of directors is one.
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Madeira
Stock Corporation
The Stock Corporation (Sociedade anonima
- SA) has a minimum of 5 shareholders
('quota-holders') and minimum share
capital ('registered quotas') of 50,000
euros. Prior to the execution of the
notarial deed of incorporation 33% of
the share capital of a Stock Corporation
or another amount designated by the
authorities (previously1.5m escudos),
whichever is the lesser, must be deposited
with a bank. This sum can be withdrawn
for corporate purposes after the execution
of the deed.
By
way of exception, the Stock Corporation
can have one shareholder if that shareholder
holds as a nominee, if the company includes
the name "Sociedade Unipersonal"
in its name and where the company is
not the sole shareholder in a subsidiary.
Stock
Corporations are permitted bearer shares
so long as their share capital is fully
paid up. The transfer of bearer shares
can be by way of registration, by way
of deposit with a financial institution
or by physical delivery. When bearer
shares are transferred by registration
the transfer of ownership only occurs
upon the completion of the re-registration
process in the company books. When they
are transferred by deposit with a financial
institution the transfer of ownership
occurs when the re-registration process
is completed in the institution's books.
When bearer shares are transferred by
physical delivery the transfer of ownership
occurs on acquisition of physical ownership.
If
the share capital is less than 200,000
euros only one director is permitted;
if the share capital is more than 200,000
euros any number of directors can be
appointed. Nominees are permitted. Shares
of no par value are not permitted.
In
the case of Stock Corporations, accounts
are a matter of public record. The information
to be filed with the tax authorities
must include a statement listing the
registered shareholders.
Unlike
common law jurisdictions, a Madeira
Stock Corporation normally includes
a statutory audit committee in its composition.
A statutory audit committee (conselho
fiscal) is an internal auditing board
which is composed of one person where
the share capital of the company is
less than 20m escudos and 3-5 persons
if the share capital of the company
is above 20m escudos. At least one member
of the committee has to have a relevant
accountancy qualification. Alternatively,
a Stock Corporation can have a three-tiered
supervisory structure, with a directors'
board (directao), a shareholders' board
(conselho geral), and a certified auditor
(revisor oficial de contas).
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Madeira
Holding Company
A
Holding Company (sociedada gestora de
participacoes sociais) is a corporate
entity which for a period of at least
12 months holds at least 10% of the
voting share capital of the company
in which it has a participating shareholding.
Holding companies are governed by Decree
law 495/88 and Decree Law No 21/87.
Holding
companies can be either Private Limited
Liability Companies or Stock Corporations
and must have their accounts audited
annually. The initials SGPS must be
included in the Holding Company's name.
A
Holding Company is not permitted by
law to buy its own shares, purchase
debentures in companies in which it
does not hold a participating shareholding
(subject to certain exceptions), make
loans other than to companies in which
it holds part of the share capital or
engage in any commercial activities
other than holding shares in other companies.
See Offshore
Legal and Tax Regimes for details
of the taxation of Holding Companies,
which receive generous tax breaks on
income from their holdings.
Mixed
Holding Companies: As its name suggests,
a Mixed Holding Company can both hold
shares in other companies and trade
in its own right. It cannot engage in
the type of trading activities which
are carried on by banks and financial
institutions and which require licensing
and authorization from the Bank of Portugal.
A
Mixed Holding Company must combine its
activities. Its trading activity cannot
be exclusively limited to the holding
of shares; nor can it be a pure trading
company which does not hold shareholdings
in any other company. Mixed Holding
companies can be either Private Limited
Liability Companies or Stock Corporations.
License authorization comes from the
regional authorities.
Most
European Union member countries do not
accept that the Parent Subsidiary Directive
No 90/435 on withholding tax on dividends
applies to Mixed Holding Companies (see
Withholding
Taxes and Double
Tax Treaties).
NB:
The Tax Reform Act of December 2000
somewhat reduced the tax advantages
of both Pure and Mixed Holding Companies,
particularly for Portuguese residents.
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Madeira
Trusts
Madeira
is a civil law jurisdiction, subject
in general to Portguese law, and thus
the trust does not exist as such. Portugal
has not ratified the Hague Convention
on the law applicable to trusts and
their recognition.
Nonetheless
when the Free Trade Zone Legislation
of Madeira was enacted, provision was
made for the creation of offshore trusts.
Decree Law No 352/88 & Decree Law
No 149/94 deal with the registration
and management of offshore trusts whereas
Decree Law 264/90 concerns authorization
by Government of trust corporations
and branches. The property of trusts
must be outside Portugal, and their
income must be derived from outside
the country.
An
offshore trust lasting for more than
one year needs to register in the Free
Trade Zone registry, although the identity
of the beneficiaries need not be disclosed.
Neither settlor nor beneficiaries may
be residents of Portugal. Only Stock
Corporations (see above) and branches
of foreign trust corporations licensed
to operate under the Free Trade Zone
Legislation of Madeira can act as trustees.
See Offshore
Business Sectors for details of
the licensing regime for trust companies.
Trusts
pay an annual license fee of Euros 1,500.
They are not subject to the vestigial
exchange controls operated by the Bank
of Portugal. Trusts are not subject
to tax; see Offshore
Legal and Tax Regimes for details
of the taxation of trustees and trust
companies.
Trusts
are free to emigrate without authorisation
by substituting their proper law with
that of another jurisdiction.
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