Lowtax Network

Back To Top

Madeira: Types of Company


This page was last updated on 30 June 2021.

The most common types of corporate structure under Portuguese law are the private limited liability company (sociedade por quotas) and the stock corporation (sociedade anonima). Companies may also be limited by guarantee or unlimited. Partnerships, both general (sociedade em nom colectivo), and limited (sociedade em comandita) are possible, and sole trader status is also permitted.

Madeira companies are governed by the Portuguese Companies Code as set out in Decree Law no. 262/86 and subsequent amendments. The laws covering disclosure of confidential information are set out in Decree Law np. 298/92. The Tax Reform Act of December 2000 included some more permissive rules governing the disclosure of information. Decree Law 212/94 regulates stock companies and the creation of sole shareholder private limited liability companies.

Decree Law no. 21/87 regulates the activities of service and trading companies whilst Decree Law no. 225/95 governs the use of foreign names. Decree Law no. 495/88 covers holding companies.

Some of the concepts surrounding Portuguese companies are different from those in common law jurisdictions. Shares are known as quotas (and arranged slightly differently), capital is represented by registered quotas rather than shares and part ownership of a company is evidenced not by the issue of share certificates but by registration of the quota on the registration certificate. Changes in share capital and the transfer of shares must be evidenced by the execution of a notarial deed prior to registration in the Companies Registry.

Incorporation procedures are more cumbersome than those in common law jurisdictions. Companies cannot be incorporated without the prior authorization of the Madeiran regional government. The certificate of incorporation must be executed by way of notarial deed and in front of a notary public. After execution of the notarial deed of incorporation the company must register with the local tax department. Corporate accounts must be audited and filed with the tax authorities.

Re-domiciliation: Portuguese law allows a Portuguese company to transfer its seat to another jurisdiction, provided the other jurisdiction has suitable legislation and a resolution has been passed to this end by at least 75% of the shareholders. Likewise foreign companies may re-domicile to Portugal if the proper law of the foreign company so allows, and provided a resolution of at least 75% of the shareholders has been passed.

Company secretaries do not exist under Portuguese law. Madeiran companies must have a registered office where all legal documents, minute books, official accounting books and records must be kept. Information available at the Corporate Public Registry consists of details of the registered office, directors, shareholders, mortgages, objects clause and the share capital. Meetings must be held at the registered office.

No stamp duty is payable on issued share capital. The minimum annual tax or registration fee payable by a Madeiran company is €1,800.

A company can use a foreign name provided it refers to its main activity. Although non-resident directors are allowed, in practice a number of disadvantages attach to their use. Foreign directors must be registered with the local tax and social security offices and must act through a resident agent in order to comply with the laws and financial requirements of Portuguese companies. Corporate directorships are not permitted.



Back to Madeira Index »