[ESTABLISHING A BUSINESS ENTITY IN PORTUGAL] 373
The first two types of companies are by far the most common, while the last three have proven to be less flexible and generally inadequate for the modern business needs. II.2. The Public Limited Liability Company (PLC) As previously mentioned, the PLC (“ Sociedade Anónima ” or “ S.A. ”) is one of the two most common investment vehicles used in Portugal with the purpose of establishing business and commercial transactions. It ensures the limitation of shareholders’ liability to the amount of their investment in the company – their participation in its share capital – and qualifies these participations as negotiable securities. Shares may be listed on the Lisbon Stock Exchange (Euronext Lisbon, PSI- 20 or “ Bolsa de Valores de Lisboa ”) or remain under private commerce. Generally, a PLC must be incorporated by a minimum of five individual or corporate founding shareholders. Exception is made, being required only one founding shareholder, when all outstanding capital stock is subscribed and held by another corporation at the time of incorporation. Also, only two founding shareholders are required when the State, or a State holding company, owns more than 50 % of the capital stock. Since 2017, corporate law only allows nominative shares in PLC’s, in accordance with European Union regulation. Such shares may be represented by book entries or certificates/titles (depending on whether they are represented by registrations in an account or by paper documents). Along with the shares with par or nominal value, it is also possible to issue shares without par value, in order to facilitate capital
increase scenarios. In any case, a share shall have a minimum value of EUR 0,01 (par value or issue value). There are two types of shares:
ordinary shares (“ ações ordinárias ”), which entitle holders to dividends and to a portion of the assets upon winding up, subject to the rights attributed to any existing preferred shares. preferred shares (“ ações preferenciais ”), which award special rights to their holders, usually broader rights than the ones attributed to ordinary shares. The bylaws may authorize the PLC to issue two types of preferred shares: 1. non- voting preferred shares (“ ações preferenciais sem voto ”) which confer, if they have nominal or par value, preferential rights to their holders to receive an annual payment of not less than 1% of the shares' par value, payable as a dividend out of distributable profits. If not, the annual payment is calculated by reference to the value of the issue of the shares reduced of its premium, if any. These shares also have priority over ordinary shareholders in the event of company liquidation. If authorized by the bylaws, corporations may issue non-voting preferred shares up to a maximum of 50% of its registered share capital; 2. redeemable preferred shares (“ ações preferenciais remíveis ”) which are redeemable at a fixed time date or when established by shareholders' general meeting. Only shares which are fully paid up can be redeemable. Redemption must be made at par value or according to
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ILN Corporate Group – Establishing a Business Entity Series
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