[ESTABLISHING A BUSINESS ENTITY IN PORTUGAL] 397
• when it has formalized a managerial subordination agreement with the target company, under which the management of the subordinated company’s business activities is entrusted to the SGPS. Under special circumstances and provided that some requirements are met, the holding company is allowed to provide technical management services to all or some of the partially held companies in which the SGPS has a minimum holding of 10% or with which the SGPS has formalized a managerial subordination agreement. Depending on the type of investment, some holding companies can be subject to Bank of Portugal (“ Banco de Portugal ”) supervision along with other non-banking financial institutions or to the Insurance and Pension Funds Supervisory Authority (“ ASF ”, former “ Instituto de Seguros de Portugal ”). Others are subject to the supervision of the competent Tax Authority (“ Inspecção-Geral de Finanças ”). Bank of Portugal supervision is mandatory where the company holds, directly or indirectly, the majority of voting rights in one or more credit or financial institutions. Regardless of the legal form adopted, it is required that every holding company appoints a certified chartered accountant (statutory auditor) or an audit company (statutory audit company). II.6. The Limited Liability Individual Undertaking An individual entrepreneur may also limit his liability to the firm's registered capital through the incorporation of a limited liability individual undertaking (“ Estabelecimento Individual de Responsabilidade Limitada ” or “ E.I.R.L. ”) which regime is foreseen in Decree -
Law no. 248/86, of August 25, 1986, as amended. The minimum capital for an E.I.R.L. is EUR 5.000,00, two thirds of which must be paid in cash and deposited in a blocked account with a local bank until the deed of incorporation is registered with the Commercial Registry Office. Twenty percent of after-tax profits must be allocated annually to a legal reserve until the amount in such reserve corresponds to at least 50% of the E.I.R.L.'s registered capital. II.7. Branches / Representation Offices A foreign company intending to conduct business activities in Portugal for more than one year may do so through the establishment of a subsidiary or affiliate in Portugal, except if operating under the freedom of provision of services. The subsidiary will have to vest one of the above outlined types of companies and will be an autonomous legal entity with a separate corporate personality. Any foreign company wishing to operate in Portugal without resorting to a subsidiary is legally required to establish a Portuguese branch (“ sucursal ”) or other local permanent representation (“ representação permanente ”) and to comply with the appropriate registration requirements. It is foreseen that the registration of the branch or permanent representation may be done online, provided the necessary registration requirements are met. It should be noted that, differently from subsidiary entities, branches are not autonomous legal entities, nor do they have a separate corporate personality, reason why the foreign company will always be liable for its operations and debts in Portugal. II.8. Collective Investment Undertakings (OIC)
ILN Corporate Group – Establishing a Business Entity Series
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