Corporate Governance 2025 Comparisons

General Characteristics of the Principal Forms of Corporate Organisations

Private limited company (Sociedade por quotas or Lda), equivalent to the French SARL or to the German GmbH

• This type of company is particularly suited to small and medium-sized enterprises.
• A minimum share capital is not required.
• Each quota must have a minimum value of EUR1.00.
• A minimum of two shareholders is required.
• Shareholders are liable under the terms of the by-laws and only up to the amount of the company’s share capital. Only the company’s assets are liable towards third-party creditors.
• The managers bear subsidiary liability towards third parties and share joint liability between them for all taxes related to the company’s financial year, unless they are able to prove that the insufficiency of the company’s assets to cover tax liabilities was not due to any fault on their part.

Public limited company (Sociedade Anónima or S.A.), equivalent to the French SA or to the German AG

• This type of company is particularly suited to larger enterprises, as it entails a more complex administrative structure.
• It requires a minimum share capital of EUR50,000;
• Each share must have a nominal value equal to or higher than EUR0.01;
• The minimum number of shareholders to incorporate a company is five. However, single-shareholder companies are permitted, provided the sole shareholder is a corporate entity.
• Shareholders are liable only up to the amount of the shares they hold.

• The directors bear subsidiary liability towards third parties and share joint liability between them for all taxes related to the company’s financial year, unless they are able to prove that the insufficiency of the company’s assets to cover tax liabilities was not due to any fault on their part.

Sole proprietorship – Sociedade Unipessoal Por Quotas (Unipessoal, Lda./Limitada)

• It has essentially the same structure as the private limited company.
• It is composed of one shareholder – an individual or a company.
• It cannot have as a shareholder another sole proprietorship.

• An individual cannot be a shareholder of more than one sole proprietorship.

• The sole shareholder has the same responsibilities as the general meeting of shareholders;
• The name of these companies must include the expression “Unipessoal” (sole proprietor).

Comparing the Types of Companies

The main advantages of a public limited company lie in the ease with which its shares can be transferred, the ability to raise capital through public subscription, and, to some extent, the ability to keep the identities of shareholders confidential. This type of company also tends to project the image of being larger and more robust. However, such companies come with a more complex organisational structure and, as a result, are more costly to operate than a private limited company, since they are subject to stricter requirements and formalities.

On the other hand, private limited companies offer a simpler, more flexible structure, making them an excellent choice for private, closely held companies where shareholder changes are infrequent and anonymity is not a primary concern.

In any event, under Portuguese law, it is possible to convert a company from one type to another, provided that all legal conditions are fulfilled and there is nothing in the company’s by-laws prohibiting such a transformation.

Main Sources

The principal sources of corporate governance requirements for companies in Portugal are the Companies Code (Código das Sociedades Comerciais or CSC) and the Portuguese Securities Code (Código dos Valores Mobiliários or CVM).

There are, however, specific provisions for:

• Listed Financial Institutions: The recommendations issued by the Portuguese Central Bank (BdP) play a central supervisory role in overseeing the governance models adopted by these institutions. Institutions must periodically evaluate their governance model to identify opportunities for improvement and must take the necessary measures to correct any detected deficiencies. In the exercise of supervision, and adhering to the principle of proportionality, the Bank of Portugal maintains regular contact with the members of the governing bodies of the institutions it supervises. If deemed necessary, it may attend the meetings of these bodies in person.
• Public Interest Entities: The legal regime applicable to public companies (Regime Jurídico do Setor Público Empresarial or RJSPE) sets out rules for the formation, organisation, and governance of public companies, as well as for the exercise of powers inherent to the ownership of shareholdings which aim to ensure efficiency, transparency, and accountability in the management of public companies.
• Public Limited Sports Companies (Sociedades Anónimas Desportivas or SADs): The corporate governance of Portuguese SADs is set out by Law 39/2023 of 4 August 2023, which promotes transparency in the management of SADs by setting out, among others, the obligation to disclose annually to the organising sports bodies the identity of the members of the management body. The Portuguese Institute of Sports and Youth (Instituto Português do Desporto e Juventudeor IPDJ) is the supervisory entity responsible for verifying the suitability and any potential conflicts of interest of qualified investors, directors, and managers.

Soft Law

Further, the Securities Market Commission (Comissão do Mercado de Valores Mobiliários or CMVM) has been issuing recommendations on corporate governance since 1999, which initially only applied to listed companies, and that have been compiled in the Corporate Governance Code (Código de Governo das Sociedades or CGS) by the Portuguese Institute of Corporate Governance. This code’s principles and recommendations pertain to the body of “soft law” and, thus, are not legally binding and cannot be enforced before a court.

In 2001, CMVM Regulation No 7/2001 adopted the “comply or explain” principle, whereby companies are required to disclose whether, and to what extent, they comply with the recommendations or to explain why they do not and proposed that companies issuing shares admitted to trading on a regulated market must annually disclose information on various aspects related to corporate governance. This regulation also requires companies issuing shares to prepare a corporate governance report, either as an annex to the annual management report or in a separate chapter.

Companies with publicly traded shares are subject to both mandatory and voluntary corporate governance requirements.

Mandatory Requirements

• disclosing annual reports and accounts;
• disclosing to the CMVM in the management annual report or in an attachment thereto a detailed report on the corporate governance with the following information:
1. capital structure;
2. any restrictions on the transferability of shares;
3. qualified holdings in the company’s share capital;
4. identification of shareholders holding special rights and a description of those rights;
5. control mechanisms within any employee participation schemes, where voting rights are not exercised directly by employees;
6. any restrictions on voting rights;
7. shareholder agreements that may lead to restrictions on the transfer of securities or voting rights;
8. rules on the appointment and replacement of members of the management body and amendments to the company’s by-laws;
9. powers of the management body, particularly concerning resolutions on capital increases;
10. significant agreements and amendments thereto;
11. agreements between the company and the members of the management body or employees that provide for compensation in the event of resignation, dismissal without just cause, or termination of the employment relationship following a public takeover bid;
12. key elements of the internal control and risk management systems implemented in the company regarding the process of disclosing financial information;
13. statement on adherence to the corporate governance code to which the issuer is subject by a legal or regulatory provision;
14. statement on compliance with any corporate governance code adopted voluntarily by the company;
15. the location where the public can access the full text of the relevant corporate governance codes;
16. composition and description of the functioning of the issuer’s corporate bodies, as well as any committees that are created within them; and
17. a description of the diversity policy applied by the company concerning its management and supervisory bodies, particularly in terms of age, gender, qualifications, and professional background, the objectives of this diversity policy, how it was applied, and the results in the reference period.
• the annual presentation, by the board of directors to the general meeting of shareholders, of a report explaining all the matters listed in the previous bullet point;
• disclosing to the public the following information:
1. notice of shareholder meetings of companies issuing securities admitted to trading, inclusion of matters on the agenda and submission of resolution proposals;
2. modification, allocation, payment or exercise of any rights attached to securities admitted to trading or the shares to which they give rights, including the applicable procedures and the financial institution through which shareholders can exercise their property rights;
3. modification of bondholder rights resulting, inter alia, from changes to the loan conditions or interest rate;
4. share issuances, including associated privileges, and information on any allocation, subscription, cancellation, conversion, exchange, or redemption procedures;
5. modification of the elements required for the admission of securities to trading;
6. acquisition and disposal of own shares, when, as a result, the percentage exceeds or falls below the limits of 5% and 10% of the voting rights;
7. resolution of the general meeting concerning the financial statements; and.
8. the total number of voting rights and share capital at the end of each calendar month in which an increase or decrease of that total number occurs.
• publishing on the company’s website the remuneration policy of members of management and supervisory corporate bodies, including the voting results and the date of approval at the general meeting;
• preparing a clear and understandable report by the management body that provides a comprehensive overview of remuneration, including all benefits, regardless of their form, granted or due during the last financial year to each member of the management and supervisory bodies;
• having an internal procedure approved by the management body, with a prior binding opinion from the supervisory body, through which it periodically verifies whether the transactions that the company conducts with related parties are carried out within the scope of their regular activities and under market conditions;
• publicly disclose transactions with related parties the value of which is equal to or greater than 2.5% of their consolidated assets, or of their individual assets if they do not prepare consolidated accounts; and
• publicly disclose all the information received regarding qualified participations.

Voluntary Requirements

The CGS sets out several principles and best practices that should be adopted by these companies, particularly concerning ESG, which is deemed a key goal of such corporate governance provisions. 

Until recently, companies have been following internationally recognised standards for the preparation of their sustainability reports, including the GRI Standards (Global Reporting Initiative), which are the most used, or the frameworks of the ISSB (International Sustainability Standards Board), the TCFD (Task Force on Climate-Related Financial Disclosures), or the TNFD (Taskforce on Nature-Related Financial Disclosures).

However, the latest EU directive on corporate sustainability reporting (CSRD, Directive 2022/2464) demands the use of European reporting standards, the ESRS (European Sustainability Reporting Standards) and the application of the European Taxonomy.

In today’s world, there is little doubt that companies must commit to respecting human rights and minimising their impact on the environment. Sustainability reporting is no longer limited to traditional financial metrics – it must also reflect both quantitative and qualitative information concerning a company’s environmental, social, ethical, and human rights practices, as well as its stance on issues such as corruption. Younger generations, including Millennials and Generation X, place increasing importance on responsible investment and believe that it is possible to achieve competitive returns by incorporating ESG factors into investment decisions.

The new European regulatory duties have a systemic and cross-cutting effect. They focus on information provision but also require strategic definition and rigorous commitment. Decisions based on immediate profits compromise long-term sustainability as well as the longevity of the organisation. To mitigate this risk, companies should adopt governance models that encourage sustainable investments, linking bonuses to behaviours related to good ESG practices. Companies must find a way to leverage substantive sustainable business practices for competitive differentiation. This approach will result in a broader vision where financial gains go hand in hand with positive social and environmental impact. The companies that successfully balance purpose and profits through sustainability leadership will be best positioned for long-term success.

According to the CSC, the management report prepared by the management body should include not only financial matters but also relevant information on environmental issues and employees’ issues.

Furthermore, large companies of public interest must also include in their management report a non-financial statement with information that enables stakeholders to understand the impact of the company’s activities in relation to environmental, social and employee issues, gender equality, non-discrimination, respect for human rights, corruption and bribery. The information must include the policies of the company regarding these issues and the results thereof as well as the associated risks.

The CSG also encourages the existence of mechanisms within companies for collecting and processing data on social and environmental sustainability. These mechanisms are intended to assist the management body in identifying risks and formulating appropriate strategies to mitigate them. Additionally, companies are expected to disclose how they address climate change and its related challenges.

The CSRD imposes several sustainability reporting obligations applicable not only to large companies but also to small and medium-sized companies deemed of public interest. Only micro-companies are excluded. For this purpose, EU law deems of public interest the following companies:

• with publicly traded shares;
• credit institutions;
• insurance companies; and
• designated by member states as public-interest entities.

Reporting obligations will include:

• evaluating the business model’s resilience to sustainability risks, opportunities related to sustainability and plans for aligning with sustainable economy transitions and the Paris Agreement goals;

• establishing time-bound sustainability targets, including greenhouse gas reduction goals, and reporting progress and scientific validity of targets;
• describing the role and expertise of management bodies in sustainability matters;
• providing an overview of sustainability policies and incentive schemes linked to sustainability for management bodies;
• implementing due diligence processes, identifying and managing adverse impacts, and actions taken to mitigate these impacts;
• setting out the principal sustainability-related risks and dependencies, and how these are managed; and
• disclosing relevant indicators related to the points above.

Penalties shall be applicable to infringements of reporting obligations.

Portugal has introduced a transitional period for the full application of the CSRD, resulting in a staggered implementation calendar:

• For large public interest companies, the CSRD is applicable in the current year for the 2024 financial year.
• For all other large companies, the CSRD is applicable in 2028 for the 2027 financial year.
• For small and medium-sized public interest companies, the CSRD is applicable in 2029 for the 2028 financial year.

Principal Bodies

The bodies involved in the governance and management of a company are:

• the sole director or board of directors in S.A. companies (in the event the share capital exceeds EUR250,000, administration must be carried out by a board of directors);
• managers in Lda companies; and
• the supervisory board, sole auditor, audit committee or general and supervisory board (depending on the corporate model adopted).

The board of directors and the sole director in S.A. companies or managers in Lda companies have exclusive and full powers of representation of the company. They are executive corporate bodies, in charge of managing the company. The company is bound by their acts executed or ratified by the majority of the directors, unless the articles of association provide otherwise, in which case a smaller number of directors may be sufficient.

The supervisory board, sole auditor or general board are responsible for the supervision of the company, particularly in relation to financial and accounting matters. The sole auditor and some of the members of the boards must be a statutory auditor (Revisor Oficial de Contas or ROC).

Lda companies that do not have a board of auditors must appoint an official auditor to carry out the supervision of the accounts if, for two consecutive years, the company exceeds at least two of the following thresholds:

• a total balance sheet value of EUR1,500,000;
• total net sales and other income of EUR3,000,000; and/or
• an average number of 50 employees.

Directors/Manager

Decisions taken by these bodies typically concern:

• the day-to-day management of the company;
• preparation of annual reports and accounts to be submitted for shareholders’ approval;
• opening or closing of company branches or establishments;
• changes in the company’s organisational structure; and
• hiring and termination of employment contracts.

In S.A. companies, directors have the authority to dispose of and encumber real estate assets.

Supervisory Bodies

Supervisory bodies have no management powers and are responsible, in particular, for:

• supervising the management of the company, and ensuring compliance with the law and the articles of association;
• ensuring the proper maintenance of the company’s books and accounting record;
• checking the cash holdings and inventory of assets or securities of the company;
• verifying the accuracy of the financial statements;
• preparing an annual report on its activities and issuing an opinion on the management report and on the financial statements; and
• receiving reports of irregularities submitted by shareholders, company employees, or others.

Directors/Manager

In the event these bodies are composed of several members, a specific process must be followed for the resolution to be valid, which normally takes place at a meeting convened for such purpose.

The board of directors shall meet monthly if not set out otherwise in the by-laws.

Resolutions are taken by the majority of the directors. Each director has one vote, and directors may not vote on matters in which they have a conflict of interest with the company. The chairman of the board of directors has a casting vote if granted by the articles of association or if the board is composed of an even number of directors.

Minutes must be drawn up for each meeting of the board of directors, recording the matters discussed and approved at the meeting, and must be signed by all directors present at the meeting.

Supervisory Bodies

In the event these bodies are composed of several members they shall meet at least once every quarter, and their resolutions shall be adopted by majority vote.

The chairman of the supervisory board has a casting vote if granted by the articles of association or if the board is composed of an even number of directors.

The minutes of each meeting shall be drawn up, and must be signed by all members present.

Board of Directors’ Structure in S.A. Companies

The structure of the board of directors in an S.A. company is directly related to the structure of the respective supervisory board. There are three main mandatory governance models, which may slightly differ:

• The traditional or classic model includes a board of directors and:

1. a sole auditor;
2. supervisory board; or

1. supervisory board and a statutory auditor (ROC) or an official auditing company (SROC).

• The Anglo-Saxon model includes a board of directors, including an audit committee and a statutory auditor.
• The German model includes an executive board of directors, general and supervisory board and statutory auditor.

Board of directors

Legal persons may be appointed as directors of a company but they must appoint an individual to act as director in his/her own name.

The board of directors is composed of any number of members, but with a minimum of two.

Supervisory board

The supervisory board comprises a minimum of three effective members. One of its permanent members and one of the substitutes must be a statutory auditor and cannot be a shareholder of the company. In companies with publicly traded shares, the supervisory board must be composed of a majority of independent members. The most complex supervision structure that includes the supervisory board and the statutory auditor (who cannot be a member of the corporate bodies of the company) is mandatory for:

• companies with publicly traded shares; and
• companies that exceed two of the following limits:
1. a total balance sheet value of EUR20,000,000;
2. net turnover of EUR40,000,000; and/or
3. an average of 250 employees.

Sole auditor

A sole auditor may be appointed instead of the supervisory board. It supervises the direction of the company. It must be a statutory auditor or an official auditing company. It cannot be a shareholder of the company. The company will always have a substitute auditor that shall also be an official auditor. Except for companies following the Anglo-Saxon model, the governance structure of a sole director may only be adopted if the company’s share capital does not exceed EUR200,000.

Audit committee

This committee comprises a minimum of three effective members, some of which are non-executive members of the board of directors. In companies with publicly traded shares, most of these members must be independent. In listed companies and companies exceeding two of the limits set out under Supervisory board above, at least one of the members must be independent and have an appropriate degree and expertise in auditing and accountancy.

Executive board of directors

This board comprises any number of directors as set out in the articles of association. The company may only have a sole director if the share capital is below EUR200,000. It carries out the company’s executive functions.

General board

It comprises the number of members set out in the articles of association but not less than the directors.

They cannot be directors of the company.

Secretary of the company

Regardless of the governance model adopted, listed companies must appoint a company secretary as well as a substitute.

Lda Board Structure

The company is managed by one or more managers (gerentes), who must be individuals. These managers may or may not be shareholders.

Provided authorised by the articles of association, the board may delegate, subject to certain limitations, the day-to-day management to one or more directors or to an executive committee.

The chairman of the board of directors is granted a casting vote in the board’s resolutions in the following situations:

• when the board is composed of an even number of directors; and
• in other cases, if the articles of association provide for it.

The chairman of the executive committee is also granted a casting vote and he/she must:

• ensure that all information regarding the activity and decisions of the executive committee is provided to the other members of the board of directors; and
• ensure compliance with the delegation limits, the company’s strategy, and the duties of collaboration towards the chairman of the board of directors.

In listed companies and public interest entities, the proportion of individuals of each gender newly appointed to each management and supervisory body of each company cannot be less than 33.3%.

To ensure the desirable agility of the executive management’s functioning and a balanced and appropriate diversity of skills, knowledge, and professional experience, the CGS sets out the following principles regarding the composition of the board of directors:

• The number of executive directors should take into account the size of the company, the complexity and geographical dispersion of its activity, and the costs.
• The number and qualifications of non-executive directors should be adequate to provide the company with a balanced and appropriate diversity of skills, knowledge, and professional experience.

Appointment of Directors

As a general rule, the directors are appointed in the incorporation deed or by the shareholders’ meeting. Directors must formally accept their appointment and declare that they are not aware of any circumstances that may prevent them from being appointed.

In the event the company adopts the German model, and provided the by-laws do not set out otherwise, the general and supervisory board is in charge of appointing the members of the executive board of directors.

The directors are appointed for a period set out in the company’s by-laws, which cannot exceed four years. However, directors may be re-elected and remain in office after the original term has elapsed until new appointments are made.

Listed companies must include in the by-laws a provision enabling minority shareholders, representing at least 10% of the share capital, who have voted against the approved proposal for the appointment of directors, to appoint at least one director.

The board may also elect a new member in the event one director is permanently absent and the board is unable to operate. Otherwise, the supervisory board of the audit committee will appoint him/her. Such election must be ratified by the shareholders’ meeting. 

Removal of Directors

Any member of the board of directors can be removed by resolution of the general meeting at any time.

A director appointed according to special rules (such as those that must be adopted by listed companies) cannot be removed without a just cause if shareholders representing at least 20% of the share capital have voted against the resolution for their removal.

A director may resign from their position by sending a letter to the chairman of the board of directors or, if the chairman is the one resigning, to the supervisory board or the audit committee.

In the event that, after the appointment of any director, any incompatibility or incapacity occurs that would prevent such director from being appointed, the supervisory board or the audit committee shall declare the termination of his/her office if the director fails to resolve the issue, or does not resign.

Restrictions on Appointment

Persons who do not have full legal capacity cannot be directors.

Persons disqualified from engaging in commerce, as well as from holding any position as an officer of a commercial or civil company, as a consequence of an insolvency due to misconduct or negligence, cannot be directors.

Directors may not perform any temporary or permanent work in the company, or in companies that are in a controlling or group relationship therewith, under any employment contract, whether subordinate or autonomous. They also cannot enter into any such contracts for the provision of services when their role as a director ends.

Directors may not engage in any activity competing with the company, either on their own or on behalf of others, nor may they hold positions in a competing company or be appointed on behalf of or in representation of such a company.

Members of the executive board of directors in the German model are not required to be shareholders but they cannot be:

• members of the general and supervisory board;
• members of the supervisory bodies of companies that are in a controlling or group relationship with the company in question; or
• spouses, relatives, and kin in the direct line, and up to the 2nd degree, inclusive, in the collateral line, of the persons mentioned in the previous bullet point.

Additionally, a company can set eligibility criteria for the role of director, such as requiring professional experience or specific qualifications.

Restrictions on appointments referred to in 4.4 Appointment and Removal of Directors/Officers also serve as independence requirements.

The CSC also sets out that directors of the company or of a company in a domain or group relation with the company cannot be appointed as members of the supervisory board, sole auditors or statutory auditors.

The CGS sets out recommendations regarding the independence of directors and specifically defines an independent person as not associated with any specific interest group within the company, nor in any situation likely to affect their impartiality in analysis or decision-making.

Directors are required to comply with several legal duties, including:

• a duty not to exceed the corporate purpose or engage in acts contrary thereto;
• a duty of care, demonstrating availability, technical competence, and knowledge of the company’s activities appropriate to their roles, while exercising the diligence of a prudent and organised manager in this context;
• a duty of loyalty in the interests of the company, considering the long-term interests of the shareholders and weighing the interests of other relevant parties for the company’s sustainability, such as its employees, clients, and creditors;
• a duty of vigilance, particularly by immediately convening a shareholders’ meeting upon acknowledging that the annual or intermediate accounts evidence a loss of more than half of the company’s share capital; 
• a duty of non-competition, whereby, during the period for which directors were appointed, they may not perform any temporary or permanent functions in the company, or in companies that are in a controlling or group relationship therewith, under any employment contract, whether subordinate or autonomous; they also cannot enter into any such contracts for the provision of services when their role as a director ends;
• a duty to inform the company of the number of shares and bonds of the company that they (or any person directly related to them) hold, as well as all their acquisitions, encumbrances, or cessations of ownership, for any reason, of shares and bonds of the same company and of companies with which it is in a controlling or group relationship.
• a duty to prevent any conflict of interest with the company by informing the other directors thereof and not taking part in the relevant decisions that could be affected by such conflict;
• a duty to prepare and submit to the competent corporate bodies the management report, including the non-financial statements or a separate report with the same information, where applicable, the annual accounts, as well as other financial statements required by law for each financial year;
• a duty to take the necessary measures to resolve discrepancies between acts, their registration, and the publications; and
• a duty to request the convening of the annual general meeting and present the necessary proposals and documentation for the resolutions to be made by the shareholders.

Liability

• Directors are liable to the company for damages caused thereto by acts or omissions carried out in breach of legal or contractual duties, unless they prove that they acted without fault.
• Directors are also liable to shareholders, company creditors and third parties for any individual damage their acts may cause them.
• Director’s liability is joint and several.

• Directors bear subsidiary liability towards third parties and jointly between them for all the taxes concerning the company’s financial year, unless they are able to prove that the insufficiency of the company’s assets to cover tax liabilities was not due to any fault on their part.

• The consent or favourable opinion of the supervisory board does not exempt the directors from liability.

Exclusion

• Liability is excluded if directors can prove that they act in an informed manner, free from any personal interest, and according to business rationality criteria.
• Directors who were not part of a resolution or who voted against it are not responsible for the damage resulting therefrom. In such cases, directors may record their vote against it within five days, either in the respective minutes book, or addressing it, in writing, to the supervisory body or before a notary or a registrar. Nevertheless, a director who did not exercise the right of opposition granted by law, when in a position to do so, is jointly liable for the acts he/she could have opposed.
• The liability of directors towards the company does not apply when the act or omission is based on a resolution by the shareholders, even if it is not valid.

Guarantee

The liability of a director must be guaranteed by means of a bond or an insurance policy with a minimum coverage of EUR250,000 for listed companies and EUR50,000 for other types of companies.

Non-executive and non-remunerated directors are exempt from providing a bond.

The bond may be waived by the company’s by-laws or by means of a resolution of the shareholders’ meeting.

Joint Liability With Directors

The legal person appointed as director is jointly liable with the individual he/she appoints to act as director in his/her own name.

Shareholders with a special right to appoint a director are jointly liable with him/her before the company and the other shareholders in the event of fault in such election.

The Company

By means of a resolution of the shareholders’ meeting duly convened for such purpose, the company may dismiss the directors due to a breach of their duties which is deemed a just cause for the dismissal.

The company may file a liability claim against the directors based on a prior resolution of the shareholders, passed by a simple majority, and must be initiated within six months of the resolution.

The Shareholders

Regardless of any claim for compensation for individual damage they may have incurred, one or more shareholders holding at least 5% of the share capital, or 2% in the case of a company with publicly traded shares, can file a lawsuit against directors seeking compensation for damages the company has incurred, in favour of the company, when the company itself has not pursued such a claim.

Shareholders holding at least 10% of the share capital may file for the judicial removal of a director if the shareholders’ meeting has not yet been convened for that purpose. Any shareholder, regardless of the percentage of the share capital participation, may file for the judicial removal of a director in the event of insider trading.

Company Creditors

If neither the company nor its shareholders file a lawsuit against the directors whose wrongful conduct has led to the company’s inability to meet its financial obligations, the company’s creditors are entitled to file such a claim.

Third Parties

Any third party that may have incurred damages due to a director’s breach of duties may also file a claim against them.

Other Bases for Claims – Criminal Liability

Directors may also be held criminally liable for intentionally:

• failing to convene a shareholders’ meeting upon becoming aware that the annual or intermediate accounts evidence a loss of more than half of the company’s share capital, and failing to propose the dissolution of the company or the reduction of its share capital;
• omitting acts required for the realisation of the share capital;
• acquiring for the company its own shares, or financing or guaranteeing such acquisition, in violation of the law;
• illicitly distributing the company’s assets;
• not convening the meetings required by law or inserting therein false information;
• obstructing the proper functioning of the general meeting or assisting anyone to participate therein by presenting false documents;
• refusing, in any meeting, information which, by law, is mandatory and that has been requested in writing for the approval of the financial year accounts;
• providing false or incomplete information when obliged to provide accurate information regarding the company;
• refusing to draw up the minutes of the meetings;
• preventing the supervision of the company;
• failing to comply with the requirements for the issuance of the shares certificates; and
• refusing or delaying access to the documents required for the preparation of any shareholders’ meeting.

Limitation of Liability

The liability of a director cannot be limited. The CSC provides that any provision that excludes or limits the liability of directors is null and void. The company may, however, resolve to waive its right to claim compensation from a director. This requires a resolution of the shareholders’ meeting and must not be opposed by minority shareholders representing at least 10% of the company’s share capital.

A lawsuit filed by minority shareholders (as described in 4.8 Consequences and Enforcement of Breach of Directors’ Duties) against directors, seeking compensation for damages incurred by the company cannot be subject to any prior opinion or resolution of the shareholders or prior judicial decision thereon. Such provisions would be null and void.

Remuneration of directors is determined by the general meeting of shareholders or by a committee appointed thereby for such purpose. In companies adopting the German model, the remuneration of directors may also be determined by the general and supervisory board or by a committee it appoints.

Directors’ remuneration shall comprise a fixed and a variable component such as profit sharing.

Companies issuing publicly traded shares are required to approve a remuneration policy that shall be submitted by the remuneration committee (or by the board of directors in the event the committee has not been appointed) to the shareholders’ approval every four years and whenever there is a relevant change of the remuneration policy. However, in exceptional cases, these companies may derogate such policy in the event it is deemed necessary to serve their long-term interests and sustainability or to ensure their viability.

The remuneration policy for directors of listed companies must be clear, transparent, and consistent, aiming to align the interests of the directors with those of the company and its shareholders. The remuneration should reflect the value of the directors’ work and encourage their efforts in managing the company, with a view to ensuring the company’s sustainability in the markets.

The company is forbidden from granting loans or credit to directors, making payments on their behalf or providing guarantees in respect of their obligations. Additionally, advance payments of remuneration may not exceed one month’s salary.

The CGS reflects the idea that the remuneration of directors should ensure alignment with the long-term interests of the shareholders and promote the sustainable operation of the company. It recommends the establishment of a remuneration committee and advocates that part of the remuneration for directors (excluding non-executive directors) should be variable. This variable component should reflect the company’s sustained development without encouraging excessive risk-taking. Moreover, it recommends that a portion of the variable remuneration be deferred.

Please refer to 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares, 5 Shareholders and 6 Corporate Reporting and Other Disclosures.

The remuneration policy of companies with publicly traded shares must be published immediately on the company’s website following its approval by the shareholders’ general meeting. This publication must clearly indicate the voting results and the date of approval. The policy must remain freely accessible to the public for as long as it remains in effect.

Furthermore, the board of directors is required to issue annually a clear and comprehensive report (or chapter in the annual management report to be submitted with the annual accounts) providing a comprehensive view of remuneration, including all benefits allocated or due in the previous financial year to each member of the administrative and supervisory bodies according to the remuneration policy, including newly appointed members and former members. This report is submitted to the annual general meeting of shareholders for approval of the accounts, after which it is also published on the company’s website where it shall remain available for ten years.

The CGS recommends that the disclosure of the amounts paid to any member of the company’s body or committee due to the termination of their duties must be made either in the governance report or in the remuneration report.

Shareholders with shares representing at least 1% of the share capital may require information and documents on the amounts paid in the last three years to corporate body members.

Relationship Between the Company and its Shareholders

A company is a legal person distinct from its shareholders. Although shareholders may serve as directors, maintaining a clear separation between ownership and management allows the company to appoint qualified professionals to handle its day-to-day operations. However, external managers sometimes take advantage of their positions, making self-serving decisions or even misusing company funds. Shareholders are not only entitled to appoint and dismiss management members but also to control how the company is managed and pursue claims against directors who cause harm to the company through mismanagement(see 4.8 Consequences and Enforcement of Breach of Directors’ Duties). Shareholders also have a duty of loyalty and co-operation with the company, meaning that they should not act against the company’s interests.

The CGS chapter regarding relations between the company and its shareholders sets out the guiding principle that the company’s management should consider the interests of shareholders when making decisions.

Rules and Requirements of the Relationship

The relationship between the company and its shareholders is complex and defined by a set of rules and agreements that regulate the rights and duties of the shareholders, as well as their liability towards the company and third parties.

The shareholders’ liability is limited to the value of the share they have subscribed in the company’s share capital, meaning that the creditors of the company cannot pursue the personal assets of the shareholders.

The main obligations of a shareholder set out in the CSC are paying the initial contribution and participating in the losses of the company.

Core rights

The core rights of shareholders are:

• to participate in the distribution of profits;
• to participate in company resolutions, which includes the right to vote at the general meeting;
• to receive information regarding the company; and
• to be appointed as a member of the corporate bodies of the company

Special rights

The special rights of shareholders are granted by the by-laws to one or more shareholders, giving them an advantage over the others. For instance, in Lda companies, shareholders may be granted the right to a percentage of profits greater than their stake in the share capital, or the right to be the company’s director. In S.A. companies, the special rights are allocated to categories or classes of shares.

Other rights

Other rights of the shareholders are the preferential right to subscribe to capital increases, and protection against arbitrary exclusion by the majority shareholders.

In Lda companies, either the shareholder is entitled to relief himself/herself from the company or the company may, under certain requirements, resolve on the exclusion of the shareholder.

Available Record of the Shareholders of a Company

The rules for publicising a company’s shareholders depend on the type of company.

Lda companies

Information on shareholders is compulsorily registered with the Commercial Registry Office and afterwards published on the Official Website for Corporate Acts and Other Entities. It is publicly available upon request.

S.A. companies

Information on the shareholders of an S.A. company is contained in the company’s shares ledger, which is not publicly available.

The extent of shareholder involvement in company management depends on the type of company.

In Lda companies:

• The CSC requires prior shareholder approval for key acts, including:
1. calling or reimbursing supplementary contributions;
2. redeeming, acquiring, encumbering, or dividing own shares;
3. the exclusion of shareholders;
4. the removal of managers and members of the supervisory body;
5. the approval of the management report and annual accounts, the allocation of profits, and the treatment of losses;
6. the discharge of liability of managers or members of the supervisory body;
7. the filing of legal actions by the company against managers, shareholders, or members of the supervisory body, as well as the withdrawal and settlement thereof;
8. amendments to the articles of association; and
9. the merger, demerger, transformation, and dissolution of the company, and the resumption of activity by a dissolved company.
• Even when shareholders are not part of the company’s management, they are often well informed about the company’s affairs. Moreover, shareholders may remove managers at any time, with or without just cause.

In S.A. companies:

• In contrast, in this type of company shareholders typically do not have the same degree of influence over the company’s management, which is vested in a management body that differs according to the governance model adopted (as mentioned in 4.1 Board Structure).
• Unlike in Lda companies, shareholders of an S.A. are required to resolve on management matters only if the board of directors submits such matters for their approval. This may apply, for example, to decisions regarding:
1. the acquisition, disposal, or encumbrance of real estate;
2. the provision of guarantees or security (personal or in rem) by the company;
3. the opening or closure of establishments or substantial parts thereof;
4. significant expansions or reductions of the company’s business activities;
5. major changes to the company’s internal organisation; and
6. the initiation or termination of long-term and significant co-operation with other companies.
• There are, however, matters that are specifically reserved to shareholders of an S.A. by law or by the articles of association, such as:
1. approval of accounts (annual meeting mentioned in 5.3 Shareholder Meetings);
2. amendments to the articles of association; and
3. company demerger or dissolution.

Required Shareholders Meetings

• For both S.A. and Lda companies, a general meeting must be held annually, within three months after financial year end, to:
1. approve the annual management report and accounts;
2. decide on profit allocation;
3. assess the management and supervision, dismiss officers or express lack of confidence; and
4. elect members of corporate bodies.
• Other situations when a shareholders meeting may be required:
1. by the management body (see 4.6 Legal Duties of Directors/Officers) upon acknowledge that the annual or intermediate accounts evidence a loss of more than half of the company’s share capital;

1. by shareholders representing at least 5% of the share capital or at least 2% of the share capital in companies with publicly traded shares;

2. by the supervisory body in the event the chairman of the meeting does not convene it;
3. by the ROC upon acknowledging severe difficulties of the company; and
4. by the court upon request of any shareholder if the shareholders do not approve the annual accounts.

Rules Governing the Holding and Conduct of a Shareholders’ Meeting

The convening of general meetings varies depending on the type of company.

For Lda companies

• The convening authority is the manager(s). The chairman is the shareholder present who holds or represents the largest capital share, or, if tied, the oldest.
• Notice is made by registered letter sent at least 15 days in advance, unless otherwise required by law or by-laws;
• Minutes must be signed by all shareholders who attend.
• Each cent of nominal share value equals one vote. The articles may grant up to two votes per cent as a special right, provided it applies to quotas totalling no more than 20% of the share capital. Unless otherwise stated by law or the articles, resolutions pass by a majority of votes cast, excluding abstentions.
• A shareholder may be represented by a signed written document addressed to the chair of the meeting. Voluntary representation is only allowed to the shareholder’s spouse, ascendants, descendants, or another shareholder, unless the articles of association expressly allow other representatives.

For S.A. companies

• The convening authority is the chairman of the general meeting board. The articles may provide for the chairman’s election; failing that, the chair is the president of the audit board, audit committee or supervisory board.
• A notice must be published. The articles may require additional media (eg, newspapers). Holders of registered shares receive a registered letter or, with consent, an email with read receipt.
• At least one month must elapse between publication of the notice and the meeting; letters/emails must be sent at least 21 days in advance of the meeting.
• Minutes must be signed by the chairperson and the secretary.
• Unless otherwise stated in the articles of association, each share carries one vote. In general, resolutions are approved by a majority of votes cast, regardless of the share capital represented, unless the law or articles state otherwise. Abstentions are not counted.
• A shareholder may be represented by a signed written document addressed to the chair of the meeting.

Quorum for shareholders’ meetings

• On first call, any number of shareholders present or represented may deliberate, except when by-laws provide otherwise or when the meeting is to decide on:
1. an amendment to the by-laws;
2. a merger, demerger, transformation, or dissolution of the company; and
3. other matters for which the law requires a qualified majority without specifying its extent.
• On second call, there is no minimum quorum requirement.

The venue of the meetings

• Meetings are held at the registered office or, if space is inadequate, elsewhere in Portugal chosen by the chairperson.
• Unless the articles provide otherwise, meetings may be held by electronic means.

Shareholders may also pass unanimous written resolutions or hold a universal meeting without prior formalities when all are present and agree to meet and resolve.

Shareholders may bring claims against the company or its directors as mentioned in 4.8 Consequences and Enforcement of Breach of Directors’ Duties.

According to the CVM, shareholders in publicly traded companies must notify the issuer and the CMVM in the event their holding exceeds or falls below the thresholds of 5%, 10%, 15%, 20%, 25%, one-third, 50%, two-thirds and 90% of the voting rights corresponding to the share capital of an issuer admitted to trading on a regulated market, no later than four trading days after the change or the date on which it became known.

Also, holders of a qualified participation in publicly traded companies must inform the CMVM, upon its request, of the origin of the funds used for reaching or exceeding this threshold.

Furthermore, EU anti-money laundering directives created the RCBE according to which companies must disclose their ultimate beneficial owner (UBO). However, companies whose shares are already traded on a regulated market and subject to EU-level (or equivalent) transparency requirements on ownership and voting rights may be exempt from RCBE registration.

Annually, the directors are required to prepare and submit to the shareholders the following:

• management report and the accounts;
• attachment to the accounts; and
• non-financial statements.

The shareholders must pass a resolution on these documents.

In a parent company subject to consolidated accounts, the directors shall also prepare on an annual basis all the respective consolidated documents.

In companies with publicly traded shares, directors must also prepare a detailed report on the corporate governance management and disclose it to the CMVM.

Companies with publicly traded shares are required to file biannually an interim management report and condensed financial statements.

Please refer to 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares regarding disclosure of corporate arrangements and to 2.2 ESG Considerations regarding the CSRD on reporting obligations.

Registration of Companies

The incorporation of a company in Portugal must be made by means of a deed, and registered with the Commercial Registry Office within two months.

For the registration of the company, the following documents must be filed:

• deed of incorporation, including the by-laws;
• declarations of the members of the corporate bodies accepting their appointment; and
• information on the UBO.

Failing to file any of these documents will prevent the registration of the company. Upon verifying that any of the required documents is missing or incorrectly drafted, the Registry Office will request the company to submit the correct document within five business days, failing which the registration application will be refused.

After the registration, the incorporation of the company is published on the Official Website for Corporate Acts and Other Entities. This platform publishes key information about companies, including, for example, the composition of corporate bodies and changes to the by-laws. Afterwards, the respective UBO declaration must be filed with the RCBE within 30 days of the company’s incorporation.

Publicly Available Information

Acts and facts registered in the commercial registry office are publicly available, including the documents filed therewith. The aim of the Commercial Registry Office is to publicise the legal situation of companies and other commercial entities.

Powers of the Registry Office

Registration requests are assessed under the principle of legality – ie, the feasibility of the registration application to be made by transcription must be assessed according to the applicable legal provisions, the documents presented, and previous registrations, particularly verifying the legitimacy of the interested parties, the formal regularity of the titles, and the validity of the acts contained therein. In essence, only facts that are legally subject to registration, and that are properly substantiated through adequate documentary evidence, may be recorded in the official registry.The registrar’s role is to qualify the act by confirming the legal validity of the request and the adequacy of the supporting documents. Once the registrar is satisfied that the legal requirements have been met, the act is entered into the registration system.

The appointment of an external auditor is required in the cases mentioned in 4.1 Board Structure.

External auditors:

• serve as one of the primary protectors of corporate governance in any entity;
• report the state of a company’s financial situation and certify the validity of financial reports that may have been released. All the information must be accurate and reliable;
• introduce policies to ensure accountability in the company;
• help promote corporate governance by conducting periodic risk assessment;
• review the security measures that a firm has in place against corporate fraud or corruption; and
• analyse the overall risk tolerance of the firm and all the initiatives of the company for mitigating risks.

Directors are required to prepare several documents assessing management risk and internal controls, such as the management report, the attachment to the accounts, the non-financial statements, the annual report on corporate governance and the interim management report. Such documents are afterwards either explained or submitted for the shareholders’ approval.

Please refer to 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares and 3 Management of the Company.