The Portuguese Companies Code or PCC (Código das Sociedades Comerciais) sets out four types of companies:

• the private limited liability company (sociedade por quotas – Lda.);
• the public limited liability company (sociedade anónima – S.A.);
• the general partnership (sociedade em nome coletivo); and
• the limited partnership (sociedade em comandita).

In practice, general partnerships and limited partnerships are seldom used in Portugal. Accordingly, this guide focuses exclusively on the two predominant forms: public and private limited liability companies.

Private limited liability companies typically offer a more straightforward corporate framework, characterised by:

• no minimum number of shareholders;
• a nominal minimum share capital requirement of EUR1 per shareholder; and
• a simplified governance structure with no mandatory supervisory body (unless prescribed thresholds are exceeded).

This renders them particularly attractive to small and medium-sized enterprises and closely-held ventures.

By contrast, public limited liability companies are subject to more rigorous requirements, including:

• a minimum of five shareholders at incorporation (or one shareholder, provided it is a company);
• a minimum share capital of EUR50,000;
• freely transferable shares; and
• a more elaborate governance structure, which must include a supervisory body.

This structure is generally better suited to larger enterprises, listed companies and businesses seeking to attract external investment.

Differences are also noticeable from a management perspective: the boards of directors of public limited liability companies enjoy extensive management powers, whereas in private limited liability companies, several management matters require prior approval by the shareholders.

The choice between a private limited liability company or a public limited liability company for foreign investors is typically guided by the nature, scale and strategic objectives of the intended investment. The distinguishing features outlined in 1.1 Types of Company constitute the principal considerations underlying this decision, with each form’s structural complexity directly affecting operational costs and administrative requirements.

It should be noted, however, that certain mandatory statutory requirements may constrain the investor’s choice of corporate form. By way of illustration, listed companies, credit institutions, companies carrying out insurance activity, and entities engaged in the management of collective investment schemes are required by law to be constituted as public limited liability companies.

In a private limited liability company – where the share capital is divided into quotas, rather than shares – special rights may be granted to the shareholders. Where such rights are of a proprietary nature, they transfer together with the relevant quota; all other special rights remain personal to the shareholder and are non-transferable.

In a public limited liability company, the capital is divided into shares and these must be in registered form (nominativas). They may be held either in book-entry form (escriturais) or through share certificates (tituladas). Shares may be issued with or without par value. Shares may be either ordinary or preferential, the latter carrying special rights that attach to and transfer with the shares. Shares conferring identical rights constitute a single class of shares.

Ordinary shares/quotas carry the “standard package” of shareholder rights set out in the PCC, comprising:

• the right to participate in the distribution of profits;
• the right to attend and vote at general meetings;
• the right to receive information concerning the affairs of the company; and
• the right to be appointed to the management and supervisory bodies of the company.

Portuguese law affords considerable flexibility in the creation of classes of shares and the attribution of special rights to shareholders. While certain classes are expressly contemplated by the PCC – notably, non-voting preference shares (ações preferenciais sem voto) and redeemable preference shares (ações preferenciais remíveis) – companies may also issue shares carrying bespoke rights or obligations tailored to their specific requirements.

In respect of both corporate forms, any special rights to be conferred on shareholders must be expressly set out in the company’s articles of association.

(In this guide, “shares” includes quotas unless otherwise specified.)

Shareholders’ rights may be varied primarily through amendments to the articles of association, which generally require a resolution passed at a general meeting by a qualified majority. In private limited liability companies, amendments to the articles require approval by a majority of three-quarters of the share capital, unless a higher threshold is stipulated in the articles. In public limited liability companies, the required majority is two-thirds of the votes cast.

Certain fundamental rights – such as the right to profits, the right to information, and the right to vote – are afforded statutory protection under the PCC and may only be restricted within the limits expressly permitted by law.

As noted above, certain shareholders may be granted special or preferential rights. Such rights may not be amended, varied or abrogated without the prior written consent of the relevant holder. In the case of public limited liability companies, such consent must be obtained by way of a resolution duly passed at a separate class meeting of the shareholders holding shares of the affected class.

As further detailed below, shareholders’ rights may be varied, supplemented or otherwise modified by means of shareholders’ agreements entered into between some or all the shareholders.

For private limited liability companies, there is no statutory minimum share capital; each quota is required to have a minimum nominal value of EUR1, and the capital corresponds to the sum of all quotas. In practice, a single-member company may therefore be incorporated with a share capital of just EUR1.

For public limited liability companies, the minimum share capital is EUR50,000. Shares must have a minimum nominal value (or issue value) of EUR0.01.

A private limited liability company may be incorporated with a single shareholder, in which case it takes the form of a sole shareholder private limited liability company (sociedade unipessoal por quotas). Natural persons, however, may hold no more than one sole shareholder private limited liability company. Private limited liability companies may also have multiple shareholders, with no statutory minimum prescribed.

Public limited liability companies, by contrast, are subject to a minimum shareholder requirement of five shareholders at incorporation. An exception applies where the incorporating entity is itself a company, in which case that company may act as sole shareholder.

Portuguese law imposes no residency requirement on shareholders of companies. The sole administrative requirement, applicable exclusively to private limited liability companies, is that each respective shareholder must have a Portuguese tax identification number.

Shareholders’ agreements and joint venture arrangements are well-established and widely utilised instruments in the Portuguese market where multiple investors seek to participate in a single corporate vehicle. Typically, such agreements serve to govern matters that either cannot, or would not customarily, be addressed within the company’s articles of association.

A careful assessment is required to allocate provisions between the articles of association and any shareholders’ agreement, considering enforceability vis-à-vis the company itself and commercial confidentiality.

Shareholders’ agreements in Portugal typically address matters such as transfer restrictions on equity interests (including consent requirements and pre-emption rights), exit mechanisms (tag-along and drag-along rights), voting arrangements (including qualified majority requirements and veto rights), governance and management provisions, the right to appoint members of the corporate bodies, dividend policy and distribution arrangements, non-compete and confidentiality obligations, and dispute resolution mechanisms.

The PCC expressly permits shareholders’ agreements to regulate the exercise of voting rights, provided that such agreements do not purport to govern the conduct of parties or third parties in their management or supervisory functions. The following types of voting agreements are considered null and void under Portuguese law:

• agreements requiring a shareholder to vote at all times in accordance with the instructions of the company or any of its corporate bodies;
• agreements requiring a shareholder to approve any and all proposals submitted by the company’s corporate bodies; or
• agreements under which a shareholder agrees to exercise (or refrain from exercising) voting rights in exchange for special advantages.

Shareholders’ agreements are binding upon the parties thereto, but are not enforceable against third parties, including the company itself. Accordingly, corporate acts and resolutions (as well as actions taken by shareholders in their capacity vis-à-vis the company) cannot be challenged or set aside on the grounds that they constitute a breach of such agreements.

Unlike articles of association (which are publicly filed and enforceable against third parties), shareholders’ agreements and joint venture agreements are typically private documents and are not subject to any public disclosure requirements in Portugal.

Portuguese companies are required to hold an annual general meeting (AGM) of shareholders within three months following the close of the financial year, or within five months of that date, where the relevant company is required to prepare consolidated accounts or to apply the equity method of accounting. The AGM must address the following matters:

• approval of the management report and annual accounts;
• proposed allocation of profits/losses;
• general appraisal of the company’s management and supervision; and
• any elections falling within the competence of the general meeting.

The management body is responsible for convening (or requesting the convening of) the AGM in fulfilment of its statutory duty to report and to present the accounts to the shareholders.

In the case of private limited liability companies, notice of a general meeting must be given at least 15 days in advance, unless a longer period is stipulated in the articles of association, whereas in public limited liability companies, the minimum notice period is one month where notice is given by publication, or 21 days where notice is given by registered post or email. These statutory minimum notice periods may not be shortened by the articles of association.

A general meeting may nonetheless validly resolve, provided that all shareholders are present or duly represented, and unanimously consent to dispense with the prescribed formalities.

General meetings are convened by the management body in private limited liability companies, and by the chairperson of the general meeting in public limited liability companies.

In private limited liability companies, any shareholder is entitled to require the convening of a general meeting. In public limited liability companies, only shareholders holding, individually or collectively, shares representing at least 5% (or 2% in the case of listed companies) of the share capital are entitled to require the convening of a general meeting. The request must be submitted in writing to the chairperson of the general meeting and must: (i) specify with precision the matters to be included on the agenda; and (ii) set out the reasons why the meeting is considered necessary. In either case, shareholders whose requests are refused may apply to the competent court to convene the meeting.

Shareholders’ information rights are comprehensively regulated under the PCC.

Information Rights in the Context of General Meetings

Notice of general meetings must be addressed or sent (as applicable) to all shareholders who are entitled to access the preparatory materials and documentation relating thereto. Shareholders are also entitled to request, at any general meeting, such information as may be necessary to enable them to form a properly informed view of the matters submitted for resolution. Any unlawful refusal to provide such information may constitute grounds for the annulment of the relevant resolution.

General Information Rights

Directors are required to provide any shareholder, upon request, with written information concerning the company’s affairs. In public limited liability companies, however, only shareholders holding shares representing at least 10% of the share capital may submit a written request to the board of directors for the provision of such information.

Inspection Rights

Shareholders of private limited liability companies are entitled to inspect the company’s accounting records, books and documents at its registered office. As for public limited liability companies, any shareholder holding shares representing at least 1% of the share capital may, provided that they demonstrate a legitimate interest, inspect certain documents at the company’s registered office, including financial statements, minutes, attendance lists and aggregate remuneration data for the preceding three financial years, as well as the share register. In both cases, the shareholder may be accompanied by a statutory auditor or other expert.

Subject to any contrary provisions in the articles of association, general meetings may be convened and conducted virtually, provided that the company implements appropriate measures to ensure the authentication of participants, the integrity of communications and the secure recording of the proceedings and attendees.

Virtual general meetings are increasingly used in Portugal and represent a valuable mechanism for facilitating shareholder participation.

There is no general statutory quorum requirement for ordinary resolutions on first call. For resolutions pertaining to amendments to the articles of association, mergers, demergers, corporate transformations, dissolutions, and other matters requiring a qualified majority, a quorum of shareholders representing not less than one-third of the issued share capital must be present in person or duly represented on first call. On second call, no minimum quorum applies to any category of resolutions, unless the articles of association provide otherwise.

In general, resolutions are passed by a simple majority of the votes cast, with abstentions being disregarded for the purposes of calculating the requisite majority. However, resolutions on certain fundamental matters, including amendments to the articles of association, mergers, demergers, corporate transformations, and dissolutions may only be passed if approved by a qualified majority. The precise threshold applicable to any such qualified majority will vary depending upon both the nature of the matter in question and the corporate form of the relevant entity. The articles of association may prescribe higher voting thresholds than those stipulated by statute.

In addition to the matters which are legally subject to qualified majorities, the articles of association may provide for other matters to require a qualified majority and may specify the applicable voting threshold.

In the case of private limited liability companies, shareholder approval is required for a broad range of corporate matters, including (without limitation):

• amendments to the articles of association, mergers, demergers, corporate transformations and voluntary dissolution;
• authorisation of transfers of quotas;
• approval of the annual accounts and the allocation of distributable profits;
• removal of directors and members of the supervisory body;
• supplementary capital contributions, and the acquisition or disposal of own quotas;
• exclusion of shareholders;
• the granting to directors of a release from liability;
• the appointment of directors and members of the supervisory body (unless otherwise provided for in the articles of association);
• the disposal or encumbrance of real estate or business undertakings (unless otherwise provided for in the articles of association); and
• the subscription for, or acquisition of, interests in other companies, and any disposal or encumbrance thereof.

In the case of public limited liability companies, shareholders are competent to resolve matters specifically attributed to them by law or by the articles of association, including (without limitation) amendments to the articles of association, mergers, demergers, corporate transformations and voluntary dissolution, together with any other matters falling outside the powers of other corporate bodies. With respect to management matters, shareholders may only pass resolutions upon a prior request from the board of directors.

Proxy Voting

Shareholders are entitled to appoint a proxy to attend and vote at general meetings on their behalf. Such appointment must be made in writing, duly signed by the appointing shareholder. In private limited liability companies, unless the articles of association provide otherwise, a shareholder may only appoint as proxy their spouse, an ascendant, a descendant, or another shareholder of the company. In the case of public limited liability companies, there are no restrictions on the choice of proxy.

Weighted Voting

In private limited liability companies, voting rights are calculated on the basis of one vote for each cent of the nominal value of the relevant quota. Notwithstanding this, the articles of association may grant, as a special right attaching to one or more quotas representing in aggregate no more than 20% of the share capital, double voting rights (ie, two votes for each cent of nominal value).

In public limited liability companies, the general principle is that each share carries one vote (“one share, one vote”). However, the articles of association may provide for the following derogations:

• a requirement that a certain number of shares be held to exercise one vote, provided that (i) all shares issued by the company are covered by this arrangement, and (ii) at least one vote attaches to each EUR1,000 of share capital; and
• a voting cap, pursuant to which votes exceeding a specified threshold cast by a single shareholder (in their name or as proxy) are disregarded, provided that such limitation applies generally and is not directed at particular shareholders.

Voting caps are a common feature in listed companies. Their impact extends well beyond directly held shares, as they encompass the full spectrum of votes attributable to the shareholder under Article 20 of the Portuguese Securities Code – including votes held by controlled entities, parties acting in concert, and other persons covered by the extensive attribution regime. Listed companies may also issue shares with a special plural voting right, carrying up to five votes per share.

How Voting Rights Are Exercised

The method by which votes are cast is determined by the articles of association, by resolution of the shareholders, or by direction of the chairperson of the general meeting. Permissible voting methods include, without limitation, oral voting, voting by show of hands, written voting (whether signed or by secret ballot), and voting by ballot balls.

Unless expressly prohibited by the articles of association, shareholders may cast their votes by correspondence. This mechanism permits shareholders to submit their votes in writing and send them by post or email. Through this mechanism, and within the limits permitted by law, electronic voting may be allowed. In this case, the articles of association must regulate how the vote is exercised, including how the authenticity of the vote is verified and how its confidentiality is ensured until the time of voting.

In listed companies, voting by electronic means is permitted by statute. Where votes are cast electronically, the company is required to send an electronic confirmation of receipt to the shareholder or representative who submitted the vote.

In private limited liability companies, any shareholder may require specific items to be placed on the agenda of a general meeting, regardless of their holding.

In public limited liability companies, only shareholders holding at least 5% (or 2% in the case of listed companies) may exercise this right.

Shareholders may also propose resolutions at the meeting on items included in the agenda.       

Shareholders are entitled to challenge resolutions adopted at a general meeting on grounds of either nullity (nulidade) or voidability (anulabilidade).

A resolution is deemed null and void where:

• the general meeting was not duly convened, save where all shareholders were present or validly represented;
• the resolution was adopted in writing without all shareholders entitled to vote having been afforded the opportunity to exercise that right, unless all such shareholders duly cast their votes in writing;
• the subject matter of the resolution falls outside the scope of matters that shareholders are competent to resolve; or
• the content of the resolution is contrary to public order or contravenes mandatory provisions of law.

A resolution is deemed voidable where:

• it contravenes applicable law (where nullity does not apply) or the company’s articles of association;
• the shareholders were not provided with the minimum information required by law prior to the meeting; or
• it was adopted for the abusive purpose of procuring special advantages for a shareholder or third parties, to the detriment of the company or other shareholders, or was otherwise intended to cause prejudice to them, unless the resolution would have been approved without the improper votes.

Claims of nullity or voidability must be asserted by way of legal proceedings brought against the company seeking a declaration of nullity or annulment, as applicable. Nullity may be invoked at any time, whereas an action for annulment must be commenced within 30 days of:

• the date on which the general meeting was concluded;
• the third day following the date on which minutes of a resolution adopted by written vote were dispatched; or
• the date on which the shareholder became aware of the resolution, where the matter resolved upon was not included in the notice convening the meeting.

Standing to invoke voidability is limited to shareholders who neither voted in favour of the resolution nor subsequently ratified it.       

Portuguese law does not prescribe specific mechanisms through which institutional investors or shareholder groups may directly influence or monitor the conduct of a company’s affairs. In practice, such stakeholders must rely on the exercise of general shareholder rights, including their information rights, the right to requisition the convening of general meetings, and the right to propose items for inclusion on the agenda. These rights, when exercised strategically, provide meaningful avenues for shareholder engagement and oversight, as further discussed in 11.3 Shareholder Activist Strategies.

Under Portuguese corporate law, the registered holder of shares is deemed to be the legal owner thereof and is entitled to exercise all rights attaching to such shares, including voting rights and rights to receive information. Where a beneficial owner holds shares through a nominee, the relationship must be governed by a private contractual arrangement, which operates solely inter partes and is not enforceable against the company itself. Accordingly, the company is entitled to treat the nominee as the shareholder of record for all purposes.

Shareholders of any company form may adopt resolutions by unanimous written consent without convening a physical meeting. This mechanism permits shareholders to take decisions by circulating written proposals and obtaining the written consent of all shareholders entitled to vote on the matter. In the case of sole shareholder companies, the sole shareholder exercises the powers of the general meeting, and any decisions equivalent to meeting resolutions must be recorded in minutes duly signed by that shareholder.

Beyond these scenarios, the PCC does not provide for a majority-based written resolution procedure; any resolution lacking unanimous shareholder consent must be adopted at a duly convened meeting.

Portuguese law generally grants existing shareholders statutory pre-emption rights in connection with capital increases made by way of cash contribution. Shareholders are generally entitled to subscribe for new shares in proportion to their existing shareholdings and with preference over non-shareholders. The statutory pre-emption right may be limited or excluded in relation to a specific capital increase where justified by the interests of the company. Any such limitation or exclusion must be approved by the general meeting in a separate resolution and by the majority required for the capital increase. Where proposed by the board, a written report must set out the reasons, the proposed allocation of new shares and the criteria for the issue price.

In order to exercise their rights, shareholders are given prior notice of the terms of the capital increase.

• In private limited liability companies, the right must be exercised by the date of the general meeting approving the capital increase, and shareholders must be informed of the proposed terms in the notice convening the meeting or by communication from the directors at least ten days before the meeting.
• In public limited liability companies, the right must be exercised within 15 days from publication of the relevant notice or, where notice is given by registered letter, within 21 days from its dispatch.

These statutory pre-emption rights do not generally extend to capital increases made by contributions in kind.

In private limited liability companies, a quota transfer inter vivos must be made in writing and, as a general rule, does not take effect vis-à-vis the company without its consent. Exceptions include certain transfers between shareholders, spouses, ascendants and descendants. The articles may provide that the company’s consent is not required, generally or in specified circumstances, and may regulate transfer conditions, including a pre-emption right in favour of other shareholders, provided that this does not constitute an additional requirement for the transfer’s effectiveness vis-à-vis the company. A transfer becomes effective against the company upon notification to, or recognition by, the company and is subject to commercial registration.

Shares in a public limited liability company are generally freely transferable. However, the articles of association may, within the limits permitted by law:

• condition transfers to the company’s consent;
• grant other shareholders a pre-emption right; or
• make a transfer subject to specified subjective or objective requirements consistent with the company’s interests.

Where a company’s consent is required, specific statutory procedures apply to its request and refusal, including, where applicable, the acquisition of the shares by the company or their mandatory redemption. Transfer restrictions must be included in the articles and transcribed on the share certificates or recorded in the relevant securities accounts to be enforceable against third parties. Transfers of shares are not subject to commercial registration.

Foreign nationality or residence does not generally restrict transfers or acquisitions. However, sector-specific requirements may apply to changes of control or qualifying holdings in regulated entities, and to acquisitions of certain strategic assets by persons or entities outside the EU/EEA.

Shareholders may generally grant security over their shares by way of pledge. The creation of a pledge is subject to the applicable statutory formalities and to any further restrictions contained in the articles of association:

• Quotas of private limited liability companies may be pledged, subject to the formalities and restrictions applicable to their transfer. In particular, restrictions contained in the articles of association, including requirements for company consent or other conditions applicable to transfers, may affect the creation and enforcement of security over the quota. The pledge is subject to registration with the Commercial Registry.
• Shares of public limited liability companies may likewise be pledged, subject to any restrictions applicable under the articles of association. For shares held in book-entry form, the pledge is created and made effective against third parties through the relevant entry in the securities account. Where shares are represented by certificates, the applicable endorsement, delivery and issuer registration formalities must be complied with.

A pledge does not transfer ownership of the underlying quotas or shares to the secured creditor and, unless otherwise agreed, the rights attached to pledged quotas or shares, including voting and economic rights, remain with the shareholder. Enforcement of security remains subject to the transfer restrictions outlined above.

Disclosure requirements depend on the company form and the applicable statutory or regulatory regime:

• In private limited liability companies, the identity of shareholders and their quotas is registered with the Commercial Registry. Transfers and other changes in the shareholding structure are also subject to registration.
• In unlisted public limited liability companies, this information is instead maintained in the company’s share records or, where applicable, securities accounts. Members of the respective management and supervisory bodies are subject to specific disclosure obligations towards the company concerning holdings in the company and companies in a controlling or group relationship. These cover acquisitions, disposals and encumbrances and may extend to holdings of spouses, children under 18 and certain related entities.

All Portuguese companies are currently required to maintain up-to-date information on their ultimate beneficial owners. Beneficial ownership may arise through direct or indirect ownership or other means of control; ownership of more than 25% of the capital or voting rights is an important, but not conclusive, indicator. Shareholders and other relevant persons must provide the required information to the company and notify any changes within the applicable statutory period. Based on this information, the company is required to submit (or update, as applicable) a declaration of its beneficial owners to the Central Register of Beneficial Owners (Registo Central do Beneficiário Efetivo – RCBE), which is generally publicly accessible.

Listed companies are subject to additional disclosure requirements: shareholders must notify the issuer and the Securities Market Commission (Comissão do Mercado de Valores Mobiliários – CMVM) when their voting rights reach, exceed or fall below 5%, 10%, 15%, 20%, 25%, one third, 50%, two thirds or 90%. Notification must be made as soon as possible and within four trading days. These rules also cover attributed voting rights and certain financial instruments and acquisition rights.

Outside these regimes, an unlisted SA has no general statutory obligation to require disclosure of shareholders’ interests, although its articles or shareholders’ agreements may impose additional disclosure obligations.

Shares may be cancelled after issue in several circumstances, including through redemption accompanied by a reduction of capital or, more generally, through a capital reduction involving the cancellation of shares.

The articles of association may provide for compulsory redemption without the holder’s consent upon specifically defined events or merely permit redemption subject to a resolution of the general meeting and holder’s consent. Redemption accompanied by a reduction of capital extinguishes the relevant shares when the reduction becomes effective and is subject to the applicable capital reduction requirements.

Shares may also be cancelled following their acquisition by the company as treasury shares, where the company subsequently resolves to cancel them through a capital reduction.

Redemption does not necessarily entail a reduction of share capital; where there is no reduction, the shares of the other shareholders are proportionately increased.

Private limited liability companies may acquire their own fully paid-up quotas only in specific circumstances, including acquisitions free of charge, in enforcement proceedings against a shareholder, or where the company has freely distributable reserves of at least twice the consideration payable. There is no ceiling, but the statutory grounds for acquisition are more limited than for an SA. Rights attached to own quotas are suspended while held by the company.

A public limited liability company may acquire its own fully paid-up shares, subject to statutory restrictions. As a general rule, prior authorisation by the general meeting is required, specifying the maximum number of shares, the duration of the authorisation (not exceeding 18 months) and, for onerous acquisitions, the minimum and maximum consideration. The company must also have sufficient freely distributable assets to satisfy the applicable capital-maintenance requirements, including assets of at least twice the consideration payable. As a general rule, an SA may not acquire and hold own shares representing more than 10% of its share capital, although statutory exceptions apply. While held by the company, own shares generally carry no voting, dividend or other participation rights.

In listed companies, acquisitions by listed issuers are additionally subject to the Market Abuse Regulation (MAR). Buyback programmes may benefit from the MAR safe harbour where their sole purpose is capital reduction, meeting obligations arising from exchangeable debt instruments, or meeting obligations under employee or management share-option or allocation programmes, and where the applicable disclosure, reporting, price and volume requirements are satisfied. Transactions outside the safe harbour are not necessarily unlawful but remain subject to the general market-abuse rules.

Dividends are typically paid following approval of the company’s annual accounts and a resolution on the allocation of the relevant profits, although there are no prescribed periods during the year for declaring or paying dividends.

As a general rule, at least 50% of the distributable yearly profit must be distributed to shareholders, unless the articles of association or a qualified majority resolution provides otherwise. The right to receive the dividend generally becomes due 30 days after the distribution resolution. In exceptional circumstances, payment may be deferred under the applicable statutory rules.

Distributions are subject to mandatory capital-maintenance requirements. Profits needed to cover carried-forward losses or to constitute or replenish statutory or articles-based reserves may not be distributed. A distribution is also prohibited where it would reduce the company’s net assets below share capital plus unavailable reserves. Companies must generally allocate at least 5% of annual profits to the legal reserve until the applicable statutory threshold is reached.

Public limited liability companies may also distribute interim dividends during the financial year, if authorised in the articles of association. Such distribution may be made only once and during the second half of the financial year, subject to the applicable statutory requirements.

In private limited liability companies, directors (gerentes) are designated in the articles of association or appointed by shareholders’ resolution. Shareholders may generally remove directors at any time, although the articles may require a qualified majority or other conditions. Removal may be approved by simple majority, and any shareholder may seek judicial removal for just cause, subject to specific rules applicable to two-member companies and directors holding special contractual management rights. Removal without just cause may give rise to compensation.

In public limited liability companies, the appointment of directors depends on the governance model. In one-tier models, directors are generally elected by the general meeting, whereas in the dualistic model executive directors are appointed by the general and supervisory board, unless the articles provide otherwise. Directors may also be designated in the articles of association. They are appointed for up to four years and may be re-elected. The general meeting may generally remove directors at any time, with or without cause. However, directors elected under the minority-representation mechanism have specific protection: removal without just cause may be ineffective where shareholders representing at least 20% of the share capital oppose it. Shareholders representing at least 10% of the share capital may also apply to the court for removal for just cause, including serious breach of duties or incapacity. Appointment and removal must be registered with the Commercial Registry.

Shareholders may challenge board resolutions affected by grounds of nullity or voidability. A resolution may be null and void where, among other grounds, the board was not duly convened, the subject matter was not, by its nature, subject to a board resolution, or its content infringed mandatory provisions of law. Resolutions may be annulled where they infringe other legal or constitutional provisions. Any shareholder with voting rights may request the board or the general meeting to declare a resolution null and void or annul it, subject to the applicable statutory time limits. The general meeting may ratify an annullable resolution or replace a null and void resolution with its own resolution, provided the matter does not fall within the board’s exclusive powers.

The regime for challenging management decisions in public and private limited liability companies is relatively similar. However, in private limited liability companies, shareholders competences are broader and may include typical management matters, giving shareholders greater powers to direct the company’s affairs, as directors must comply with valid shareholder resolutions falling within shareholders’ competence. In public limited liability companies, the board is subject to shareholder resolutions concerning management matters only where provided for by law or the articles of association. It should be noted that in groups formed by total domination, the dominant company may, in certain circumstances, issue binding instructions to the dependent company.

Private limited liability companies are only required to appoint a supervisory board (or alternatively, a statutory auditor) where, for two consecutive financial years, the company has exceeded two of the three applicable statutory thresholds relating to balance-sheet total, turnover and average number of employees. The statutory auditor is appointed by the shareholders, who may also procure removal in accordance with the statutory requirements, including the requirement for just cause.

In public limited liability companies, shareholders have powers over the appointment and removal of the statutory auditor (revisor oficial de contas) or audit firm, although the allocation of powers depends on the governance structure. Under the traditional governance model, the statutory auditor is appointed and removed by the general meeting. Under the dualistic and Anglo-Saxon governance models, the general meeting makes the appointment following a proposal from the general and supervisory board or the audit committee, respectively. The general meeting may only remove the statutory auditor before the end of its term for just cause and in accordance with the applicable procedure. Shareholders may therefore procure the removal through the general meeting where the relevant statutory requirements are met.

In both types of company, appointment and removal of the statutory auditor or audit firm remain subject to professional eligibility, independence and incompatibility requirements.

The management body must prepare the annual accounts, management report and other documents required by law for submission to the relevant corporate body. The management report must provide a clear and faithful account of the company’s business development, performance and financial position, and describe its principal risks and uncertainties. This does not, in itself, entail a general obligation for private or unlisted companies to prepare a separate corporate governance report.

Listed companies are subject to additional corporate governance reporting requirements. Their annual reporting must include a detailed corporate governance report covering, among other things, governance structure and practices, corporate body composition and functioning, appointment and replacement of directors, internal control and risk-management arrangements, and the corporate governance code adopted and any departures from its recommendations. This report is made available to shareholders and the market. The Portuguese Institute of Corporate Governance (Instituto Português de Corporate Governance – IPCG) Corporate Governance Code 2018, revised in 2023, is the principal corporate governance code used by Portuguese listed companies. The Code is voluntary and operates on a comply-or-explain basis.

Portuguese law does not impose a general fiduciary duty on a controlling company towards the shareholders of a controlled company merely by reason of control. The controlled company remains a separate legal person, and ordinary control does not, in itself, make the controlling company liable for its debts or for losses suffered by minority shareholders. Liability may arise where a controlling shareholder uses its influence to procure conduct by a director that gives rise to liability towards the company or its shareholders. Separate rules also apply where a company becomes wholly owned by a single shareholder.

More extensive consequences apply to groups formed by total domination or by a subordination agreement. In both cases, the directing company may issue binding instructions to the management of the controlled company, including, subject to statutory limits, instructions that may be detrimental to the controlled company but serve the interests of the group. The directing company also assumes specific statutory responsibilities, including liability for the controlled company’s obligations and an obligation to compensate certain losses. Minority shareholders in a subordinated company benefit from additional protections, including exit rights and, subject to the applicable conditions, a minimum-profit guarantee.

Under the general corporate regime, a qualifying 90% shareholding may trigger the statutory regime for acquisition tending towards total control, subject to the applicable conditions. For listed companies, following a general takeover bid, a shareholder that reaches or exceeds both 90% of the voting rights corresponding to the share capital and 90% of the share capital may, within three months of the results of the offer being determined, compulsorily acquire the remaining shares for cash consideration, subject to the applicable statutory requirements.

Once insolvency is declared, creditors become the central focus and shareholders’ practical influence is significantly reduced.

Although the company’s corporate bodies formally remain in place, effective control shifts to the insolvency administrator, who has exclusive standing to bring and pursue, on behalf of the debtor, liability claims against the company’s founders, de jure and de facto directors, members of its supervisory body and shareholders, as well as to pursue claims against those legally liable for the insolvent company’s debts.

An insolvency plan may provide for far-reaching corporate measures, including capital reductions (potentially to zero), capital increases by creditors or third parties, amendments to the articles of association, changes to corporate bodies, corporate transformations and, in certain circumstances, the exclusion of shareholders. The court judgment approving the insolvency plan may replace corporate resolutions otherwise required.

Shareholders are subordinated to creditors in the economic hierarchy of insolvency. They will only participate in any residual distribution once all insolvency creditors have been satisfied. Following liquidation and extinction, former shareholders remain liable for unsatisfied company debts up to the amount they received in the final distribution.

Portuguese law provides shareholders with several remedies against the company, and mechanisms for protecting their corporate rights. A central remedy is the ability to challenge shareholders’ resolutions that are contrary to mandatory law or the articles of association, through actions seeking their nullity or annulment, depending on the nature of the defect. This allows shareholders to challenge decisions affecting their rights or the proper functioning of the company.

Shareholders also benefit from inspection and information rights. Where information is unlawfully withheld, or appears false, incomplete or misleading, shareholders may seek a judicial inquiry into the company’s affairs, which may lead to disclosure orders or other court-directed measures.

As outlined in 2. Shareholders’ Meetings and Resolutions, shareholders may also, subject to statutory thresholds, require the convening of a general meeting or request the inclusion of additional matters on its agenda. In public limited liability companies, and particularly in listed companies, the exercise of certain information and participatory rights is subject to minimum shareholding thresholds ranging from 1% to 10%.

Directors owe duties of care and loyalty and are jointly and severally liable towards the company for any damage caused by acts or omissions in breach of those duties, unless they can prove that they acted without fault. Liability is further excluded (i) under the statutory business judgment rule where the director demonstrates that they acted on an informed basis, free from any personal interest and according to criteria of business rationality, and (ii) the relevant act or omission was based on a shareholders’ resolution, even if that resolution is voidable.

The primary remedy is the corporate liability action brought by the company itself. Its commencement depends on a shareholders’ resolution adopted by simple majority and the action must generally be brought within six months of that resolution. Where the company does not exercise its right to compensation, qualifying shareholders may bring a derivative action on its behalf, as further detailed in 10.3 Derivative Actions. In addition, shareholders may bring individual claims for losses suffered directly as a result of unlawful conduct by directors.

The articles of association cannot validly exclude or limit directors’ liability in breach of the statutory regime.

The ação social ut singuli is the principal Portuguese mechanism through which shareholders may pursue, on behalf of the company, a claim against directors for damage caused to the company. One or more shareholders holding at least 5% (or, in listed companies, 2%) of the share capital may bring the action.

The right being enforced belongs to the company rather than to the shareholder personally, and any compensation awarded therefore accrues to the company. The action is independent of any claim that the shareholder may have for damage suffered directly in its own capacity.

The mechanism is subsidiary: it is available where the company has not pursued the claim or fails to act within the applicable period. The defendant may argue that the action does not serve the interests protected by law and request a preliminary ruling or that the shareholder provides security.

This mechanism is particularly relevant where the alleged wrongdoing involves those controlling the company’s decision-making process, although the Supreme Court of Justice (Supremo Tribunal de Justiça – STJ) has emphasised that the action’s function is not limited to minority protection – it should be viewed as a defender of the corporate interest (interesse social).

Shareholder activism in Portugal is mainly governed by the Commercial Companies Code (Código das Sociedades Comerciais – CSC) and by the Securities Code (Código dos Valores Mobiliários – CVM).

Shareholders of public limited liability companies holding at least 5% of share capital (2% for listed companies) may require the convening of a general meeting and the inclusion of agenda items. Shareholders may also submit draft resolutions and vote by correspondence or proxy. In listed companies, participation and voting rights are determined by a record date (the fifth trading day before the meeting) and blocking of shares is not required.

The transposition of the EU Shareholder Rights Directives led to the setting of additional rules designed to facilitate shareholder engagement in Portuguese listed companies. These must submit remuneration policies to binding shareholder votes at least every four years (“say-on-pay”) and publicly disclose them while in force. The law also establishes shareholder identification mechanisms, allowing issuers to obtain information on shareholder identity and holdings through the centralised securities system. Further, institutional investors and asset managers must disclose engagement policies covering voting behaviour and proxy adviser use.

The objectives pursued by activist shareholders in Portugal generally fall into three broad categories:

• The first is economic performance and value creation. Activists may seek to influence corporate strategy, optimise capital structures, promote changes to dividend or capital-return policies, or encourage strategic transactions such as mergers, spin-offs, asset disposals or other forms of corporate restructuring.
• The second concerns corporate governance. Shareholders may advocate changes to board composition, greater independence of directors, improved oversight mechanisms or remuneration structures more closely aligned with long-term performance and shareholder interests.
• The third relates to transparency and accountability. Activists may seek enhanced disclosure regarding significant transactions, related-party dealings, sustainability matters or governance practices, as well as more meaningful engagement between the board and the shareholder base.

In companies with concentrated ownership, activism may also rebalance the relationship between controlling and minority shareholders, with minority investors using their rights to increase scrutiny and influence particular decisions, rather than seeking control.

Activist shareholders in Portugal commonly employ a combination of strategies, often leveraging mandatory CMVM disclosure requirements and annual corporate governance reporting to identify vulnerabilities and frame their agenda:

• Stake-building – Investors may gradually acquire a sufficient shareholding to access statutory minority rights, while (where applicable) remaining mindful of disclosure obligations and mandatory takeover rules.
• General meeting engagement – General meetings are an important forum for activism. Shareholders may submit proposals, seek the inclusion of matters on the agenda, requisition meetings and engage with other investors to build support for a particular position.
• Public pressure – In listed companies, public communication, investor reports and engagement with institutional investors may also be used to increase pressure on the board or management.
• Direct board engagement – On strategic transactions (mergers, demergers, capital restructurings, asset disposals) direct board engagement is also common. This is particularly noticeable in Portugal, where concentrated ownership can make private negotiation with the board, management or a reference shareholder more effective than a public proxy campaign.
• Exercise of information and inspection rights – In unlisted companies, the exercise of statutory information and inspection rights – and, where refused, petitioning for a judicial inquiry – is the most typical activism tool, often used to expose management failures and build the evidentiary basis for liability claims.

The Portuguese capital market is relatively small and characterised by concentrated ownership, factors that have historically limited the scope for activist campaigns when compared with larger Anglo-Saxon markets. Public and confrontational activism therefore remains relatively uncommon.

Where activist engagement does occur, it is more likely to involve larger listed companies with a meaningful free float and a broader institutional investor base. The energy and financial sectors have traditionally attracted particular attention, reflecting their market relevance, institutional ownership and the strategic issues often associated with those businesses.

A broader trend has nevertheless been the increasing importance of shareholder engagement on governance and remuneration matters. The revised Shareholder Rights Directive strengthened the framework for shareholder participation, though concentrated ownership continues to limit the effectiveness of traditional activist strategies.

In Portuguese listed companies, the most active shareholder groups are typically foreign institutional investors – investment funds, asset managers and, to a lesser extent, hedge funds – which hold the bulk of the free float in several stock market (PSI) constituents. Domestic pension funds and insurers have also become more vocal, although their participation tends to be less visible. The influence of any activist investor must, however, be considered against concentrated ownership: many listed companies have reference shareholders capable of significantly influencing shareholder votes, making hostile campaigns or proxy contests difficult to pursue successfully.

In unlisted companies, activism is more frequently associated with minority shareholders seeking to protect their economic or governance interests. Engagement in that context tends to rely less on public campaigns and more on negotiation, contractual rights and the statutory remedies available under Portuguese corporate law.

The low number of public activism campaigns and the absence of systematic tracking databases make quantitative analysis of public activism difficult. Concentrated ownership on Euronext Lisbon means most disputes are resolved privately. When disputes arise, they are typically resolved through private negotiation with reference shareholders rather than through contested votes.

In listed companies, the say-on-pay vote provides the most visible formal channel through which institutional shareholders can express dissent on remuneration policy, but even here outright rejections are rare. In unlisted companies, activism more often takes a judicial path – through the annulment of resolutions or the institution of judicial inquiry proceedings – where outcomes depend on court decisions rather than negotiated settlements.

Portuguese companies may resort to both preventative and reactive tools to respond to activist shareholders.

Preventatively, companies can adopt governance best practices – appointing independent directors, establishing specialised board committees, and maintaining transparent market communication – to reduce the likelihood of shareholder discontent. An attractive dividend and capital-return policy helps align management and shareholder interests. Monitoring the shareholding structure through the CMVM qualified holdings register and the shareholder identification mechanism, allows the boards of companies to anticipate stake-building by potential activists. Maintaining structured dialogue with significant shareholders is increasingly viewed as a key preventative measure.

Mandatory governance reporting and whistle-blowing channels indirectly support activist risk management by promoting transparency and constructive engagement.

When faced with an activist campaign, the most common response is to engage directly with the activist and other key shareholders to seek a negotiated resolution. Where activism takes a judicial form – such as an ut singuli action – the company may challenge the plaintiff’s procedural standing or argue that the claim does not serve the corporate interest.

Given concentrated ownership, securing the support of the reference shareholder(s) typically determines the outcome of any contested situation. Overall, Portuguese companies favour proactive engagement over adversarial defence strategies.