€1 Company Formation in Portugal
Since 2005 Portugal has been focused on increasing its competitive presence. The implementation of this so-called “technological plan” has consisted of the modernization of national laws, the improvement of eﬃciency in the public sector by the reducing of bureaucracy and the optimization of resource allocation. In this context a new model of company set-up has been created: the On the Spot Firm, nationally known as the Empresa Hora.
The ‘On the Spot Firm’ is an innovative procedure that facilitates the incorporation of a company in a quick, cheap and eﬀective way. An investor is able to set up a civil or commercial company (which in Portugal may take the form of a sole proprietorship company, a private limited company or public limited company)at any On the Spot Firm service desk, which is known as a “one-stop oﬃce”, without needing to disclose the location of the company’ intended registered oﬃce. The incorporation is eﬀective immediately and the total cost of the same, including the mandatory publications, will amount to €360 (equal to approximately AED 1625). Should the chosen principle activity of the company be related to technology or research and development, and the cost of incorporation will be reduced to €60 (approximately AED 270).
The truth is that the set-up of the On the Spot Firm is a simple and eﬀective procedure – the main qualifying requirement is that all the future partners must be present or be represented by proxy at incorporation, and must be in physical possession of their identiﬁcation and taxpayer number documents.
In order to further simplify the process, the authorities have made available both at each service desk and online pre-approved models of company statutes, which can be chosen by the shareholders when incorporating the company. The same applies to the trade name – representatives of the company may select a name from a list of pre-approved names provided both online and at the service desk, however, this will only be deﬁnitely assigned at the point of incorporation–in other words, it is not possible to reserve the name in advance. It is also noteworthy that the list of pre-approved trade names does not in any way limit the choice available, nor does it restrict the activity of the company as per its generality. If in any case, the partners wish to use a speciﬁc name, they must ﬁrst obtain prior approval – a Certiﬁcate of Eligibility – to be provided to the National Register of Companies(the RNPC). Either individuals or corporate entities can set up this type of company. Foreign legal persons are subject to the additional requirement that they submit corporate documents, including a document proving the legal existence of the entity in the country of origin, its articles of association, the board resolution or minutes of the meeting at which the incorporation of the new entity was approved, and identiﬁcation of the legal representatives of the company. It is also necessary to request in advance before the RNPC the ID number of a legal person that will make identiﬁcation of the company possible in Portugal. These documents must all be duly translated unless the originals have been prepared in the French, Spanish or English languages (where the desk employee knows the language) . Thus, nothing prevents a foreign individual or entity from incorporating a company in Portugal, with the only requirement being the possession of a tax identiﬁcation number.
Currently, and since 2011, one of the most intriguing aspects of starting a business in Portugal is the minimum share capital requirement in the event that the entity is a sole proprietorship or a private limited company. In order to boost small businesses, the Portuguese Government decided to go so far as to change the prevailing companies law in order to provide that these types of the company could be established with a minimum capital of €1 (less than AED 5) per partner instead of the€5,000 (approximately 22,500) hitherto required. This measure avoids the mandatory initial investment requirement and allows micro-enterprises to be created without the signiﬁcant capital necessitated by law – an amount which was controversial at the time of its implementation and remains so today. The main reason for this legislative amendment is stated within the preamble of the law decree: the high social capital of a company does not necessarily ensure a good ﬁnancial situation, as often such capital is fully utilized to cover initial costs. The Government also stated that creditors of the companies should focus on the turnover and sustainability of the company to determine its viability, instead of taking the capital as a guarantee of such factors.
At the time of setting up the On the Spot Firm, the share capital should already be deposited in a ﬁnancial account opened in the name of the company, or must be deposited within 5 (ﬁve) working days thereafter, as the money should be withdrawable at any time following the set-up of the company.
It is remarkable to consider that this procedure can be completed in less than an hour and that when incorporating the company the partners will be immediately given the access code to the company’s e-card and the Social Security identiﬁcation number. The registration of the company’s statutes is immediately published on the website of the Ministry of Justice, whose access is public and free. Finally, also included within the price of the incorporation is the assignment of a domain name registration taken from the company’s trade name, which is free of charge for the company's ﬁrst year.
So rather than frantically spending all of our small change at the airport on the way home from vacations in Europe in future, perhaps we could instead consider the incorporation of an On the Spot Firm?