PART 4 (CHAPTER 3) Flashcards
Number of partners in private limited companies/quota companies
a minimum of 2 (although the company can be incorporated with only 1 partner in the case of a single partner quota company)
Company name in quota companies
shall include the name or business name of one, some or all partners and shall end with “Limitada” or the abbreviation Lda
Capital and initial contributions
- No minimum capital requirements; it is freely established by the partners in
the articles of association - initial contributions consisting of services are not permitted
- partners shall only be obligated to pay additional capital contributions if stated in articles of association
- capital is divided into quotas (over 1 euro)
- quotas are nominative
- partners are jointly liable
Options for Initial Capital Contributions (money or assets put into the company at the start)
- they can be deferred (delayed) until a specific date
- they can depend on specific events happening
Time Limit for Initial Contributions
Regardless of when they are deferred, partners must make their initial capital contributions by:
- 5 years after the articles of association are signed
- 5 years after a decision to increase capital is made
- or when half of the company’s planned duration has passed, whichever comes first
Liability of partners
- liability of partners is limited to the share capital
- each partner is responsible for the full subscription of his quota, in addition, partners are also responsible for the other partners unsubscribed capital (join responsability)
- partners are not liable for the debts of the company
Other Obligations of the Partners
- Obligation to make additional contributions
- Obligation to make supplementary contributions
- Partners loan agreements
Obligation to make additional contributions
- additional contributions that partners may be required to make beyond the initial capital contributions
- can be provision of services, construction, work, a loan
Obligation to make supplementary contributions
- specific for quota companies
- contributions shall always be cash (although they will not become part of the company’s capital)
- interest will not be applied
- the AOA must provide:
> total amount of supplementary contributions
> partners who are obligated to make these contributions
> criteria to allocate these supplementary contributions among the partners obligated to make them
Partners can recover supplementary contributions only if:
- the recovery does not reduce company’s liquidity below sum of the capital and statutory reserves
- the partner has fully paid their initial quota
Partners loan agreements
contract where partner lends money/fungible thing to the company, the company is obligated to repay in the same quality and type
Types of loan agreements
Loan contracts
Deferral agreements
Loan contracts
partner lends money or fungible items to the company
Deferral agreement
a partner agrees to extend the maturity date of their existing loans to the company, provided that the loan has “permanent nature”
Permanent nature
For a loan to be considered of permanent nature the following is relevant:
- if the reimbursement period is specified to be more than one year, either at the time the loan is made or later on
- if the partner does not request reimbursement for a period of one year from the loan’s establishment date
Partner’s right to information
- managers are obligated to provide partners with truthful information on the management of the company, and make the respective accounts, books, nad documents
- the access to documents or the inspection of the company’s assets may be refused by the manager if the manager suspects that a partner is using the information for purposes other than htose of the company
Statutory Reserves
mandatory reserves that a company must maintain to ensure financial stability and cover potential losses.
Formation and requirements of statutory reserves
- a minimum of 5% of the company’s annual profits must be allocated to the statutory reserve
- the allocation continues until the reserve equals 20% of the company’s capital
- the statutory reserve must not be less than 2500 euros
Right to share in the profits of the financial year
- the company must distribute at least 50% of the annual distributable profits unless provided for in the AOA, or there is a resolution not to distribute approved by a majority representing 3/4 of the capital
- profits must be paid within 30 days from the resolution that approved distribution
Management and Supervision
- quota companies represented by one or more managers with full legal capacity
- managers are elected by a resolution adopted by the partners
- unless duration is stated in AOA, the function of the managers shall continue for as long as they do not resign or are fired
Non compete obligation
- managers are not permitted to exercise an activity which is in competition with the company
A statutory auditor must be designated if two of the following three limits are exceeded for 2 consecutive years:
- total financial statement: 1500 euros
- net sales and other profits: 3000 euros
- avergae number of employees during the financial years: 50
Partners Resolutions
partners may adopt resolutions by means of a written vote or through the general meeting
Acts that require resolutions by partners:
- Calling in and recovering supplementary contributions
- dismissal of partners/managers and members of supervisory committee
- approval of annual report and accounts for the financial year
- amendments to the articles of association
- ammortisation of quotas
Partners General Meetings
the provisions regarding the general meetings of share companies shall apply in all matters that are not specially regulated for quota companies
Convening the general meeting
- responsibility of any of the managers
- rules on partner general meetings for share companies shall apply to quota companies
- the meeting is convened by means of a registered letter, sent at least 15 days in advance
Majorities
- decisions are passed with the majority of the votes cast by the attending partners
- decisions like amendments to the AOA, transformations, mergers, or dissolutions of the company require votes corresponding to 3/4 of the share capital
Minutes
must be signed by all partners that attend the meeting
Single Partner Quota Companies
private limited companies/quota companies with only one partner
Legal limits in relation to ownership (Single Partner Quota Companies)
- one individual can only be a partner
- a private limited company cannot have as its single partner a single partner private limited company
- a breach of these rules may result in the dissolution of the company
legal framework of single partner quota company
governed by rules regulating quota companies, with the exception of those that imply a plurality of partners
Company name (Single Partner Quota Companies)
- must include “Sociedade Unipessoal” or the word “Unipessoal” and end with “Limitada”/”Lda”
Conversion into a quota company
a single partner quota company can be converted into a (plural) quota company by:
- division and transferring of a quota
- increase in the share capital by means of an initial contribution of a new partner
and removing the expression “sociedade unipessoal” or “unipessoal” in the name
Partner’s decisions (single partner private limited company)
- sole partner shall exercise the powers conferred upon general meetings, and may appoint managers
- decisions by the partner shall have the same nature as resolutions adopted at a general meeting
