Lda. vs. S.A. vs. Sucursal: Pick your Poison
Understand the pros, cons, and legal implications of Portugal’s main business structures before you launch.
When setting up a business in Portugal, choosing the right structure is crucial. The most common options are Sociedade por Quotas (Lda.), Sociedade Anónima (S.A.), or a Sucursal (Branch of a Foreign Company). Each has its advantages and obligations:
Lda. (Limitada – Private Limited Company)
✔ Shareholders: Minimum of 1 (Unipessoal Lda.) or 2 (regular Lda.), with quotas instead of shares
✔ Minimum Capital: No fixed minimum (can be as low as €1 per quota)
✔ Liability: Limited to each shareholder’s quota investment
✔ Governance: No board of directors required; can be managed by one or more directors
✔ Flexibility: More straightforward structure, fewer formalities, and lower administrative costs
✔ Statutory Auditor: Required if two of the following are exceeded for two consecutive years: total assets of €1.5M, revenue of €3M, or 50 employees
✔ Profit Distribution: At least 50% of distributable profits must be distributed unless otherwise agreed
✔ Transfer of Shares: Sale of quotas to third parties requires company approval (typically unanimous) unless bylaws state otherwise
S.A. (Sociedade Anónima – Public Limited Company)
✔ Shareholders: Minimum of 5 (unless single-shareholder S.A.)
✔ Minimum Capital: €50,000, divided into shares
✔ Liability: Limited to the value of shares subscribed
✔ Governance: Requires a board of directors and an audit committee (or sole director if capital is below €200,000)
✔ Capital Markets: Can issue shares and be listed on the stock exchange
✔ Statutory Auditor: Mandatory regardless of size
✔ Profit Distribution: No mandatory minimum, subject to shareholder approval
✔ Transfer of Shares: Freely transferable unless restricted by bylaws
Sucursal (Branch of a Foreign Company)
✔ Legal Entity: Not a separate legal entity—operates as an extension of the foreign parent company
✔ Minimum Capital: No minimum capital required
✔ Liability: Foreign parent company is fully liable for the branch’s debts
✔ Governance: Must appoint a legal representative in Portugal
✔ Statutory Auditor: Required if the branch meets the same financial thresholds as an Lda.
✔ Taxation: Taxed in Portugal only on income from Portuguese activities
✔ Flexibility: Easier to set up than an Lda. or S.A., but lacks independent legal status
Key Takeaways
• Lda.: Ideal for SMEs seeking flexibility and simpler administration, but with default profit distribution and restricted share transfers unless modified.
• S.A.: Best for larger businesses needing capital from multiple investors, with stricter governance but greater fundraising potential and more flexible share transfers.
• Sucursal: Perfect for foreign companies wanting a local presence in Portugal without a separate legal entity, but the parent company assumes full liability.
Choosing the right structure depends on your business goals, funding needs, and liability considerations.
