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Close a Company in Portugal

Close a Company in Portugal

Updated on Wednesday 09th June 2021

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Business-Restructuring-in-Portugal.jpgThe dissolution of a company in Portugal may be the consequence of a situation of law or fact and might be the expression of the will of the shareholders (if voluntary dissolution), or individuals, institutions, and other external factors or circumstances, in case of compulsory liquidation. In any case, if you need legal guidance and support for company liquidation, you can get in touch with our team of lawyers in Portugal and find out more in this matter.

 

What is a voluntary company liquidation in Portugal?

 
In the case of voluntary liquidation of a company in Portugal, after the satisfaction of liabilities in the firm in front of creditors, the company’s associates may reach an agreement on the allocation of the remained assets. The following matters are connected to the voluntary company liquidation:
 
  1. If the partners do not reach an agreement, the liquidation procedure is carried out as required by law for such situations, by appointing a liquidator.
  2. If the company is found in obvious insolvency or impending insolvency, cessation of the legal entity will be the procedure which is called bankruptcy.
  3. The dissolution of a company is represented by a change in the legal situation which is characterized by its entry into liquidation.
  4. The legal personality of the company is kept up to the closure of the liquidation.
 
The entire procedure needs to be supervised by a team of experienced lawyers in Portugal, so you are suggested to talk to one of our advisors.
In case you need other types of services, such as advice for immigrating to Portugal, we can put you in contact with our partners - Immigrate-Portugal.com.
 

What are the steps for company dissolution in Portugal?

 
The first phase of dissolution of the firm is making the deed before a notary public, required only in cases where there are real estate properties. In other situations, the deed is waived and only a record of the general assembly with the decision of dissolving the company is required. This document certifies the approval by a qualified majority of the company shareholders to close the business. The company goes into liquidation so the deed of dissolution is performed. Within 15 days, the entrepreneurs must make the changes in the Directorate General for Taxation (DGCI) and, within ten days following, the partners must report the changes to the Social Security Office.
 
The entrepreneurs still have a period of two months to accomplish the Commercial Register Dissolution, with a settlement period of two years extendable for another one, by the members’ decision. In the end, a report will be prepared and must contain the completion of the liquidation and the approval of the accounts. The sharing of property requires a deed and its registration must be performed at the Land Registry.
 
At this point, it is necessary to go to the Commercial Register to notify on the closure of the company and for this, you will need a minute of approval of accounts. Then the partners will declare the closure before the DGCI and before the Social Security Office.
 

The bankruptcy process in Portugal

 
The first phase of the bankruptcy process is to assess the economic situation of the company. On one hand, this can be found insolvent when it becomes unable to fulfill some of its obligations due to lack of financial resources and access to credit, or when the assets are insufficient to meet the liabilities. On the other hand, the company can only have financial difficulties preventing it from fulfilling its obligations. Bankruptcy proceedings may be required by the company 60 days after failing to comply with at least one relevant obligation, a situation which leads to declaring the company unable to resolve the majority of its duties. Besides this, the creditor can also initiate the process of the bankruptcy of a company found in a situation of economic inability to solve its financial problems, in case it is unable to pay the debts. The Public Authority may also file the bankruptcy of the company.
 
It is necessary to make a written submission for starting the insolvency proceeding. The following phase is represented by summoning the parties who have instituted the insolvency proceedings before the court. Once the court issued a decision in this sense, a liquidator is appointed to carry out the liquidation procedure. Once declared the bankruptcy, the liquidator may carry out the liquidation of the assets within six months.
 

The difference between liquidation and dissolution

 
The company dissolution is the last step involved in closing a company in Portugal. In case of company liquidation, the company’s assets are collected and distributed by an appointed liquidator, for the following steps to take place (closing the company). Some companies might need the sale of assets to pay the creditors before the dissolution takes place. 
 

How do I close an LDA in Portugal?

 
LDA is the limited liability company in Portugal and often the ideal choice of business for many entrepreneurs from abroad. However, in case of company dissolution, a limited liability company offers protection of assets for the owners involved. The winding-up phase is the first stage in LDA dissolution and this involves paying all debts, announcing the creditors, transferring properties, etc. It is extremely important in this stage to pay attention to the creditors before anything else. Also, the LDA membership interests are frequently founded on the contributions made by the company member. For instance, if an LLC member paid 40% of the total cash and property to the LLC, the member is entitled to 40% of the LDA assets. A possible issue that might arise during the dissolution procedure of an LDA in Portugal is that the business' creditors must be compensated first before the division of assets is made to company members. In terms of accounting, the support of a specialist is needed, as he or she can verify the company bank accounts before the assets' distribution takes place. In most cases, an LDA has an operating agreement comprising the general rules of the firm, including the ones referring to the distribution of liquid or physical assets in case of company liquidation. The agreement can also mention the sale of all assets before the company in Portugal closes. All the legal requirements for closing a company in Portugal can be explained by our attorneys in Portugal. The same team can provide legal support for foreign investors who want to start a business in Portugal
 

How long does it take to close a company in Portugal?

 
The period for closing a company in Portugal will depend on the winding-up process and the steps involved if there are debts to be paid, staff to dismiss, etc. Normally, it takes approximately 3 months for the whole process of liquidation to conclude, nevertheless, the company in Portugal is officially closed when the announcement is made in the Official Gazette in Portugal. 
 

Why start a business in Portugal

 
The business opportunities in Portugal are huge, especially when it comes to making investments in tourism, agriculture, or the real estate sector. Foreign entrepreneurs have the possibility of joining the Golden Visa Programme in Portugal, meaning that they can invest EUR 350,000 in real estate properties to obtain the permanent residence and eventually, after a few years, the Portuguese citizenship. The investment field in Portugal rose in a large percent in recent years, soon after the economic crisis was over. Below you may find interesting information about the business and the investments in Portugal:
 
  • •    the financial and insurance services received 27% of the total investment stock in 2018;
  • •    the total FDI for 2018 in Portugal was approximately EUR 143.6 billion;
  • •    the Netherlands was the main investor in Portugal in 2018, more than 23% of investments being directed here;
  • •    through the Golden Visa Programme, investors can obtain naturalization after 6 years in Portugal;
  • •    the country ranks 34th out of 190 countries in terms of business and economy, as stated by the 2019 Doing Business report;
  • •    numerous investors are attracted by the research and development sector in Portugal which is highly sustained by the government.
 
The easy way of opening a company in Portugal, due to the lack of complexity in terms of documents and formalities, makes international entrepreneurs choose this country for investments. 
 
 
No matter if you are interested in starting a business in Portugal or in company dissolution procedure, for which extra support and legal advice are needed, you may contact our lawyers in Portugal and send your inquiries.