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Decree Law No. 262/86, of 1986-09-02

Consolidated

Publication: Republic Diary No. {0}, Series {1} of {2}
  • Issuer: Consolidated Legislation
  • Diploma Type: Decree Law
  • Number: 262/86

Summary in plain english

What is it?

This decree-law creates the Commercial Companies Code.

The commercial companies are those incorporated by one or more individuals for the practice of trade actions (purchase and sale, for instance).

How is a commercial company incorporated?

Through the articles of association. The articles are entered between one or more individuals and must be in written.

The articles must include, namely:

    • The type of company (for example, joint-stock company);
    • The address of the company;
    • The share capital;
    • The name of the shareholders.

After being entered, the articles of association are registered at the commercial registry office.

The articles of association may be amended, at any time, by the will of the shareholders. Such amendment must always be carried out in written.

Share capital of the company

It is the total of the amounts which each shareholder offers as their entry into the company. This amount must be established in the articles of association.

It is according to the share capital that the following are determined:

    • The company’s economic situation (if it was profitable or not in a certain period);
    • The shareholders’ rights and obligations and their power within the company (the greater the shareholder’s participation on the company, the greater their number of votes, for instance).

The share capital is a stable value, which, as a rule, may not be altered by the shareholders.That is, it cannot be distributed through the shareholders as profit and it is necessary for the share capital’s amount to remain intact.

Therefore, the creditors’ guarantees are safeguarded.

The share capital may be increased or reduced, by will of the shareholders, in a general meeting.

Types of companies

Several types of commercial companies may be incorporated, namely:

    • Limited companies;
    • Joint-stock companies;
    • Single-member companies.
Obligations of the shareholders
    • Participate in the company with a monetary amount (admission value). This amount is established in the articles of association.
    • Participate in the company’s losses.
Rights of the shareholders
    • Participate on the company’s profit distribution;
    • Be informed on the company’s life;
    • Participate on the decisions made by the shareholders;
    • Be chosen for the company’s governing and supervisory bodies.
Quotas and shares

Upon the company’s incorporation, each shareholder is entitled to a quota, which corresponds to their admission value on the company. The quota may be transferred at any moment and, if the articles of association allow, it may also be transferred due to a death.

In the joint-stock companies and in the limited partnerships, the share capital is divided into shares. The power and liability of each shareholder correspond to the number of shares held.

How is a commercial company organized and operated?

The commercial companies comprise the following governing bodies:

    • General meeting - body in which the shareholders express their will, making decisions, through a vote, on the company’s life;
    • Management - body which manages and represents the company. It may comprise one or more individuals. The managers are assigned in the articles of association;
    • Audit Committee or Certified Public Accountant - body which supervises the commercial company’s activity.
Deliberations of the shareholders

The shareholders meet in a general meeting in order to deliberate, for instance, on the assignment of members for the company’s bodies, on the exclusion of shareholders and on the acquisition of shares.

The meeting is called by the managers, through a registered letter, and the decisions are made through the shareholder’s vote (who may make decisions through a written vote).

Merge and Demerge of companies

Two or more commercial companies may be, at any time, merged into one. This is called merge of companies. It may be carried out in two ways:

    • The companies are terminated, originating a new company; or
    • One of the companies incorporates the others, which is meanwhile terminated.

A commercial company may also be divided, originating a new company. This is called demerge of companies. It may be carried out in two ways:

    • The company withdraws a part of its assets (machinery, for instance) and, with it, incorporates a new company; or
    • The company is terminated and divides its assets, which originate new companies.
Termination of the commercial company

The commercial company may be terminated upon deliberation of the shareholders, due to the end of a certain period or through its declaration of bankruptcy, for instance.

The company then goes into liquidation.

The liquidation consists of a set of acts which must be practiced (conclusion of the pending businesses, payment of debts and collection from debtors, for instance), aiming to dissolve the company.

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