Private Limited Companies: An Effective Alternative for Attracting Investment

Private limited companies are the most common corporate model in Portugal and in several European countries, such as Spain, France, Germany, Italy and the United Kingdom, although they use other names, their form, content and operation are similar (see “Lda.”, “S.L.”, “SARL”, “GmbH”, “SRL”, “Ltd.”, respectively).

In Portugal, the law configures private limited companies with a view to encouraging the SME economy.

From the outset, private limited companies are characterized by the undeniable benefit of limited liability, since shareholders are only liable to the extent of the amount deposited in the company (see article 197.º of the CSC), creating a clear split between the personal assets of the shareholder and the assets of the company, with ab initio protection of the shareholder's personal assets.

The simplified process of setting up, managing and winding up the business, which also extend to accounting and tax, and which ultimately result in lower costs, which has encouraged the usage of this type of company to attract new investors and carry out start-up projects. The company can have one or several shareholders, and the minimum legally required share value is only one euro per partner.

Sem prejuízo desta simplificação, continua a ser possível arquitetar estruturas societárias mais complexas, mediante a adaptação adequada do contrato de sociedade, acordos parassociais, acordos e contratos interempresariais, entre outros, a serem definidos conforme cada caso concreto.

Conclui-se, as sociedades por quotas mostram ser uma solução eficiente para empresas que desejam expandir e atrair capital sem perder a sua identidade, fomentando um crescimento sustentável empresarial.

Despite this simplification, it’s still possible to design complex corporate structures, via the Articles of Association, Shareholder’s Agreements, intercompany agreements and contracts, among others, which should be chosen for each specific case.

We can conclude that private limited companies prove to be an efficient solution for companies wishing to expand and attract capital without losing their identity, fostering sustainable business growth.