The reasons for transferring ownership or control of a business vary. They may be personal reasons (new projects, retirement, exhaustion) or difficulties with managing the business (financial situation, production processes, markets). In both cases, transferring all or some of the shares can form an alternative to ceasing trading (seller) or starting up a business (purchaser). Business operators wanting to transfer their shares will benefit from doing so at a time when the business is still in a good financial position.
The Companies Code and the Civil Code deal with various issues relating to the transfer of business ownership.
Types of business transfer
In a Partnership (Sociedade em Nome Colectivo), if a partner dies and unless the partnership agreement stipulates otherwise, the heir assuming the rights of the deceased partner must receive their respective value, unless the surviving partners opt to dissolve the partnership. The partnership can continue with the heir of the deceased partner, if he or she expressly consents to this.
In a Private Limited Company (Sociedade por Quotas), the articles of association may stipulate that, if a shareholder dies, his or her shares will not be transferred to his or her heirs, in which case the company must write them off, purchase them or arrange for them to be purchased by a shareholder or third party. However, if none of these steps is taken within 90 days of notification of the shareholder’s death, the shares will be regarded as transferred to the heirs.
In a Private Limited Company (Sociedade por Quotas), shares must be transferred between living parties by deed, except where this occurs within legal proceedings. However, the share transfer will not be binding on the company if the latter has not consented to this transfer, unless this occurs between spouses, between ascendants and descendants or between shareholders. It should also be noted that the transfer of shares between living parties is binding on the company when it is notified to the latter in writing or is expressly or tacitly recognised by the company.
Taking over an existing company is a worthwhile alternative to setting up a new business.
Administrative procedures for business transfers
The various steps involved in a business transfer (share transfer) are set out on the website of the Business Centre. As yet these centres exist in only certain municipalities in Portugal.
Decree-Law No 76-A/2006 simplified the process by eliminating the need for a deed, which is now optional. Share information only needs to be registered by the company itself with the Trade Registry.
Furthermore, the registration of share information, such as a share transfer, now simply involves filing the information, which is not checked by the registrar (who does not have to check that the information is correct).
As a result, it is the company itself that is responsible for checking that the share information is correct, that the respective ownership is legal, and whether any prejudice has been caused to holders of rights over the shares or third parties.
An extract from the Trade Register can be requested on-line via the On-Line Company services page of the Business Gateway, but only in the case of companies set up in this way.
A qualified digital certificate is required to access this service. Currently, lawyers, notaries and citizens holding a Citizen’s Card have digital certificates integrated within their respective professional certificates or the new identity document.
After the share transfer request has been registered, the respective fees must be paid, with the Multibanco reference being used for payment. Requests submitted on-line must be paid for within 48 hours calculated consecutively in working days, after which unpaid requests will be removed from the system.
For information on how to make changes to shares over the Internet, you can consult the ‘Manual of Procedures for Registering Changes to Shares and Shareholders’.