Shareholder Agreement in Portugal: What Founders of an Lda Should Agree

A shareholder agreement can be one of the most useful documents in a Portuguese company with two or more owners.

It can also create false confidence if the founders assume that a private agreement can replace the company articles or override Portuguese company law.

In a Portuguese Lda, three layers should be separated:

• 1. the Companies Code;
• 2. the company's articles of association;
• 3. the shareholder agreement.

The safest structure is one in which all three work together.

What is a shareholder agreement?

Portuguese company law recognises agreements between all or some shareholders, often referred to as acordos parassociais.

These are contracts between the participating shareholders.

They can regulate how those shareholders will behave in relation to the company, provided the agreed conduct is lawful.

The key point is contractual effect.

The agreement primarily binds the parties to it.

It does not become the company's constitutional document simply because all shareholders sign it.

Shareholder agreement and articles are not the same thing

The articles are the registered constitutional rules of the company.

They define matters such as:

• share capital;
• quotas;
• company object;
• management structure;
• representation;
• transfer restrictions where included;
• special shareholder rights where lawfully created.

A shareholder agreement can supplement those rules.

It should not be drafted as if the articles do not exist.

If an important right needs company-law effect, consider whether it also belongs in the articles.

What does Article 17 allow?

Article 17 of the Portuguese Companies Code recognises agreements between shareholders concerning conduct in their capacity as shareholders.

The agreements can cover voting arrangements.

But there are important limits.

A shareholder agreement cannot be used, by itself, to challenge an act of the company or an act of a shareholder toward the company.

It also cannot regulate the conduct of participants or other persons when they are exercising management or supervisory functions.

That distinction matters where a founder is both shareholder and gerente.

Voting agreements

Founders often want to agree in advance how they will vote on defined matters.

Portuguese law permits shareholder agreements concerning voting.

But not every voting promise is valid.

Article 17 expressly invalidates certain arrangements, including agreements under which a shareholder promises to:

• always follow instructions from the company or one of its bodies;
• always approve proposals made by those bodies;
• vote or abstain in exchange for special advantages.

A voting clause should therefore be designed around legitimate shareholder coordination, not control by company management.

Reserved matters

A shareholder agreement can identify decisions that the founders want to treat as especially important.

Examples can include:

• issuing new quotas;
• admitting an investor;
• borrowing above a threshold;
• buying or selling major assets;
• changing the business;
• entering related-party transactions;
• paying dividends;
• hiring or removing key executives;
• acquiring another business;
• selling the company.

The legal effect of a reserved-matters clause depends on how it interacts with the articles and mandatory company-law voting rules.

Do not assume a private contractual veto automatically changes the validity of a company resolution toward the company.

Deadlock

A 50/50 company needs a deadlock plan before the relationship breaks down.

Possible mechanisms can include:

• escalation between founders;
• mediation;
• expert determination on defined technical issues;
• buy-sell procedures;
• structured offer processes;
• negotiated exit rights.

The correct mechanism depends on the company.

An aggressive deadlock clause can itself create leverage problems if one founder has much more financial capacity than the other.

Quota transfer rules

A shareholder agreement commonly regulates what happens if a founder wants to sell.

Possible clauses include:

• notice before transfer;
• first-offer mechanism;
• first-refusal mechanism;
• tag-along;
• drag-along;
• permitted transfers;
• valuation methodology;
• payment terms.

But the agreement must be coordinated with statutory quota-transfer rules and the articles.

A contract cannot simply erase a company-consent requirement that remains applicable under company law and the articles.

Tag-along protection

A tag-along clause is normally designed to protect a minority shareholder when a controlling shareholder sells.

The minority may receive a contractual right to participate in the sale on equivalent or defined terms.

This can be commercially important where a minority position would otherwise become much less valuable after a change of control.

The clause needs clear mechanics:

• triggering percentage;
• notice;
• buyer information;
• price;
• timing;
• allocation if the buyer refuses to purchase all quotas.

Drag-along

A drag-along mechanism is intended to prevent a minority shareholder from blocking a qualifying sale of the whole company.

Because it can force an exit, drafting needs particular care.

Define:

• triggering ownership threshold;
• minimum transaction conditions;
• equality of consideration;
• warranties required from minority sellers;
• liability caps;
• payment mechanics;
• treatment of shareholder loans.

Do not use a one-line generic drag clause.

Funding obligations

Many founder disputes begin when the company needs more money.

A shareholder agreement can address:

• whether funding is equity or shareholder loan;
• whether funding is mandatory;
• what happens if one shareholder does not participate;
• whether dilution is possible;
• whether external investment is permitted;
• approval thresholds.

This should be coordinated with the statutory capital-increase and shareholder pre-emption framework.

Dividends

Founders sometimes agree a dividend policy.

But a shareholder agreement should not promise distributions that would violate company law, accounts or creditor-protection rules.

A better approach is to define a policy subject to:

• lawful distributable profits;
• liquidity;
• investment needs;
• financing obligations.

Information and reporting

Portuguese Lda shareholders already have statutory information rights.

A shareholder agreement can create a more practical reporting system, for example:

• monthly management accounts;
• annual budgets;
• cash-flow reports;
• access to defined operational data;
• board or founder meetings.

This can reduce disputes before legal information rights need to be enforced.

Founder roles

If shareholders work in the business, separate ownership from employment or management.

A shareholder can also be:

• gerente;
• employee;
• consultant;
• lender.

Each role has different legal consequences.

The shareholder agreement should not be the only document regulating employment or management duties.

Good-leaver and bad-leaver clauses

Founder agreements sometimes link departure from the business to the person's quota.

These clauses can be commercially useful.

They are also sensitive.

A clause that forces transfer of a quota at a discounted price should be reviewed carefully for:

• trigger;
• valuation;
• proportionality;
• interaction with company-law transfer rules;
• employment-law consequences;
• enforceability.

Confidentiality

A private shareholder agreement can include confidentiality obligations.

Define what is confidential and what disclosures remain permitted, for example to:

• lawyers;
• accountants;
• banks;
• investors;
• public authorities.

Do not draft confidentiality so broadly that a shareholder cannot comply with legal duties.

Non-compete clauses

Any non-compete restriction needs case-specific review.

The fact that the parties are shareholders does not make every restraint automatically enforceable.

Consider:

• duration;
• geography;
• business scope;
• legitimate company interest;
• proportionality.

If the founder is also an employee, employment-law restrictions may create another layer.

Dispute resolution

The agreement can define how contractual disputes between shareholders will be handled.

Possible choices include:

• Portuguese courts;
• arbitration;
• mediation before litigation;
• expert determination for valuation issues.

Do not choose arbitration simply because it sounds more sophisticated.

Consider cost, urgency, confidentiality and enforcement.

What the shareholder agreement cannot do

A shareholder agreement should not be treated as a private constitution above company law.

In particular:

• it does not make mandatory company law optional;
• it does not automatically change the company's articles;
• it does not automatically invalidate a company resolution toward the company;
• it cannot lawfully control management conduct in ways prohibited by Article 17;
• invalid voting commitments remain invalid.

When should founders sign?

Ideally before the business relationship becomes difficult.

Good moments include:

• company formation;
• before a new investor enters;
• before a capital increase;
• before one founder becomes full-time;
• before significant external funding;
• when ownership becomes 50/50;
• before transferring quotas.

Retrofitting a shareholder agreement after trust has disappeared is much harder.

A practical drafting checklist

1. Map ownership

Current quotas and intended economic split.

2. Read the articles

Identify what is already regulated.

3. Define governance

Who decides what?

4. Define reserved matters

Use realistic thresholds.

5. Plan funding

Loans, equity and dilution.

6. Plan transfer

First refusal, tag, drag and permitted transfers.

7. Plan founder departure

Management, employment and quota consequences.

8. Plan deadlock

Before deadlock happens.

9. Coordinate documents

Articles, shareholder agreement and employment/management documents.

10. Review enforceability

Do not copy a foreign template without adapting it to Portuguese law.

Frequently asked questions

Is a shareholder agreement mandatory in Portugal?

No. But it can be highly useful where an Lda has more than one owner.

Is it public?

A private shareholder agreement is generally not the public constitutional document of the company in the way registered articles are.

Can it override the articles?

Not generally. It is contractual between its parties and must be coordinated with the articles and mandatory law.

Can founders agree how to vote?

Yes within the Article 17 limits.

Can it include tag-along and drag-along clauses?

Potentially, if properly drafted and coordinated with company law and the articles.

Should a 50/50 company have a deadlock clause?

Usually it is sensible to address deadlock before it occurs.

Do you need a Portuguese shareholder agreement?

Send us the current articles, ownership structure and the commercial points the founders want to regulate.

Our lawyers can structure the agreement, identify which protections should also appear in the articles and coordinate the document with Portuguese company law.