Differences Between LDA and Unipessoal LDA Company Types in Portugal

The two most common company types encountered by Turkish entrepreneurs wishing to establish a company in Portugal are Sociedade por Quotas (LDA) and Sociedade Unipessoal por Quotas (Unipessoal LDA). Both are limited liability companies, and the liability of the partners is generally limited to the capital they have committed to contribute to the company. However, there are significant differences between the two company types in terms of the number of partners, decision-making procedures, company name, capital structure, acceptance of new investors, and management of partnership relations.

Entrepreneurs who want to start a business alone and own the entire company often prefer a Unipessoal LDA (Licensed Joint Venture) company. However, in cases where multiple individuals want to run a business together by combining their capital, knowledge, or labor, an LDA company is a more suitable structure.

When determining the type of company, one should not only consider ease of incorporation or the legally mandated minimum capital. Factors such as whether future investors will be brought in, the decision-making powers of the partners, profit distribution, exit procedures, share transfers, and the long-term growth plan of the business should all be evaluated together.

What is an LDA Company?

A Sociedade por Quotas, or LDA for short, is a Portuguese limited liability company established with at least two natural or legal persons as partners. The company's capital is divided into shares called "quotas" held by the partners. Each partner's economic and managerial position within the company is determined by the quota amount and special provisions specified in the articles of association.

According to the Portuguese Ministry of Justice, LDA companies must have at least two partners. The company's capital consists of the sum of the quotas committed by the partners, and each partner can only own one quota at the time of incorporation. The management and representation body of the company is the "gerência," which consists of one or more directors.

LDA can be used for family businesses, joint projects of two or more entrepreneurs, businesses established jointly by Turkish and Portuguese partners, investment partnerships, and subsidiaries within a group of companies.

Partners do not have to be natural persons. A Turkish or other foreign company can also become a partner in an LDA company to be established in Portugal by submitting the necessary trade registry, representation, and ultimate beneficiary documents. Portugal's official investment guide states that the Sociedade por Quotas structure can be established by natural or legal person investors.

What is a Unipessoal LDA Company?

A Sociedade Unipessoal por Quotas is a limited liability company in which a single natural or legal person owns all of the capital. The sole shareholder holds a quota representing the entire company capital.

The sole partner can be a Turkish citizen, or a company established in Türkiye or another country. However, for a foreign individual or legal entity to become a partner in Portugal, they must prepare the necessary Portuguese tax identification numbers and identification documents.

The most important feature of a Unipessoal LDA is that, although the company has a single shareholder, the shareholder and the company are separate legal entities. The company's assets, bank accounts, contracts, debts, and commercial transactions must be kept separate from the personal assets of the single shareholder.

According to the Portuguese Ministry of Justice, Unipessoal LDA has sole ownership of the entire capital, a minimum shareholder stake of one Euro, and liability is generally limited to the company's capital. The company name must include the word "Unipessoal".

Key Differences Between LDA and Unipessoal LDA

Subject of comparison	Unipessoal LDA	LDA
Number of partners	The sole partner	At least two partners
Partner qualifications	Natural or legal person	Natural or legal persons
Legal minimum capital	1 Euro	At least 1 Euro per partner
Decision making	By a single partner	With the votes of the partners
Company name	“Unipessoal Lda.” should contain	It must contain “Lda.” or “Limitada.”
Management	One or more agents	One or more agents
Acquiring new investors	It requires a change in the company structure	This can be done through share transfer or capital increase
Disagreement between partners	It's not found; however, there is a risk of a single person being present	Management and shareholder disputes may arise
Profit sharing	Owned by a single partner	The ownership stake is shared according to the articles of association and the ownership ratio
Documentation of decisions	Only joint decisions are recorded in the minutes	General assembly or joint decisions are recorded in the minutes

Difference in terms of Number of Commons

The most significant difference between the two company types is the number of partners. Unipessoal LDA has only one partner, while an LDA company must have at least two partners.

The sole shareholder of a Unipessoal LDA can be an individual or another company. However, according to Portugal's official company directory, an individual can only be the sole shareholder of one Unipessoal LDA. This rule alone does not prevent the same person from owning shares in more than one multi-shareholder LDA company.

Portuguese Company Law also prohibits one Unipessoal LDA from being the sole shareholder of another Unipessoal LDA. Therefore, if a holding or group company structure is to be established, the direct and indirect ownership chain must be examined beforehand.

For an LDA (Limited Liability Company), a minimum structure of two partners is sufficient. One partner may hold a majority of the capital, while the other holds a smaller share. However, merely adding a second partner to the company in name only, especially when the partnership relationship is not genuine, may lead to future management and shareholder disputes.

Difference in Terms of Capital

In a Unipessoal LDA (Licensed Industrial Zone), the legal minimum capital is one Euro. In an LDA company, each partner's share value must be at least one Euro. Since a minimum of two partners is required, the theoretical minimum total capital of a two-partner LDA is two Euros.

These figures only represent the legal minimums in terms of commercial law. For most businesses, it is not commercially realistic for a company to actually operate with a capital of one or two Euros.

When determining the company's capital, the following expenses should be taken into consideration:

• Company headquarters or business premises rent,
• Personnel and social security expenses,
• Purchases of goods or equipment,
• Software and licensing costs,
• Marketing and sales expenses,
• Accounting and legal consulting expenses,
• Working capital needs in the initial months.

While it is legally possible to establish a company with very low capital, the financial reality of the business may be further examined by banks, investors, business partners, and in immigration applications such as D2 visa applications.

For both LDA and Unipessoal LDA, if the capital has not been deposited into the company account at the time of incorporation, the founders may declare that the capital will be deposited within five business days or by the end of the first fiscal year as stated in the incorporation document.

Partners' Responsibility

The main advantage of both types of companies is that the partners' liability is generally limited to the company's capital. Company creditors, as a rule, cannot directly target the partners' homes, personal bank accounts, or other personal property.

The Portuguese Ministry of Justice states that, for both LDA and Unipessoal LDA, partners are not personally liable for company debts with their own assets, and liability is limited to the company's capital. However, the LDA articles of association allow one or more partners to assume additional liability to company creditors up to a certain amount.

However, limited liability is not absolute protection. Unlawful management actions by a company director, unpaid capital commitments, personal guarantees, specific liabilities relating to tax and social security obligations, or the deliberate mixing of company assets with personal assets can all create a risk of personal liability.

For example, if a sole shareholder provides a personal guarantee to a bank for company debt, the creditor may resort to the shareholder's personal assets as part of the guarantee. This does not negate the nature of Unipessoal LDA as a limited liability company; however, it arises from the fact that the shareholder has undertaken a separate personal security obligation.

Differences in Management and Representation

Both types of companies are managed by one or more “gerents,” or directors. The director can be a partner or a non-partner.

In a Unipessoal LDA, the sole shareholder is usually also appointed as the company director. However, it is not mandatory for the sole shareholder to be the director. The shareholder may appoint a professional manager or another person as director.

In an LDA (Land Registry Agency) company, one or more of the partners may be directors. It is also possible to appoint professional directors who are not partners. The company's articles of association should regulate whether the directors will represent the company individually, jointly, or with joint signatures in specific transactions.

In companies with two partners, establishing a 50-50 share structure carries the risk of decision-making deadlocks. Disagreements between partners on fundamental issues can prevent the company from signing contracts, halt banking transactions, and lead to a management crisis.

Therefore, the following issues should be regulated in the LDA articles of association or in a separate partners' agreement:

• Appointment and dismissal of directors,
• Single or dual signature authority,
• Transactions above a certain amount,
• The authority to borrow and provide collateral
• Acceptance of a new partner,
• Capital increase,
• Profit distribution,
• One of the partners leaving the company,
• The method to be used in case of a tie in votes.

According to Portugal's official company directory, both limited liability company structures can be managed by one or more directors. An independent auditor may also be required if certain balance sheet, turnover, and employee limits are exceeded.

The Difference in the Decision-Making Process

In Unipessoal LDA, all membership powers are exercised by a single member. Since there are no other members present at the general meeting, there is no possibility of splitting votes or minority objections.

However, it is not correct for a sole shareholder to make decisions regarding the company without preparing any documents. According to Portuguese Company Law, a sole shareholder exercises the powers belonging to the general assembly in other companies and can appoint directors. Decisions made by a sole shareholder, which have the nature of a general assembly resolution, must be recorded in minutes signed by the shareholder.

Significant transactions such as capital increases, appointment of directors, profit distribution, change of company headquarters, or dissolution of the company must be documented by a written decision of a single shareholder.

In an LDA (Licensed Partnership), decisions are made by the votes of the shareholders. Voting power is, as a rule, linked to the shareholders' capital shares. For important decisions such as amendments to the articles of association, mergers, demergers, changes in company type, and dissolution, a qualified majority corresponding to at least three-quarters of the capital may be required. Higher decision-making ratios may be stipulated in the articles of association.

In LDA (Limited Account) companies, balancing the rights of the minority shareholder with the management power of the majority shareholder is crucial. It is not possible to deprive a shareholder with a 10% stake of all information and control rights solely based on their shareholding. However, to prevent the majority shareholder from making critical decisions unilaterally, special voting conditions can be stipulated in the articles of association.

Difference in Company Name

The LDA company's trade name must end with "Limitada" or "Lda." The company name may be formed from the name of one or more of the partners, a phrase indicating the field of activity, or a specific trade name.

In the case of Unipessoal LDA, the company name must include "Sociedade Unipessoal" or "Unipessoal" before "Limitada" or "Lda.".

For example:

• Atlas Technology, LDA.
• Atlas Consulting, Unipessoal, Lda.
• Mehmet Yılmaz Comércio, Sociedade Unipessoal, Lda.

According to the official statement of the Portuguese Commercial Register, LDA (Landlord-Department) names must end with “Limitada” or “Lda.”, and single-shareholder companies must end with “Sociedade Unipessoal, Limitada” or “Unipessoal, Lda.”.

If a second partner is added to the company, or if all shares are consolidated under a single partner, these phrases in the company name must also be changed to reflect the new ownership structure.

Acquiring New Investors and Transferring Shares

In Unipessoal LDA, all capital is owned by a single shareholder. If a new investor is to be admitted, a portion of the single shareholder's quota can be transferred, or the capital can be increased and a quota allocated to the new shareholder.

With the addition of a new partner, the company ceases to be a single-shareholder entity and transitions to a Sociedade por Quotas, or LDA (Licensed Dealer) structure. This change is not completed simply through a payment or verbal agreement between the parties. The articles of association, company name, quota allocation, and trade register records must be updated.

In an LDA (Limited Asset Distribution) company, a new investor can take over all or part of an existing partner's quota, or join the company through a capital increase. Quota transfers and changes must be registered in the commercial register. The Portuguese Commercial Register provides a special registration system for quota changes and transfers.

When bringing in an investor for a multi-partner company, not only the purchase price but also the new partner's voting rights, authority to appoint managers, profit sharing, capital obligations, and exit conditions must be regulated.

Transition from Unipessoal LDA to LDA

If the single-shareholder company grows and acquires a new investor, the Unipessoal LDA structure can be converted into an LDA.

This process requires the following changes in the application:

• Determining how the new partner will join the company,
• Transfer of quotas or increase of capital,
• Removing the word "Unipessoal" from the company name,
• Amendments to the partnership and capital clauses
• Preparation of the new articles of association,
• Updating trade registry records,
• Modifying the final beneficiary information.

The company's business activity or legal entity does not cease; the same company continues its operations with a new ownership structure. However, the trade registry and ultimate beneficiary records must be updated on time.

In the Portuguese Commercial Register, changes to a company's articles of association, capital, shareholders, and legal structure can be made online or through the registration offices.

Transition from LDA to Unipessoal LDA

In a multi-shareholder LDA, the company may become a single-shareholder company if one of the shareholders takes over all the other shares. In this case, the company structure needs to be adapted to a Unipessoal LDA.

The company name should be amended to include "Unipessoal," the articles of association should be revised to show that all capital belongs to a single shareholder, and the trade registry records should be updated.

It is also important to quickly bring the company structure into compliance with the law when a company temporarily becomes a single-shareholder company due to the departure, death, or transfer of shares of one of the partners.

If the sole shareholder is a natural person, it must also be checked whether this person is the sole shareholder of another Unipessoal LDA. The limitation that a natural person can only own one single-shareholder limited company must also be taken into account in conversion transactions.

Agreements Between the Sole Shareholder and the Company

In a Unipessoal LDA, lease, loan, vehicle sale, service, license, or financing agreements can be made between the sole shareholder and the company. However, since the company and the shareholder are legally separate entities, these transactions must be properly documented.

For example, if a property owned by a single partner is to be leased to a company, a written lease agreement must be prepared, the rent must be in line with market conditions, and payments must be accurately recorded in the company's accounts.

According to Portuguese Company Law, legal transactions between a sole shareholder and the company must serve the company's purpose, comply with the form prescribed by law, and in all cases be documented in writing. These documents must be kept accessible along with the company's annual financial statements.

An unexplained withdrawal of funds from the company account by the sole shareholder, or the use of company assets as personal property, may undermine the principle of the separate legal personality of a limited company and could lead to tax or liability issues.

Are there any differences in terms of accounting, taxation, and auditing?

There is no general tax advantage between Unipessoal LDA and LDA that stems solely from the number of partners. Both structures are commercial companies incorporated in Portugal and may be subject to corporate tax, VAT, withholding tax, social security, and other financial obligations depending on their activities.

Whether a company has one or multiple shareholders does not, in itself, create a different corporate tax regime. Taxation is determined based on the company's field of activity, size, headquarters, income, expenses, and applicable incentives. In Portugal, legal entities with headquarters or de facto management are generally subject to the Intracorporate Tax Rate (IRC).

Both types of companies require organized accounting and employment with a certified accountant. A commencement of business notification must be submitted to the tax authorities before the company begins commercial activity. If the supply of goods or services is subject to VAT, the relevant VAT registration and declaration obligations also apply.

For LDA and Unipessoal LDA, establishing a supervisory board is generally not mandatory. However, if the company exceeds two of the three criteria—total balance sheet, net turnover, and average number of employees—for two consecutive years, an independent auditor may be required to audit the accounts. The official investment guidance states the relevant thresholds as €1.5 million for total balance sheet, €3 million for net turnover, and 50 for average number of employees.

Establishment Method and Cost Difference

Both types of companies can be established via Empresa na Hora or Empresa Online. There is no fundamental systemic difference between LDA and Unipessoal LDA in terms of incorporation methods. The Portuguese Commercial Register allows both single-shareholder and multi-shareholder limited companies to benefit from online and fast incorporation services.

The official fee for online incorporation is €220 if a pre-approved articles of association are used, and €360 if a specially prepared articles of association are used. The standard incorporation fee for the Empresa na Hora system is also €360. These amounts do not include legal fees, accounting, translation, apostille, NIF, company address, and bank charges.

Because LDA companies have a large number of partners, the power of attorney documents, foreign company documents, partners' agreement, and ultimate beneficiary review can be more comprehensive. Therefore, professional services and document costs may be higher compared to Unipessoal LDA.

Which is more advantageous in terms of the D2 Entrepreneur Visa?

Establishing a company in Portugal alone does not grant a D2 entrepreneur visa or residence permit. However, both the LDA and Unipessoal LDA can serve as the basis for a D2 application within the scope of a real and viable business project.

For a sole proprietor, a Unipessoal LDA may offer a simpler structure. The applicant can clearly demonstrate that it owns all of the company's capital and management.

In projects with multiple investors or active founders, an LDA (Licensing Agreement) company may be more suitable. However, in a D2 application, not only the applicant's ownership percentage but also their active role in the project, investment amount, business plan, financial resources, and connection to the Portuguese economy are considered.

Owning a 1% or 5% stake in the company alone does not prove that the applicant is a genuine entrepreneur. The ownership percentage, directorial authority, role in the business plan, and the applicant's contribution to the project must be explained together.

Who is Unipessoal LDA best suited for?

Unipessoal LDA may be preferred, especially in the following situations:

• Individuals who will establish the venture on their own,
• Investors who want to control the entire company,
• One-person consulting or software businesses,
• Those who wish to conduct their freelance activities through a company,
• Foreign companies that will establish a single-shareholder subsidiary in Portugal,
• Entrepreneurs who initially do not plan to take on investors or partners.

The advantage of this structure is that decisions can be made quickly and there is no risk of disagreements between partners. The disadvantage is that the business can remain dependent on a single person in terms of capital, knowledge, and management.

Who is LDA best suited for?

LDA may be a more suitable option in the following situations:

• Two or more entrepreneurs collaborating on a project,
• Turkish and Portuguese partners investing together,
• Capital and technical expertise provided by different individuals,
• Having investors from the beginning,
• Establishing a family business,
• The formation of a joint venture by different companies,
• The desire to distribute shares and management powers.

The main advantage of an LDA is that capital, expertise, and business connections are shared among multiple partners. However, disagreements between partners, management deadlocks, and disputes over profit distribution and share transfers can pose risks.

Common Mistakes

In a Unipessoal LDA, it is a significant mistake to assume that the sole shareholder and the company are the same person. The company is a separate legal entity; its funds, contracts, and liabilities must be separated from the shareholder's personal transactions.

Using a standard articles of association in an LDA company based solely on a relationship of trust can also lead to serious problems in the future. Partners' capital obligations, management authorities, profit distribution, and exit conditions should be clearly regulated.

When establishing a 50-50 partnership, failing to define a resolution mechanism to be applied in case of a tie in votes may render the company unable to make decisions.

The mere formality of making a foreigner a shareholder with a small stake does not negate their legal rights and responsibilities. Even a small shareholder retains the right to receive information, participate in profits, and attend certain decisions as a company partner.

The fact that a company can be established with a capital of one or two Euros should not be considered to eliminate the actual financing needs of the business. The company's capital should be determined in accordance with the business plan.

Conclusion

In Portugal, the main difference between a Unipessoal LDA and an LDA is the number of partners. A Unipessoal LDA is established with a single partner, while an LDA requires at least two partners. In both types of companies, the partners' liability is generally limited to the company's capital, and management is carried out by one or more directors.

In Unipessoal LDA, the legal minimum quota is one Euro. However, in LDA, since each partner is required to contribute at least one Euro, the theoretical minimum capital for a two-partner company is two Euros. The actual capital, however, must be determined according to the company's operational and financing needs.

In a single-shareholder company, decisions are made by that single shareholder and recorded in writing. In a multi-shareholder LDA (Licensed Partnership), decisions are made by the votes of the shareholders; however, a qualified majority may be required for important transactions such as amendments to the articles of association and the dissolution of the company.

For entrepreneurs operating alone, Unipessoal LDA offers a simpler and faster governance structure. However, for projects with multiple investors, founders, or active partners, LDA may be more suitable.

Before choosing a company type, not only the current number of partners should be considered, but also future investment plans, share transfers, management authorities, profit distribution, D2 visa plans, and provisions to be applied in case a partner leaves the company.