SGPS

SGPS stands for sociedade gestora de participações sociais - the legal form of a holding company in Portugal.

A holding of some form of SGPS can be set up either as a public limited company (Sociedade Anónima) or a limited liability company. The company of the holding company (SGPS) must contain the terms “sociedade gestora de participações sociais” or the initials SGPS, whereby this is regarded as sufficient indications for its corporate purpose. The status of an SGPS is provided with special tax advantages.

Corporate purpose

The sole corporate purpose of holding companies is to manage investments in other companies. Holding shares in a company is considered an indirect form of carrying out the activities of the participants if, firstly, it is not short-term (i.e. the participation is held for more than a year) and, secondly, direct or indirect (i.e. via other controlled holdings) participation make up at least 10% of the voting share capital in a participant.

Holding companies are entitled to provide their subsidiaries with technical management services on condition of a prior, written agreement which sets the remuneration.

Subsidiaries

Holding companies can acquire and hold equity interests or shares in companies, including foreign companies. Holding companies can only acquire or hold investments with less than 10% of the voting share capital under certain conditions:

a) The balance sheet value of the participations of less than 10% of the voting share capital of the participants can represent a maximum of 30% of the other participations;
b) The purchase price of one of these investments is at least EUR 5 million; or
c) the interest was acquired through a merger or division of a company; or
d) The participant has concluded a subordination agreement with the holding company.

exam

The holding companies must appoint a certified official auditor or a certified official auditing company upon formation.