All questions

Corporate leadership

i Board structure and practices

Shareholders may choose one of three mandatory governance models, depending on the structure adopted for its management and auditing bodies.

Classic model

The classic model (also known as the Latin model) establishes a single management body corresponding to a sole director (only admissible for companies with a share capital not exceeding €200,000) or a board of directors, with a variable number of members (a minimum of two) as freely defined by the by-laws. Therefore, this model is considered a one-tier structure.

Regarding the auditing body, the PCC foresees the existence of a simple structure or a reinforced structure, depending on the appointment of a sole auditor (which must be a chartered accountant) or of a supervisory board (with a minimum of three members, one of whom must be a chartered accountant) for the simple structure, or of a supervisory board plus a chartered accountant for the reinforced structure.

The reinforced structure is mandatory for:

  1. public limited liability companies, to the extent that they are not fully dominated by a company adopting a reinforced auditing structure, if they exceed, for two consecutive years, two of the following thresholds:
    • a total balance sheet of €20 million;
    • a total net turnover of €40 million; and
    • an average of 250 employees during each fiscal year (i.e., large public companies); and
  2. companies that are issuers of securities admitted to trading on a regulated market.

Although the classic model is predominant in the Portuguese corporate landscape, listed companies and large public companies are adapting their corporate structures to the Anglo-Saxon model, which is perceived to better address the corporate governance guidelines issued and enforced by the CMVM and by the BdP.

Anglo-Saxon model

The Anglo-Saxon model establishes a single management body, a board of directors, which includes an audit committee. No sole director is admissible in this model.

Regarding the auditing body, the audit committee is composed of at least three directors with non-executive powers who are responsible for supervising the activities of the executive committee (i.e., the members of the audit committee perform similar functions to those exercised by the supervisory board under the classic model described above). In this model, the auditing body also includes an external chartered accountant.

In view of the foregoing, the Anglo-Saxon model has the characteristics of a one-tier structure.

German model

Under the German model, the management of the company is entrusted to a board of directors composed of a variable number of executive directors only, in accordance with the by-laws, or to a sole director (only admissible for companies with a share capital that does not exceed €200,000). The directors may be appointed by the general and supervisory board or by the shareholders' general meeting, if so provided by the by-laws.

The general and supervisory board combines typical competences of the supervisory board and of the shareholders' general meeting. Even though it does not have management powers, there are certain categories of management acts to be adopted by the board of directors that can be subject under the by-laws of the company to the prior consent of the general and supervisory board. Therefore, this model is a two-tier structure. The number of members of the general and supervisory board is set out in the by-laws and shall be greater than the number of directors.

In this model, the auditing body also includes an external chartered accountant.

In the case of listed companies and large public companies, the creation by the general and supervisory board of a committee for financial affairs is mandatory.

Board of directors' structure and practices

A board of directors is responsible for managing the activities of a company. However, members of an audit committee (which is a body within the board of directors) in the Anglo-Saxon model are legally prevented from carrying out executive tasks.

A company's by-laws may authorise the board of directors to delegate the day-to-day management of the company to one or more directors (executive directors) or to an executive committee (in the classic model and Anglo-Saxon model only), the latter being recommended under the CGC. The CGC further recommends that the number of non-executive directors shall be higher than the number of executive directors.

Moreover, the board of directors may also grant powers to a specific director or several directors to deal with certain aspects of the management of the company, unless the by-laws prohibit this specifically.

Also very common in large public companies and listed companies, and in accordance with the CGC, is the creation of special committees by the management body, with or without the participation of its members, and with duties to assist on specific matters.

The chair of the board of directors, to be appointed by the board of directors unless the by-laws attribute the choice to the shareholders' general meeting, may be entitled to have a casting vote whenever the board is composed of an even number of directors or if provided by the by-laws. The chair is also responsible for convening the board's meetings and chairing them. Although under the PCC there is no requirement for the roles of chief executive officer and chair to be attributed to different persons, the CGC recommends that, if the chair is an executive director, then mechanisms for the coordination of the non-executive directors are effectively put in place.

Representation of a company is also legally attributed to the board, which can, nonetheless, attribute powers to certain directors to execute specific management decisions. However, powers to bind a company are freely defined in the company's by-laws, rendering any act that is taken by those persons entitled under the by-laws to bind the company without a prior decision of the board of directors valid and binding on the company.

ii DirectorsAppointment and dismissal

In the classic (Latin) and Anglo-Saxon models, directors are appointed and dismissed by the shareholders' general meeting, with the supervisory board or the audit committee, respectively, being entitled to suspend directors that are temporarily unable to duly perform their mandate. In the German model, the general and supervisory board is responsible for the appointment, suspension and dismissal of directors, unless the by-laws entrust these powers to the shareholders' general meeting. However, in any case, listed companies are also required to include in their by-laws a mechanism enabling at least one director to be appointed by the minority shareholders under certain conditions. Directors are now required to formally accept their appointment and to confirm in writing that they are not aware of any circumstances that may prevent them from fulfilling their duties.

Terms of office can run for up to four years, as defined in a company's by-laws and being freely renewed; however, directors remain in office after the lapse of the original term until the date on which new directors are appointed, or until the end of the month subsequent to the month in which the director delivered his or her resignation to the company, whichever occurs first.

Directors are required to be natural persons. If a legal person is appointed as a director, it is required to appoint a natural person to act as director for its own name and account, with the legal person being jointly responsible with the natural person for the performance by the latter of its director duties.

Incompatibility and independence requirements of directors are only imposed by the PCC in respect of the audit committee. Members of the audit committee are subject to incompatibility provisions, requiring that, among other things, they are not members of the management bodies of companies that are in a group relationship with the company where they serve as members of the audit committee.

For listed companies and large public companies, it is further required that at least one of the audit committee members has achieved a level of higher education that is adequate for the performance of his or her duties, is knowledgeable in auditing or accounting, and is independent (i.e., he or she is not associated with any specific set of interests in the company, and is not in any situation that may hinder the analysis and decision capacity of a director). Listed companies are required to have audit committees with a majority of independent members.

Under the German model, directors are subject to specific incompatibility requirements, namely being prevented from being a member of the general and supervisory board.

However, the CGC recommends that each company – irrespective of its governance model – should include at least one-third of non-executive directors that are independent directors (offering a specific concept of independence for this purpose, which also incorporates a cooling-off period).

In addition, Law No. 62/2017, of 1 August, imposes a requirement that listed companies shall have in their management (and supervisory) bodies, as from the first elective shareholders' general meeting after 1 January 2020, different genders representing at least 33.3 per cent of the total members of those bodies. This means that if the board is composed of seven members, at least three should be of a different gender from the others. Note, however, that diversity (notably, gender diversity) is a recommendation of the CGC for all corporate bodies.


Directors (both executive and non-executive) are required to comply with certain legal duties, including a duty of care (availability for the performance of the position, technical skills and knowledge of the company's activities) and a duty of loyalty (performance according to the company's interest, to the shareholders' long-term interests and to the interests of the remaining stakeholders).

Non-executive directors are also subject to a special duty of vigilance in respect of the performance of the executive directors.

As such, all directors (both executive and non-executive) are entitled to the same level of information, at the same time, and can request any information from the company as they deem necessary to the adequate performance of those duties.

Other legal duties of directors notably include an obligation to:

  1. preserve the share capital and avoid and react to thin capitalisation (loss of more than half of the company's share capital), upon which directors are legally required to call a shareholders' general meeting (unless, as from April 2022, the company is subject to a restructuring process under the Insolvency Code);
  2. not compete (the director may not pursue, by himself or herself or through entities, activities that are in competition with the activity of the company, unless so authorised by the relevant corporate body);
  3. prevent any conflict of interests (a director is required to avoid situations in which he or she has or could have an interest that conflicts with the company's interests, to declare that conflict or potential conflict to the other directors, and is prohibited from taking part in the relevant decisions that could be affected by that conflict or potential conflict of interests); and
  4. ensure conformity between actions and respective records and publications.

Compliance with these duties implies that the directors shall not accept a mandate if there is a lack of appropriate personal and professional conditions to carry out the mandate in an adequate form (e.g., lack of time or necessary knowledge and preparation to take on a position), and that they must be duly informed when making decisions, for which directors shall request all necessary information and endeavour to obtain the same, including expert advice.

Moreover, directors must be always mindful of the confidentiality obligation that they owe to the company as directors, and also of their duty to review board documentation and to raise any points of concern, making sure that any points are duly reflected in the minutes of the meeting and ensuring that they vote against any decisions in breach of their duties.

A special assessment should be exercised in transactions entered into between the company and another director or a shareholder of the company (or persons or entities related with them), and also when the company grants any loans or guarantees to persons or entities related to a director or a shareholder.


The PCC provides that the corporate body responsible for determining the remuneration of directors varies depending on the corporate governance model of the company, as follows:

  1. in a one-tier management structure models (classic (Latin) and Anglo-Saxon models), the remuneration of directors is determined by the shareholders' general meeting or a remuneration committee appointed by the latter; and
  2. in a two-tier management structure model (German model), the remuneration of directors is determined by the general and supervisory board or by its remuneration committee, except if the company's by-laws specifically attribute this competence to the shareholders' general meeting or to a remuneration committee appointed by the latter.

In all three governance models, the remuneration of the members of the management body may comprise a fixed and a variable component, the latter including profit-sharing, being the maximum percentage of profits to be attributed to directors, which shall be specifically authorised in the by-laws. However, audit committee members are entitled only to a fixed remuneration (this rule being recommended under the CGC to apply to all non-executive directors).

The PSC now requires listed companies to put in place a remuneration policy for members of corporate bodies that includes, as a minimum, certain legally mandatory content (e.g., details of variable components and other bonuses attributed and stock options), the derogation of which can only take place on an extraordinary basis to address long-term sustainability of the company or the company's viability. The remuneration policy must be available for public access on the company's website and must be approved by the shareholders' general meeting at least every four years.

In addition to the remuneration policy, the board of directors of listed companies is also required to issue annually, for assessment by the shareholders' general meeting, a clear and comprehensive report (or chapter in the annual management report to be submitted with the annual accounts) providing a comprehensive view of remuneration, including all benefits allocated or due during the previous financial year to each member of the administrative and supervisory bodies, in accordance with the remuneration policy in place, including newly appointed members and former members.

Law No. 28/2009, of 19 June, imposes on public interest entities (as defined in Article 3 of the Annex to Law No. 148/2015, of 9 September) disclosure obligations regarding the remuneration policy of the members of the management (and supervisory) body, implementing a say-on-pay rule.

Under the CGC, further recommendations have been issued with a view to ensuring that the remuneration scheme of the company:

  1. adequately remunerates directors for the responsibilities that they undertake and the competencies they use for the company's benefit;
  2. is aligned with the company's long-term interests; and
  3. rewards performance.

Breach of their duties by directors gives cause for civil liability, which shall arise from a court's decision, and which cannot be limited or excluded by agreement.

Liability of directors is always joint, the law establishing an assumption of fault by directors that may, nevertheless, be warded off if the directors:

  1. prove their actions were fault-free;
  2. prove that their actions were performed in an informed manner, free of any personal interest and according to a business judgement criterion;
  3. were not part of the resolution, or voted against it, having expressly recorded in the minutes of the meeting their disagreement; or
  4. based their actions on a shareholders' resolution.

Directors are required to guarantee their liability by delivering a bond or taking on an insurance policy with a minimum coverage of €50,000 (or €250,000 for listed companies and large public companies); however, this guarantee is legally waived for non-executive directors who are not remunerated as such, and may be waived by the shareholders' general meeting for other directors (excepted for listed companies and large public companies).

Directors are also subject to tax-related liability (civil or criminal liability), liability for administrative offences, criminal liability and civil liability within the context of insolvency and environmental affairs. The legal framework of specific corporate crimes and misdemeanours has been reinforced, with changes entering into force in March 2022. In this regard, there is significant stiffening of the penalties applicable to corporate crimes.

iii Auditing bodies

Company auditing bodies and their tasks vary from corporate model to corporate model. However, in broad terms, auditing bodies are responsible for the continuing supervision of a company's activity, especially financially and on accounting matters, but this is not absolute: for instance, any agreement to be entered into between a company and its directors, if lawful, must be preceded by an opinion of the company's auditing body.

In addition, the members of an auditing body are subject to the same duties of care and diligence as directors in the performance of their mandate and can likewise be liable towards the company and its stakeholders for breach of those duties.

Considering the tasks vested in the auditing bodies, it is understandable that members are subject to independence requirements and to incompatibilities (as previously discussed in respect of the audit committee), and auditors must be certified chartered accountants registered with the Chartered Accountants Association. These requirements were extended by Law No. 148/2015, of 9 September.