You must act within the powers imposed by legislation, the company’s Articles of Association (“articles”) and by-laws. The articles govern how the company is to be run, including the powers and responsibilities of directors.
Duties – skill and care
When exercising directors’ powers, you are required to exhibit such a degree of skill as may reasonably be expected from a person with your knowledge and experience, as well as exercise independent judgment.
You must also remember that the basis of the director’s specific duties provided for in Portuguese law lies in the following main fiduciary duties:
- A duty of care, which involves a director having the required availability, skills, technical competence and knowledge while performing his/her function to develop the company’s activity.
- A duty of loyalty, acting in the company’s interest while attending to the long term interests of the shareholders and balancing the interests of employees, clients, creditors and others with the sustainability and development of the company’s business.
Duties – general
In general, the responsibility for the company lies with the managing directors. When carrying-out the administration of the business, they have to apply the diligence of a prudent businessman, ie they have to supervise all actions of all employees and the other managing directors (cross-control).
Managing directors also have a general duty of diligent management which includes, in particular, the following duties:
- To comply with and ensure the company’s compliance with all applicable statutory and legal obligations and requirements.
- To use his best efforts to promote the purpose of the company.
- Not to disclose trade or business secrets or any other confidential information belonging to the company.
- To represent the company before public and private entities.
- To maintain the share capital and assets of the company.
- To ensure that the company complies with the requirement to prepare the annual accounts.
- To ensure that certain documents are filed with the local authorities, such as the company’s annual accounts.
- To ensure that any changes in the particulars of the company and its legal representatives or attorneys are registered with the Company’s Registry.
- To ensure that the company keeps proper books of accounts and records at all times.
- To ensure that all compliance actions are taken and that statutory filings are made with respect to tax and annual returns.
- To ensure that, during his/her term of office, the company complies with all its tax obligations, particularly towards the Tax Authorities and Social Security.
- To pay all taxes and contributions in due course and in accordance with legal requirements.
- To call meetings as required by law or the Articles of Association.
- Not to make or accept improper payments.
- Not to compete with the business opportunities of the company.
The managing directors also have to observe the instructions given by the shareholders via shareholders’ resolution.
Duties – other
There are many specific duties for a managing director, some of the more onerous have been set out below;
- The managing director has to fulfil the Shareholders’ instructions during the term of office.
- The managing director has to provide the Shareholders with any information they request regarding the company and its activities.
- The managing director has to act in good faith (bona fide) in the company’s dealings.
- The managing director has to ensure that personal interests do not pose a conflict with his/her duties to the Shareholders.
- The managing director has to perform the role of director with due skill.
- The managing director has to ensure that the company does not acquire shares which are not fully paid up, with funds that are required for the maintenance of the capital.
- The managing directors are liable for the preparation of the annual financial statements (Demonstrações Financeiras) and the financial report (Relatório de Gestão) of the company.
- The obligation to file for insolvency within one month when the company is over-indebted or unable to pay its creditors.
- The managing directors also to ensure the timely preparation and filing of the tax return (Informação Empresarial Simplificada).
- The managing directors have obligations with respect to fiduciary duties. They must preserve the economic interest of the company. Hence, the managing directors are not allowed to undertake any actions which compete with the company. Furthermore, omission of business, poor performance as well as the assumption of too higher risks can constitute a violation of this obligation.
Safeguarding a number of legal provisions in relation to health and safety of workers, examples of which include the following:
- Complying with environmental regulations for the produced or marketed products, the production process, the organisation of the work place and work facilities, and compliance with pollution limits and general reporting duties.
- Ensure health and safety at work, according to the general principles of prevention, in particular related to the prevention planning in a coherent system which takes into account the organisation of work, social relations and the material factors inherent to work.
- Ensure adequate monitoring of the health of workers against the risks to which they are exposed in the workplace.
- Ensuring statutory accident insurance remains in place, and that there is compliance with provisions for prevention of work place accidents.
Please also note anti-bribery rules, as set out in the Penal Code (Código Penal) and in Law no. 20/2008, of 21st April (Regime de Responsabilidade Penal por Crimes de Corrupção). “Anti-bribery” legislation means that it is prohibited to bribe:
- Any governmental official or public officer.
- Any person representing another party with whom the company is doing business with in order to coerce the individual to act in a certain manner in breach of his/her duties.
Latest version updated
6th April 2018