Overview of Portuguese Corporate Governance

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Overview of Portuguese Corporate Governance

Portugal’s general corporate governance framework is provided by the Portuguese Companies Code (PCC) and the Portuguese Securities Code (PSC), which apply to listed/public companies.

Securities Market Commission’s (CMVM) regulations and the Corporate Governance Code (CGC) of the Portuguese Corporate Governance Institute establish recommendations based on the comply or explain principle. Some changes have been introduced since the end of 2021 with effects on shareholder rights, related-party transactions, and board member compensation.

Pursuant to the applicable dispositions of the Portuguese Companies Code, joint stock companies (Sociedades Anónimas) must adopt one of the three governance structure types. Governance structures are matrix formulas of administration and supervision of public limited companies and include:

  1. The Unitary Model
  2. The Dualistic Model
  3. The Anglo-Saxon Model

The Unitary Model is the one most used by Portuguese companies.  It consists of a board of directors (“Conselho de Administração”), or a single executive director for smaller companies, overseen either by:

  • a fiscal/auditor board (“Conselho Fiscal”) or
  • a single auditor (“Fiscal Único”) or
  • a fiscal board and a statutory auditor (“Revisor Oficial de Contas”);

A statutory auditor outside the fiscal board is mandatory in listed and private companies.

The Germanic or Dualistic Model is statistically less common. The governance structure comprises an executive board of directors (or a single executive director in smaller companies), a supervisory board, and a statutory auditor. A financial matters committee within the supervisory board is also mandatory in listed companies and significant private companies.

Therefore, in the Dualistic Model, management powers are shared between two bodies.

The Anglo-Saxon-inspired model consists of a board of directors that includes an audit committee (“Comissão de Auditoria”), and a statutory auditor (“Revisor Oficial de Contas”). The audit committee is comprised of non-executive directors and a statutory auditor. Supervision is carried out through the non-executive directors.


Directors’ duties and obligations

The board of directors is responsible for managing the company’s business and carrying out any actions to pursue the company’s goals.

In the Unitary and Anglo-Saxon models, powers to manage the company’s day-to-day operations may be delegated to one or more executive directors or an executive committee.

In the Unitary Model, the supervisory board is a shareholder-elected body.

In the Anglo-Saxon model, supervisory powers are held by the audit committee, a body composed of non-executive directors elected by the shareholders. In both cases, there must be a statutory auditor. The audit committee that is part of the board of directors is legally barred from performing administrative tasks.

In the Dualistic Model, management and supervisory tasks are divided between the executive and supervisory boards. The executive committee is appointed by the supervisory board (unless the company’s bylaw grants this power to the shareholders), and the shareholders elect the supervisory board. Supervisory duties are performed by the supervisory board and a statutory auditor.

The CGC has issued some recommendations on these matters, namely that the number of non-executive directors should be higher than the number of executive directors. Another recommendation states that the management body should not delegate powers to define the company’s strategy and other matters.

CGC has also been alerting the importance of creating specialized committees by the management body, such as sustainability and ethics committees.

The board of directors elects the chairman of the board. The chairman has a casting vote whenever the board is composed of an even number of directors or when the company’s bylaw permits. In addition, the chairman convenes and presides over the board of directors’ meetings.

The board also has representation functions for the company, empowering certain directors to execute specific management decisions.

The CGC recommends that at least one-third of the non-executive directors should be independent.

Directors (executive and non-executive) are bound by duties of care (competence and technical knowledge). Furthermore, they have loyalty obligations (long-term interests of the shareholders, performance according to the company’s interest, among other things).

Non-executive directors are subject to a duty of vigilance in relation to executive directors’ performance of duties.

Other legal duties apply to directors, namely the responsibility to preserve share capital, a commitment to non-competition with the company’s activity, avoidance of any conflict of interest, and duty of confidentiality, among others. In this regard, the CGC recommends that management bodies annually evaluate their performance and the performance of their committees and executive directors. In addition, evaluation should consider the company’s strategic and budgetary plans, risk management concerns, the company’s inner workings, and the commitment and role of each member in achieving corporate goals. Finally, the assessment should consider the relationship between other corporate bodies and committees.


Nomination, term of office, and other issues concerning governing bodies 

In the Unitary and Anglo-Saxon models, the members of the board of directors and the fiscal board, the audit committee, and the statutory auditor are appointed and dismissed by the shareholders at a general meeting. The supervisory board and audit committee are responsible for suspending directors.

In the Dualistic model, the supervisory board and statutory auditor members are elected and removed by shareholders. The executive board members are appointed, suspended, and removed by the supervisory board (unless the bylaws grant this power to shareholders).

A nominating committee must search for possible candidates to become members of the governing bodies, which must conduct the selection processes transparently.

The law provides specific mechanisms for minority shareholders to appoint directors; otherwise, they would not be able to achieve board representation based on regular voting rules.

The director’s default mandate term is four years unless bylaws provide otherwise; however, the usual corporate practice is three years.

Audit committees’ members cannot also be members of the management bodies of related companies.




In the Classical and Anglo-Saxon models, directors’ compensation is determined at the general meeting of shareholders or by a remuneration committee with advisory powers.

In the Dualistic model, unless otherwise provided in the articles of association, remuneration is determined by the general supervisory board or the remuneration committee.

In all models, remuneration may include fixed and variable components. Pay may include equity.

The CGC reinforces some aspects that should be the basis for determining variable remuneration. Remuneration should correlate to the level of responsibility assumed, availability, competence, and alignment with the long-term interests of shareholders, which rewards performance and promotes the company’s sustainable performance.

Part of the variable component should be deferred over time, for no less than three years, linking pay to sustainability. Another recommendation is that the remuneration of non-executive directors should not include components whose value depends on the performance or value of the company.


Director’s liabilities

Directors are subject to civil liability for breach of their duties. Liability is determined according to the business judgment rule.

The director’s liability is excluded if the director can demonstrate that he or she acted rationally, free of personal interest, and guided by corporate rationality criteria. Directors are also liable for tax, criminal, and civil offenses. In addition, administrative law violations, liability for environmental matters, and liability in the context of corporate insolvency may apply.

Directors may be contractually insured for the risks associated with their office.


Disclosure Duties

The duty to disclose accounting information to shareholders is a duty of the directors, embodied in the presentation of annual accounts and the annual management report.

Directors must include other information in the annual management report of listed companies, such as relevant agreements entered into by the company and special rights granted to shareholders.

Shareholders are entitled to obtain relevant information about the company from the directors, ranging from remuneration policy to transactions with related parties, and accounting information, among others.

The CGC advises that companies should establish mechanisms to rigorously ensure the timely disclosure of information to their corporate bodies, shareholders, investors, other stakeholders, financial analysts, and the market in general.


Audit Bodies requirements 

Audit bodies exercise supervision functions concerning the company’s financial and accounting matters. They may be accountable to the company if they breach incompatibility and independence requirements.


ESG matters

In addition to disclosure obligations regarding the company’s accounting and financial documentation, the risk management report must include non-financial issues, such as labor or environmental issues that may impact the company. Audit bodies are responsible for overseeing these risks.

Specific legislation requires companies to set up risk management mechanisms composed of non-executive directors holding the required knowledge to monitor the company’s risk strategy.

Directors should pursue the company’s interests and other relevant parties, such as the company’s creditors and employees.

Listed and large public companies have sought to implement corporate social responsibility programs to address social concerns.

The importance of diversity in corporate bodies to ensure gender equality has been increasingly discussed. The CGC believes that the gender of members of corporate bodies is relevant to promoting good performance.

Large public interest companies (with an excess of 500 employees), must issue a statement containing sufficient information on their policy regarding environmental, social, equality, non-discrimination, and human rights issues, among others.

Our Corporate Law team is available to assist. For more information, please contact us.


This publication or document contains general information and is not intended to be comprehensive nor provide legal or tax advice or services. It should not be acted on or relied upon, or used as a basis for any decision or action that may affect you or your business. Professional legal advice should be requested for specific cases. We do not undertake any continuing obligation to advise on future legal amendments or the impact on the conclusions herein.

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