Upon incorporating a company in Portugal, and even before submitting a request for incorporation to the authorities, a minute book is an essential part of the company structure. It includes information such as the date, location, participants, discussion topics and the decisions made.
Whether you’re thinking about, or already have a company in Portugal, it’s important to understand the importance of having a minutes book.
What is a Minutes book?
A Minute book is an official company document used to record discussions, deliberations and decisions taking place at formal meetings, for example between managers and shareholders of the company. Each minute summarises the discussions, and if any conclusions were reached during the meeting.
Generally the first Minute is created before informing the authorities about the requirement to form a company in Portugal. For instance, if you already have a US company and decide to form a company in Portugal, you’ll likely need a minute to inform the authorities that a meeting took place about this type of decision.
Minutes are also important if you wish to alter the Articles of Association, which is a document created upon initial formation of the company.
So, as mentioned, it’s an official document which accounts for several decision-making processes; for managers and shareholders, and any external individuals, to take account of what has happened – before, during and after company incorporation in Portugal.
Why is a Minutes book required?
A Minutes book in Portugal is needed for many reasons, including –
- Formal records: as highlighted in the brief introduction, it’s an official document which accounts for decisions made during meetings. Acting as a permanent record.
- Transparency and accountability: the book provides a transparent record based on the company’s activities, and it ensures that individuals who form apart of the company hold accountability for each decision and/or discussion.
- Record for reference: by creating a formal document regarding discussions, it allows individuals to reflect back on what was discussed. This helps to ensure consistency in actions being made.
- Legal purpose: if required, the Minutes book can act as evidence towards legal matters showcasing that decisions were made, and when.
- Decision monitoring: following decisions after a discussion, the minutes book is useful to refer back to; so individuals can understand if all (or most) resolutions were met.
Responsibility as the shareholder
Usually the company manager is responsible for most things, however in the case of a minutes book – the shareholder(s) is responsible.
There are quite a few responsibilities that the shareholder(s) must uphold to keep the minutes book in check, one of the main points being to decide upon the manager’s wage. For many of our clients, a manager’s wage is determined based on the particular tax regime they’re trying to obtain however in other cases the manager’s wage is solely needed to showcase their role in the company. But, when you have an external shareholder determining the manager’s wage, things can be a little different. That’s why it’s of course important to the manager, to choose a respective shareholder – or to become both the shareholder and manager of the company.
Another important responsibility is that each year a review of the turnover and profits, from the previous year, needs to be analysed by 31 March. This analysis then helps to determine what action should be taken with profits and/or losses. Should a loss be calculated, then perhaps the shareholders need to think about injecting more money into the company. Or, if there’s been a profit (which is always a nice feeling) then perhaps a distribution of dividends would be suitable.
Perhaps one of the most overlooked points of the minute book is that any and all updates must be sent for approval to the Conservatoria. And following approval, the necessary publications should be placed on public record.
How RHJ Accountants can help
As this article highlights, there are a lot of requirements to maintain a minutes book; and it can be pretty stressful trying to manage all these particularities yourself. So, perhaps it might be worth considering the use of a legal team to help and support with updates; to ensure they’re being dealt with in the right way. Or sometimes, if you find the right team of accountants – like us – they can provide simple instructions here and there to make sure things are in order.
When opening a company or branch in Portugal, there are quite a few requirements to take into account. But through the support of a team like RHJ Accountants, it makes life a whole lot easier.
Think of a Minutes book like a storybook – everything should follow a sequential order.
