Atrium Incorporators

1. Entities located in the Madeira and Santa Maria free zones are entitled to exemption from corporate or individual tax, until 31 December 2011, as follows:

a) Entities located in the respective industrial free zone, in relation to the income derived from the carrying on of activities of an industrial nature envisaged in Article 4 (1) and qualified under the provisions of Article 4(2) and (3) of Regulatory Decree No. 53/82 of 23 August and Regulatory Decree No. 54/82, of the same date, as well as activities that are accessory or complementary to the one above;

b) Entities, duly licensed, that carry on the activity of maritime transport, in relation to income derived from the carrying on, within the institutional ambit of the respective free zone, of the above-mentioned activity, except income from the transport of passengers or cargo between national ports;

c) Credit institutions, and finance companies, in relation to the income from their respective activities carried on there, provided that in this:

1) They do not engage in transactions with residents of Portuguese territory or with a permanent establishment situated there, with the exception of those entities installed in the free zones which are not credit institutions, finance companies or finance branches that carry out transactions of their own activity with residents or permanent establishments of non-residents;

2) They do not engage in transactions with non-residents who are in or under control of them, as defined in Article 13 of the General Regime of Credit Institutions and Finance Companies, approved by Decree Law No. 298/92 of 31 December, with entities resident in Portuguese territory outside the free zones, or with non resident finance entities that are majority owned directly or indirectly by entities resident in Portuguese territory outside the free zones.

d)Entities that carry on the activity of investment fund management, in relation to the income derived by them from the management of funds, the units of participation of which are exclusively acquired on issue, by non-residents in Portuguese territory, except for the permanent establishments which they may have there, and the investments of which are exclusively in financial assets issued by non-residents or other assets located outside Portuguese territory, without prejudice to up to 10% of the global net value of the fund consisting of cash, bank deposits, certificates of deposit or investments in the inter bank markets;

e) Entities that carry on insurance or re-insurance activity, in the non-life field, and that operate exclusively with risks located in the free zones or outside of the rest of Portuguese territory, in relation to the income from their activities;

f) Pension fund management companies, and those of life assurance or re-insurance, in the non-life field, that undertake obligations exclusively with non-residents of Portuguese territory, except for the permanent establishments of such non-residents, situated there, in relation to the income from those activities;

g) Portfolio management companies Sociedades Gestoras De Participações Sociais or SGPS in relation to income from shareholdings in companies not resident in Portuguese territory, except for the free zones, or in other European Union Member States.

h) The entities referred to in paragraph a) above in relation to income derived by them from activities carried on in the demarcated industrial zone not included in paragraph a), and other entities not mentioned in the preceding paragraphs, in relation to income derived from their activities within the institutional ambit of the respective free zone provided that, in both cases, the income relates to transactions with entities installed in the free zones or with non-residents of Portuguese territory, except for their permanent establishments situated there outside the Free Zones.

2. Entities that participate in the capital of companies located in the free zones and mentioned in paragraphs a), b), g) and h) of 1. above are exempt, without any formalities, from corporate or individual taxes until 31 December 2011 in relation to:

a) the profits placed at their disposal by those companies, in the proportion which the exempt part increased or reduced by net worth variations attributable to activity carried on outside Portuguese territory or with companies located in the free zones not reflected in that profit, bears to the net total profit of the corresponding accounting period, increased or reduced by net worth variations not reflected in that profit;

b) the income from interest and other form of remuneration of shareholder loans, allowances or advances of capital made by them to the company or due to the non-withdrawal by them of profits or remuneration placed at their disposal.

3. For purposes of applying the provisions of the preceding section, the following rules apply:

a) If the amount of profits placed at the disposal of the shareholders includes the distribution of reserves, for purposes of the calculation of the exempt part referred in a) of the preceding section, the older reserves are deemed to be those first distributed;

b) Entities resident in Portuguese territory are not entitled to the exemption envisaged in the preceding section, except if they are shareholders of the companies referred to in section 1. a) or b).

4. Interest on loans obtained by entities located in the free zones, provided that such loans are for the purpose of financing investments and the normal functioning of the borrowers, within the ambit of the free zone, and provided that the lenders are non-residents in the rest of Portuguese territory, except for their permanent establishments located there, are exempt from corporate tax.

5. The following is exempt from individual or corporate tax:

a) Income from the grant or temporary licensing by entities non-resident in Portuguese territory, except their permanent establishments placed there and outside of the free zones, of patents, utilisation licences, models, industrial models or designs, trade marks, names and insignia, manufacturing or conservation processes and analogous rights, as well as the income from the provision of technical assistance and from the provision of information acquired through experience in the industrial, scientific or commercial sectors, provided it relates to the activity carried on within the free zone;

b) Income from services obtained by non-residents, except for their permanent establishments located in Portuguese territory outside the free zones, provided that it is paid by entities located in the free zone, and it relates to activity that is carried on there.

6. Income paid by the credit institutions located in the free zones, whatever the activities carried on by their permanent establishment located there, in relation to the financing of the balance sheet liabilities of these permanent establishments is exempt from individual or corporate tax, provided that the recipients of that income are:

a) Entities in the free zones, except for credit institutions, finance companies or finance branches that engage in transactions with residents of Portuguese territory or with permanent establishments situated there;

b) Non-residents of Portuguese territory, except for their permanent establishments located there outside of the free zones.

7. Income paid by trust companies and off-shore branches located in the free zones to the users of their services, provided that these are entities located in the free zones or non-residents in the rest of Portuguese territory, are exempt from corporate or individual tax.

8. The crew members of the ships registered at the International Shipping Register, created and regulated within the ambit of the Madeira free zone, or at the International Shipping Register, to be created and regulated, under the same conditions, within the ambit of the Santa Maria free zone, are exempt from individual tax in relation to the remuneration received in that capacity and while the registries are valid.

9. The provisions of the preceding section do not prejudice the consideration of the exempt income for purposes of Article 72 of the Individual Tax Code determination of the rate applicable to non-exempt income.

10. Income obtained in Portuguese territory, except the free zones, is excluded from the exemption from corporate and individual tax as stated above, considering as such:

a) Income envisaged by respectively, Article 17 of the Individual Tax Code and Article 4(3) et seq. of the Corporate Tax Code, income from Portuguese public debt securities and debt and securities issued by the Autonomous Regions, by local governments, by institutes or public funds and, also, any income from other securities that could be classified as public funds;

b) Income from services provided to individuals or collective persons resident in Portuguese territory as well as to permanent establishments there of non-resident entities, except for entities located in the free zones.

11. Documents, books, papers, contracts, operations, acts and products covered by the General Stamp Tax Table in respect of entities licensed in the Madeira and Santa Maria free zones and entities that manage the zones are exempt from stamp tax, except if they have as their recipient or if they involve entities resident in national territory or permanent establishment of non-residents entities located there.

12. The tax regime envisaged in sections 2, 4 and 5 applies to the concessionaire companies of the free zones and their respective shareholders or owners and to the acts and operations practised by them in connection with their corporate objects, with the former being entitled also to exemption from corporate tax until 31 December 2017.

13. For purposes of the foregoing paragraphs, entities are regarded as resident in Portuguese territory if they are regarded as such under the Individual Income Tax Code and the Corporate Tax Code and who are not regarded as residents of another state under a tax treaty entered into by Portugal.

14. For purposes of the foregoing paragraphs, the status of non-resident shall be proved in the following form:

a) In the case of central banks, institutions of public law or international organisations, as well as financial institutions domiciled in a Member State of the European Union or a country with which Portugal has concluded a tax treaty, and that are subject to a special regime of supervision or administrative registration, by the respective taxpayer identification number;

b) In all other cases, by presenting a certificate of residence or equivalent document issued by the tax authorities or other official entity of the country f residence or of a document issued by the Portuguese consulate, confirming residence abroad, dated not more than three years prior to and three months after the date of the transaction and recognition of the income, except where the document is of shorter validity, in which case that applies.

15. The entities referred to in 1. above are obliged to certify the non-resident status of entities with which they have established relations, and the form of proof must be retained for not less than five years and displayed or provided to the tax administration whenever requested.

16. Failure to present proof of non-residence referred to in the preceding paragraph by the entities referred to in paragraph 1. shall have the following consequences:

a) The benefits granted to entities that claim that status shall be null and void;

b) The general rules of the relevant codes governing payment of the tax due shall apply, and

c) It shall be presumed that the transactions were entered into with entities resident in Portuguese territory for purposes of this article.

17. Entities to which subparagraph c)of Paragraph 1 applies that do not carry on their activity exclusively in the free zones shall organise their accounts to allow the computation of the profits of operations carried on in the free zones, for which procedures may be detailed in an order to be issued by the Ministry of Finance.

Article 41-A

Special regime of the Madeira Free Zone

1. The profits of entities mentioned in Article 41 (1) d),e),f),and h) shall be liable to corporate tax from 1 January 2001 to 31 December 2011, provided the conditions set out in those paragraphs are fulfilled, at rate of 1% if they are licensed during 2001 or 2002, 2% if they are licensed in 2003 or 2004, and 3% of they are licensed in 2005 or 2006.

2. The profits of credit institutions and finance companies shall be liable to corporate tax from 1 January 2001 to 31 December 2011, provided the conditions set out in paragraph c) of Article 41(1) are fulfilled, at a rate of 7.5% if they are licensed during 2001 or 2002, 10% if they are licensed in 2003 or 2004, and 12.5% of they are licensed in 2005 or 2006.

3. The profits or dividends received by portfolio management companies Sociedades Gestoras De Participações Sociais or SGPS licensed in the years 2001 through 2006, shall be taxed at the rates referred to in paragraph 1 above provided the conditions set out in paragraph g) of Article 41(1) are fulfilled.

4. Companies licensed after 1 January 2001 in the demarcated industrial zone , and those who licensed after that date carry on the activity of maritime transport, shall continue to enjoy the regime envisaged in subparagraphs 1) and b) of Article 41.

Law nº 30-F/2000, of 29 December

Article 2

The amended wording given to Article 41(1)(c) shall not apply to transactions already entered into under the previous legislation, as long as they are not modified or extended after 1 January 2001.

Article 3

In conformity with the notification already made to the European Commission by the Portuguese Government, a new Article 41A is added to the Tax Incentives Statute approved by Law No.215/89 of 1 June, relating to entities that are limited to the free zone of Madeira , with the following wording:

(see above)

Article 4

This law shall enter into force on 1 January 2001.

Current as at 1st July 1996

TAX AND FINANCIAL INCENTIVES

Modifies Article 41 of the Statute of Tax Benefits, approved by DL no. 215/89 of the 1st of July which partially revokes DL no. 165/86.

DECREE LAW Nº 84/93
The evolution of the process of European financial integration, which modifies in a positive manner the comparative advantages which Free Trade Zones and Offshore Centres, established within the European Community offer to companies wishing to operate in the international markets, as well as the experience acquired with the system of fiscal incentives granted to the Free Trade Zones of Madeira and Santa Maria Island, justify a re?definition of their respective frameworks, in order to avoid economic distortions in the Portuguese national territory and to re?affirm the principle that these fiscal benefits are not applicable to operations involving residents in the aforementioned territory.

Thus:

In accordance with the legislative authority granted by Law nº 2/92, of the 29th of March, and in the terms of lines a) and b) of nº 1, of Article 201 of the Portuguese Constitution, the Government decrees the following:

Article 1
Article 41 of the Tax Incentives Statute, attached to Decree?Law nº 215/89, of the 1st of July, is hereby amended to the following:

Article 41
Madeira and Santa Maria Free Zones
1. Entities located in the Madeira and Santa Maria Island Free Zones are entitled to exemption from corporate or individual taxes, until the 31st of December, 2011, on the following terms:

(a) Entities located in the respective industrial free trade zone, in relation to income resulting from the carrying on of activities of an industrial nature, envisaged in Article 4 (1) and qualified under the provisions of Article 4 (2) and (3), of Regulatory Decree nº 53/82, of the 23rd of August and Regulatory Decree nº 54/82 of the of the same date, as well as activities that are accessory or complementary to the one above;

(b) Entities duly licensed that carry on the activity of maritime transport, in relation to income derived from the carrying on, within the institutional ambit of the respective free zone, of the above?mentioned activity, except income from the transport of cargo or passengers between national ports;

(c) Credit institutions, in relation to the income from their activities, provided that their activity excludes the taking of deposits, or other repayable funds from the public, the granting of credit, including the provision of guarantees and other obligations, financial leasing and factoring, which have as their contracting party a resident in Portuguese territory or that can be imputed to a permanent establishment of a non?resident located there, unless they are entities located in the free zones;

(d) Entities that carry on the activity of investment and fund management, in relation to the income derived by them from the management of funds, the units of participation of which are exclusively acquired, on issue, by non?residents in Portuguese territory, except for the permanent establishments which they may have there, and the investments of which are exclusively in financial assets issued by non?residents or other assets located outside Portuguese territory, without prejudice to up to 10% of the global net value of the fund consisting of cash, bank deposits, certificates of deposit or investments in the interbank markets;

(e) Entities that carry on insurance or re?insurance activity, in the non?life field, and that operate exclusively with risks located in the Free Trade Zones or outside of the rest of Portuguese territory, in relation to the income from their activities;

(f) Pension fund management companies, and those of life assurance or re?insurance, that undertake activities obligations exclusively with non?residents of Portuguese territory except for the permanent establishments of such non?residents situated there, in relation to the income from their activities;

(g) Holding companies ("SGPS's"), in relation to the income derived by them from shareholding in companies which are non?residents of Portuguese territory, except for the free zones, or of other Member? States of the European Community;

(h) Entities referred to in a), in relation to income derived from the activities carried on in the demarcated industrial zone not included in a), and other entities not mentioned in the above paragraphs, in relation to the income from their activities within the institutional ambit of the respective free zone, provided that, in both cases, the income is a result of activities carried on with entities located in the free zones, or with non?residents of Portuguese territory, except for their permanent establishments located there outside of the free zones.

2. Entities which participate in the share capital of companies located in the free zones and mentioned in paragraphs a), b), g) and h) of 1) above are exempt without any formalities, from corporate or individual taxes, until the 31st of December, 2011, in relation to:

(a) the profits placed at their disposal by those companies, in the proportion of the sum of the exempt part and the non?exempt one which arises from income earned outside Portuguese territory, of the net profit of the corresponding accounting period, increased by net worth variations not reflected in that profit.

(b) the income from interest and other forms of remuneration of shareholder loans, allowances or advances of capital made by them to the companies or due to the non?withdrawal by them of profits or remunerations placed at their disposal.

3. For purposes of applying the provisions of the preceding section, the following rules apply:

(a) If the amount of the profits placed at the disposal of the shareholders includes the distribution of reserves, it will be considered that, for the purpose of the calculation of the exempt part referred to in a) of the preceding section, that the older reserves are those first distributed;

(b) Entities resident in Portuguese territory are not entitled to the exemption envisaged in the preceding section, except if they are shareholders of the companies referred to in section 1. (a) or (b).

4. Interest on loans obtained by entities located in the free zones, provided that such loans are for the purpose of financing investments and the normal functioning of the borrowers within the ambit of the free zone, and provided that the lenders are non?residents in the rest of Portuguese territory, except for their permanent establishments located there, are exempt from corporate tax.

5. Income from the grant or temporary licensing by entities non?resident in Portuguese territory (excluding their permanent establishments placed there but outside the ambit of the free zones) of patents, utilization licenses, models, industrial models or designs, trade marks, names and insignia, manufacturing or conservation processes and analogous rights, as well as the income from the provision of technical assistance and from the provision of information acquired through experience in the industrial, scientific or commercial sectors is exempt from corporate or individual tax provided it relates to the activity carried on within the ambit of the free zone;

6. Income paid by the credit institutions located in the free zones, whatever the activities carried on by their permanent establishments located there, in relation to the financing of the balance sheet liabilities of these permanent establishments, provided that the recipients of that income are entities located in the free zones or non?residents of Portuguese territory, except for their permanent establishments located there outside of the free zones, is exempt from corporate or individual tax.

7. Income paid by trust companies and offshore branches located in the free zones to the users of their services provided that these are entities located in the free zones or non?residents in the rest of Portuguese territory, are exempt from corporate or individual tax.

8. The crew members of the ships registered at the International Shipping Register, created and regulated within the ambit of the Madeira Free Zone, or at the International Shipping Register, to be created and regulated, under the same conditions, within the ambit of the Santa Maria Free Zone, are exempt from individual tax in relation to the remunerations received in that capacity and while the registries are valid.

9. The provisions of the preceding section do not prejudice the consideration of the exempt income for purposes of Article 72º of the Individual Tax Code (determination of the rate applicable to non?exempt income).

10. Income obtained in Portuguese territory, except the free zones, is excluded from the corporate and individual tax exemption, as stated in the previous sections, considering as such:

(a) Income envisaged by respectively, Article 17º of the Individual Tax Code and Article 4 (3) and following of the Corporate Tax Code, income from securities representative of the national public debt and securities issued by the Autonomous Regions, by local governments, by public institutes or public funds and, also, any income from other securities that could be classified as public funds;

(b) All income from services provided to individuals or collective persons resident in Portuguese territory as well as to permanent establishments there of non?resident entities, except for entities located in the free zones.

11. Documents, books, papers, contracts, operations, acts and products covered by the General Stamp Tax Table in respect of entities licensed in the Madeira and Santa Maria free zones are exempt from stamp tax, except if they have as their recipient or intermediaries entities resident in Portuguese territory or permanent establishments of non?resident entities located there.

12. The tax regime envisaged in sections 2, 4, and 5 applies to the concessionaire companies of the free zones and their respective shareholders or owners and to the acts and operations practised by them in connection with their corporate objects, with the former being entitled also to exemption from corporate tax until the 31st of December, 2017.

Article 2
This Decree?Law shall come into effect on the 1st of January, 1993.

Current as at 1st July 1996

TAX AND FINANCIAL INCENTIVES

Establishes the system of tax and financial incentives for companies operating within the IBC.

DECREE?LAW Nº 165/86

The special geographical situation of Madeira together with the very specific characteristics of its company led the Government to authorize, in terms of Decree?Law Nº 500/80 of 20th October, the creation of a free zone in the Autonomous Region of Madeira.

The central objective in view, was to promote and attract new investments designed to help the economic and social development of the Region , to which end, under and in terms of Regulatory Decree Nº 53/82 of the 23rd August, the Government determined that all activities of an industrial, commercial and financial nature may be authorized in the said free zone.

In accordance with this policy, the Government sought and obtained from the Assembly of the Republic, legislative powers to revise the tax benefits which shall be granted to companies, which install themselves in free zones that have been created, a measure which will now be applied together with other benefits for similar purposes.

In drawing up the incentives hereby granted, due allowance has been made for the economic delay in assisting to install themselves, defined in terms, compatible with the stipulations of Nº 3 of Article 92 of the Treaty of Rome, and aimed at the promotion of regional development and an improvement in the conditions under which the companies which install themselves in the Free Zone of Madeira may compete:

Consequently:

In accordance with the authorization granted under Article 77 of Law Nº 9/86 dated the 30th April, the Government decrees, in terms of item b) of Nº 1 of Article 201 of the Constitution, the following:

Article 1
(Objectives)
In order to promote and attract investment in the Free Zone of Madeira, tax and financial benefits may be granted on a regional basis for the following purposes:

(a) To promote the installation of new investment projects;

(b) To attract and secure factors of production;

Article 2
(Incentives)
The incentives to be conceded for the promotion and attraction of investment in the Free Zone of Madeira shall be defined by the Regional Government, after analysing the contribution that is able to be made to the economic and social development of the Region, provided that the Regional Government is able to make available the resources for the purpose.

Article 3
(Agreements on double taxation)
The effects resulting from exemption and/or reduction in tax rates should be considered in order to avoid international double taxation.

Article 4
(Accounting requirements)
The companies established in the Free Zone of Madeira should keep suitable books, so that profits derived from activities carried on in the Free Zone can be clearly and unmistakably identified, in keeping with the requirements, if applicable, of the sole paragraph of Article 22 of the Industrial Tax Code.

Article 5
(Financial incentives)
1. The companies established in the Free Zone of Madeira may be granted the following financial incentives by the Regional Government:

(a) A share of up to 50% in the cost of staff training, to be determined in the light of its technological content and its social and economic impact on the region;

(b) A share of up to 50% in the costs arising from the adoption of manufacturing processes which result in energy savings.

2. The availability of the financial incentives provided for in the previous clause is subject to the Regional Budget.

Article 6
(Tax incentives for shareholders)
The shareholders of companies established in the Free Zone of Madeira shall enjoy, without and formality, the following tax incentives:

(a) The total value of their holding in the capital of the formed company shall be considered a deductible charge for the purposes of industrial tax in the respective financial period;

(b) They shall be exempt from capital tax and complementary tax in respect of income arising from profits on loans, supplementary capital, or other advances made to such companies, and also in respect of the income arising on profits not uplifted prior to the end of the year during which they were placed at their disposal;

(d) Holdings, quotas, shares or other assets forming part of the equity of companies established in the Free Zone of Madeira, whether transferred free of charge or against payment, shall be exempt from property transfer tax, donations tax, death and legacy duties, provided that the respective activity is exercised solely within the said Free Zone.

Article 7
(Tax incentives for companies)
Companies established in the Free Zone of Madeira shall enjoy the following tax benefits:

(a) Exemption from tax on transfer of property, death and legacy duties due on the acquisition of immovable property for their establishment;

(b) Exemption from capital gains tax due on the sale of buildings, plots or other fixed assets which they have kept as a reserve or for profit;

(c) Exemption, up to 31st December 2011, from property tax, industrial tax and complementary tax applicable to income derived from the carrying out of their activity in the Free Zone of Madeira;

(d) Exemption from local taxes and levies;

(e) Exemption from extraordinary taxes on profits and expenses.

Article 8
(Fiscal incentives for capital transactions)
Interest on loans contracted by companies established in the Free Zone of Madeira with foreign credit institutions will be exempt from capital tax and complementary tax, as will the interest on debentures issued by those companies, provided that the amount raised by such loans is destined for investment and their normal operations in the said Free Zone.

Article 9
(Incentives relating to social security)
Companies established in the said Free Zone shall not be obliged to deduct any sums for social security contributions from the wages of workers under the age of 22 who are admitted into their employ as trainees or apprentices, until such time as they reach that age.

Article 10
(Tax incentives for the transfer of technology)
Income derived from the concession or temporary lease of registered patents, operating licences, jigs, industrial drawings or moulds, trade marks, brands or insignias of establishments, processes for manufacture or the preservation of products and similar rights, together with that received from the supply of information relating to experience acquired in an industrial, commercial or scientific sector, are free from any form of tax or levy.

Article 11
(Foreign investment)
1. Direct foreign investment which is intended for the installation of new companies in the Free Zone of Madeira shall enjoy the tax benefits outlined in the aforementioned articles.

2. Foreign companies which are registered in the Free Zone of Madeira, as also their respective shareholders and owners, shall be entitled to:

(a) Freely repatriate their invested capital and profits;

(b) Freely transfer funds connected with commercial transactions;

(c) Have no restrictions placed on the import of capital and enjoy the simplification of the respective administrative proceedings.

Article 12
(Service companies)
1. The concessionaire of the Free Zone of Madeira, as also the commercial or financial services companies referred to in clause 1. of Article 4 of the Regulatory Decree No 53/82 dated 23rd August, may be authorized by the Regional Government of Madeira, in terms of the powers granted to it by Article 2 of this Decree, to acquire, purchase or make use, lease or otherwise, permanent installations in the Autonomous Region of Madeira if this is considered essential or advisable for the more efficient carrying out of their respective activities.

2. The installations referred to in the previous clause should be clearly identified as being utilised by companies registered in the Free Zone of Madeira, and that no manufacturing, handling or storage operations may be performed therein.

Article 13
(Tax system for the Concessionaire)
The tax system outlined in Articles 6, 7, 8, 9, and 10 shall be applicable to the concessionaire company which is operating the Free Zone, to the respective shareholders or owners and to the acts and operations carried out in connection with its objective, with the exception of the date indicated in item c) of Article 7, which shall be 31st December 2017.

Current as at 1st July 1996

FORMATION, OPERATION AND REGISTRATION OF COMPANIES

Authorizes the creation of the IBC's private deeds registry services and allows the possibility to use foreign names or denominations by the companies licensed to operate within the system.

The creation of Madeira's Free Trade Zone is based on features which give it a privileged position in international markets and competitive characteristics in comparison with other offshore centres.

This requirement is specially relevant in the formation and operation of entities intending to undertake their activities within the legal framework of the Free Trade Zone, since these formalities may be carried out in other centres in a more efficient and less bureaucratic manner. It is important, therefore, to provide special registration and private deeds services to meet this specific situation.

In these circumstances, it is necessary to begin by fulfilling the expectations for a private commercial registry for Madeira's Free Trade Zone. This shall include the undertaking of the activities carried out by the conservatories of commercial registries, including intermediary services before the National Registry of Collective Persons (RNPC), without prejudice, in any case, of the essential institutional ties.

Likewise, a private deeds registry shall be created, with obvious advantages and organized in such a manner as to be able to satisfy the requirements of English?speaking nations.

The Regional Government of Madeira was consulted:

Under the terms of paragraph a) of nr. 1 of article 201 of the Constitution, the Government decrees the following:

Article 1
1. Within the Ministry of Justice, the private deeds and registration services of Madeira's Free Trade Zone are created.

2. The services referred to above include:

(a) conservatory of the commercial registry;

(b) notarial office.

Article 2
1. The services of the commercial registry are under the responsibility of a private conservatory, hereafter referred as CRC, with the power to perform all acts undertaken by other conservatories with regard to entities which operate exclusively within the legal framework of Madeira's Free Trade Zone.

2. The CRC also has the power to register the management of trusts, in which the trustees shall appear as the entities referred to in the previous paragraph.

3. The registries foreseen in nr. 1, carried out in other conservatories and which are valid when this law is in force, will be transferred to the CRC.

Article 3
1. The notarial services are under the responsibility of a private deeds office.

2. It is the responsibility of the notarial services to undertake all notarial acts relating to the entities referred in nr. 1 of the previous article.

Article 4
1. The identification cards of individuals, s, or similar entities shall refer that the individual or entity is authorised to only operate within the legal framework of Madeira's Free Trade Zone.

2. The issue of the admission certificates and of the identity cards will be carried out by the CRC through the appropriate computer services.

3. Once the competent mechanism of the National Registry of Collective Persons has been activated, the CRC shall issue a provisional identification card, containing what was specified in nr. 1.

4. The companies licensed to operate within the legal framework of Madeira's Free Trade Zone enjoy the possibility to use entire or parts of foreign words and denominations in the making of the Company's name.

Article 5
1. The CRC operates under the orders of a conservator, assisted by two officials.

2. The private deeds office operates under the orders of a notary, assisted by two officials.

3. The positions of conservator and private deeds and registration services of Madeira's Free Trade Zone are carried out by a conservator and a notary, without any time limitations, appointed by the general manager of Registries and Notaries, who may also apply this system to the officials.

4. This appointment may be combined with another role.

5. The period of service rendered under the terms of the previous paragraphs is considered, for all effects, as being rendered in the place of origin.

6. The officials referred to in nrs. 1 and 2 are composed of a first assistant and a "escriturário".

Article 6
The personnel foreseen in the above article have the right to a remuneration equivalent to employees of the same level who work at the conservatory and notary of 1st class in the Autonomous Region of Madeira.

Article 7
The establishment and operation of the services as well as the expenses of the personnel involved are the responsibility of the state.

Article 8
The acts referred to in this law are exempt from any tax or fee.

Article 9
The legislation which regulates the registration and notarial services is applicable to the services foreseen in the present law.

Current as at 1st July 1996

FORMATION, OPERATION AND REGISTRATION OF COMPANIES

Confines the mandatory publications regarding the acts which refer to the entities licensed within Madeira's Free Trade Zone to the Official Journal of the Autonomous Region of Madeira - IV Series (free).

Decree?Law Nº 212/94

The development of Madeira's Free Trade Zone implies the creation of conditions which, from a legal?economic point of view can make this Zone more competitive in the international markets, in relation to other similar centres, thus contributing to the increase of foreign investment in Portugal.

The recognition of the importance of this objective implies the establishment, through Decree?Law nr. 352?A/88, of the 3rd of October, of the possibility to incorporate companies of one shareholder which have as their object offshore trust operations.

Taking into consideration the need of continuing to improve the conditions which stimulate the development of the Free Trade Zone of Madeira, the present law allows the formation and management of companies held in quotas by one shareholder, provided they are duly licensed to operate within the Free Trade Zone.

The proposed solution is in harmony with EC Directive nr. 89/667, of the council, of the 21st of December, with regard to limited liability companies with a single shareholder and take into consideration the fact that such cases already exist.

Consequently, with the objective of reducing the costs of entities licensed to operate within Madeira's Free Trade Zone and of assuring the publicity and safety of legal commerce, it is determined that acts registered in the conservatory of the Private Commercial Registry of Madeira's Free Trade Zone be published only in the official Journal of the Autonomous Region of Madeira, 4th series.

The government of the Autonomous Region of Madeira was consulted:

Thus:

In the terms of paragraph a) of nr. 1 of article 20/ of the Portuguese constitution, the government decrees the following:

Article 1
1. "Sociedades Anónimas" (companies owned by shares) or "Sociedades por quotas" (Private liability companies) licensed to operate within Madeira's Free Trade Zone, may be formed with a single shareholder, an individual or a company, national or foreign.

2. Should the licence to operate within Madeira's Free Trade Zone be cancelled, for any reason, the companies referred to in nr. 1 must be winded up, in the terms of articles 142, 143 and 144 of the Portuguese Companies Code, having the Public Ministry the legitimacy to propose the respective act.

Article 2
1. The companies referred to in the previous article must include in their name the expression "sociedade unipessoal" (unipersonal company).

2. The above is applicable to companies who became unipersonal, which do not need to amend their contracts, but only to register their new names at the request of the company's administration body or single shareholder.

Article 3
1. The shares of "sociedades unipessoais" (unipersonal companies) must be nominative shares.

2. When the company is formed by quotas, there is only one quota held by the single shareholder.

Article 4
1. The single shareholder exercises the powers given by law to the general assembly, and all decisions must be properly registered in the members of the board.

2. Contracts between the single shareholder and the unipersonal company must be properly registered in the members of the board and included in the management reports of the fiscal year in which they were elaborated, except if they consist of daily operations by the company.

Article 5
1. It is forbidden to a unipersonal company to form other companies of which it would be the single shareholder.

2. The unipersonal company and the company which totally controls it are considered as a , independently from the location of the legal address of the dominant company. This relation no longer exists in those cases foreseen in paragraphs b) and c) of nr. 4 of article 489 of the Portuguese companies code.

Article 6
The above articles do not withstand articles 21 and 22 of Decree?Law nr. 352?A/88, of the 3rd of October regarding offshore trust companies.

Article 7
1. The acts of the commercial Registry of Madeira's Free Trade Zone are only published in the official Journal of the Autonomous Region of Madeira, 4th series.

2. The conservatory of the commercial registry that undertakes the duties regarding Madeira's Free Trade Zone must send, unofficially, the registration form to the official Journal within five days.

Current as at 1st July 1996

Authorizes the creation of Madeira's International Business Centre

DECREE?LAW Nº 500/80

The creation of a free zone in the Autonomous Region of Madeira constitutes an old aspiration of the people of Madeira, strengthened by numerous interventions of the different bodies of the Region's own Government which expresses the feelings of the population itself.

One must recognize the special geo?strategic position of Madeira, characterized by a specific type of economy combined with a peculiar social?political configuration that oblige the establishment of a free zone, whose main object will be to promote new industries with views to improve the economic and social development of the region.

THUS: The Government decrees, under the terms of paragraph a) Nº 1 of Article 201 of the Constitution the following:

Article 1
The creation of a free zone is authorized, in the Autonomous Region of Madeira.

Article 2
The free zone referred to in the previous Article assumes an industrial nature, constituting an area for free importation and exportation of merchandise.

Article 3
The definition of the legal fiscal?mode to be applied to the merchandise, the nature, territorial extent, the characteristics of the free zone and regulations for the industrial activities therein shall be set out in a Regulatory Decree* to be published by the Government of the Republic, with the approval of the Regional Government.

Article 4
Merchandise entered into the free zone which thereafter have or not undergone manufacturing, transformation or reparation, after their entry, may be channelled to other parts of the Republic, or exported to other countries being there considered an imported article subject to all respective duties.

Article 5
The execution of the provisions set out in this statute will take into consideration whatever is stipulated as a result of the negotiations for Portugal's entry into the EEC.

Article 6
The present statute is valid the day following its publication.

Current as at 1st July 1996

INDUSTRIAL FREE TRADE ZONE/INTERNATIONAL SERVICES

Approves the regulation of the Industrial, Commercial, and Service Activities inserted within the framework of the IBC.

REGIONAL REGULATION DECREE Nº 21/87/M

RULES AND REGULATIONS FOR THE INDUSTRIAL, COMMERCIAL AND SERVICE OPERATIONS UNDERTAKEN WITHIN THE INSTITUTIONAL AMBIT OF THE MADEIRA FREE ZONE

The conditions of installation and operation as well as the regulation in respect of the industrial, commercial and service activities within the institutional ambit of the Madeira Free Zone are an essential and pressing objective within this law, with a view to the full implementation of that Free Zone now pursued.

The legal regulations contained in this decree do not apply to offshore financial activities; due to their subject matter, they have been regulated separately in Regional Regulation Decree Nº 16/87/M, of July 13.

Over and above that legal objective, the methodology of procedure now stated must be developed. In effect, the Madeira Free Zone requires fast, proficient and scheduled management for its economic and social prominence, which contribute to the development of the Autonomous Region of Madeira. The concession granted to the company called "S.D.M. ? SOCIEDADE DE DESENVOLVIMENTO DA MADEIRA, S.A.", bringing together public and private capital, is a step in this direction. The need to speed up and simplify the decision making process is well understood; the outdated and inflexible procedure with its unnecessary complexities and procedural delays, is often blamed for discouraging investment particularly when requested by corporation forged in more open and dynamic regimes.

In these terms, and pursuant to the provisions of section (b), Article 33 of Decree?Law Nº 318?D/76, of April 30 and Article 4 of Regional Legislative Decree Nº 22/86/M, of October 2, the Regional Government of Madeira decrees as follows:

Article 1
(Approval)
The regulations for industrial, commercial and service activities within the institutional ambit of the Madeira Free Zone are approved and published as an annex to this Decree, forming an integral part hereof.

Article 2
(Force)
This Decree comes into force immediately.

ANNEX 1
Regulations of industrial, commercial and service activities within the institutional ambit of the Madeira Free Zone

I ? ADMINISTRATION AND CONCESSION OF THE MADEIRA FREE ZONE

Article 1
(Subject Matter)
These regulations govern the installation and operation of corporations intending to operate within the institutional ambit of the Madeira Free Zone, through the exercise of industrial, commercial and service activities within that ambit. Its administration and exploitation is the responsibility of "S.D.M. ? SOCIEDADE DE DESENVOLVIMENTO DA MADEIRA, S.A.", hereinafter referred to as the concessionaire, or merely "S.D.M.", by virtue of the administrative contract of concession entered into with the Autonomous Region of Madeira on April 8, 1987.

Article 2
(Administration and Exploitation)
1. The administration and exploitation of the Madeira Free Zone is the exclusive responsibility of S.D.M., in the terms of the contract of concession referred to in Article 1 of these Regulations.

2. The obligations of S.D.M., are as follows:

(a) To observe and enforce, in the exploitation of the Free Zone, all the laws, regulations and instructions relating to same;

(b) To organise the administration services of the Free Zone;

(c) To ensure that all the installations, buildings and plant existing in the geographically delimited area of Caniçal are maintained in good order and condition.

II – LICENCES

Article 3
(Nature of Licences)
1. Licences for the installation, operation and exercise of industrial, commercial and service activities, within the institutional ambit of the Free Zone, have the nature of administrative authorization for the activities tom which they relate and are inherent to the entities operating in that ambit and to their respective activities and cannot be the autonomous subject?matter of juristic acts.

2. The inter vivos transfer of establishments, is conditional upon the prior consent of the Regional Planning Secretary, where the installation, re?operating, modification of plant or change of premises have been licensed.

3. The making of juristic acts contrary to the provisions of the above sections causes the licence to lapse.

Article 4
(Competency to license)
1. The competency to license the activities referred to in Article 1 of these Regulations lies with the Regional Planning Secretary.

2. The concessionaire will proceed to issue and sign the documents furnishing title of said licences.

Article 5
(Period of issue)
Authorization for the installation, operation and exercise of activities by users must be given within the period of 30 days from the date of delivery of the application to the concessionaire. This may be extended for a further equal period, if the concessionaire has been requested to furnish additional clarifications or any documents which are indispensable for its issue or also for the practice of other legal formalities, or hearing of other competent bodies.

Article 6
(Requirements and refusal of authorization)
1. The Regional Planning Secretary will appraise the suitability of the applicant and the economic interest of the activity to be carried out.