A key characteristic of supplementary capital contributions (prestações suplementares), which Portuguese law (articles 201º to 213º of the Company Code) forsees being used exclusively for Lda companies, but which subject to certain requirements may also be materially adopted in SA companies, is to enable shareholders to make supplementary capital contributions. This is provided the terms under which such contributions are made are stipulated in the company's by-laws and that supplementary equity capital is non-interest bearing. To demand from the shareholders all or part of the amount (necessarily foreseen in the by-laws) of the supplementary capital contributions, a resolution from the General Meeting is always required.
As regards reimbursement, the reimbursement of supplementary equity capital to the shareholders can only be made provided, after reimbursement, net equity is at least equal to the total amount of the statutory equity capital and the legal reserve. The reimbursement of supplementary equity capital also requires a shareholder resolution.
Supplementary equity capital contributions are accounted for in the net equity account and this is what has made them so attractive as a form of company financing by shareholders in Portugal (other than a capital increase which is always less flexible and more time consuming). The other main form of company financing by shareholders – shareholder loans – is accounted for as debt, and may cause the company to fall under thin capitalization provisions.
Pursuant to certain requirements, such as the report of a statutory auditor and a notarial deed of capital increase – supplementary capital contributions may be converted to share capital.