The phrase “nominee director”, or “fiduciary manager”, is commonly used to describe a person who appears formally as the manager of a company but who does not in fact conduct its business, does not take the relevant decisions, and acts only on the instructions of others.
The figure is familiar in other jurisdictions. In Portugal it is not a company law category. The Commercial Companies Code knows managers (gerentes), agents and attorneys. It does not know an intermediate species of purely nominal manager, stripped of the duties and responsibilities that attach to the office.
The distinction matters in the Madeira International Business Centre, where an international structure may combine a licensed company, local managers or directors, wide powers of attorney, and a chain of control that terminates in another jurisdiction.
At a glance
Portuguese law recognises the manager of a company, who holds a corporate office with statutory powers and duties, and the attorney or agent, who acts under powers conferred by the company. It does not recognise a third category of nominal manager. A judgment of the South Central Administrative Court of 16 April 2026 confirms that formal appointment alone does not make a person liable for the company’s tax debts, and equally that a nominal arrangement is no safe harbour: what counts is who actually decides. In the Madeira Free Zone (aka Madeira International Business Centre), appointing a local manager does not by itself create the substance on which the regime depends.
What Portuguese law actually recognises
In private limited companies (sociedades por quotas), administration and representation belong to the managers. Managers must be natural persons with full legal capacity, and they are appointed in the articles of association or by shareholder resolution.
The Commercial Companies Code also provides that managers may not be represented in the exercise of the office itself. Management may, however, appoint agents or attorneys for specified acts or categories of acts.
The difference is structural:
- The manager holds a corporate office, with statutory powers of administration and representation and the corresponding duties.
- The attorney or agent acts under powers conferred by the company, within the limits of the mandate.
A nominee manager, understood as a merely nominal manager, is not a third legal category. If a person is appointed manager, that person retains the legal position of manager, even where it has been agreed internally that they will take no decisions or will act only on instructions.
A nominee or fiduciary arrangement does not, of itself, convert a formal manager into a simple attorney as against the company, the Tax and Customs Authority, creditors or third parties. The legal characterisation will depend on the conduct in fact and on the context in which the arrangement is invoked.
The starting point: a formal manager is not necessarily an actual manager
The judgment of the South Central Administrative Court under discussion concerns subsidiary tax liability under Article 24 of the General Tax Law. The court restates that formal designation as manager is not enough to make a person liable for the company’s tax debts. Effective exercise of administration or management functions has to be shown.
The case is instructive because the respondent:
- held a power of attorney with very wide powers of representation;
- had signed a number of the company’s cheques;
- appeared, in certain documents, as manager;
- carried out the functions of services director and works director;
- gave instructions to workers on operational matters; and
- held formal powers sufficient to perform various acts on behalf of the company.
The court nonetheless concluded that these elements did not, by themselves, demonstrate genuine de facto management. It was proved that the relevant decisions, in particular as to payments, suppliers, banks and the company’s other commitments, were taken by other people. The respondent confined himself to signing documents at their request, without autonomous intervention in the decision-making process.
The formulation the court used is the useful one: the respondent lacked the “substantive density of the office”.
An act that looks externally like an act of management, such as signing a cheque or a power of attorney, should therefore not be examined in isolation. The decisive questions are who determined the act, who controlled the decision, who negotiated with third parties, and who ultimately directed the company’s affairs.
A wide power of attorney does not transfer management
The judgment also rejects a conclusion that is tempting in practice: that a general power of attorney proves the attorney to be a de facto manager.
The court held that it was necessary to examine what had actually been done under the power of attorney, and on what terms. Documentary powers do not substitute for proof that they were exercised, autonomously and with decision-making effect.
The same reasoning was applied to the signing of cheques. Signing cheques may be a relevant indication of management, but it is not mechanical and conclusive proof where it is shown that the person only signed documents already decided by others.
The judgment should not be read as laying down a general rule that a cheque signatory is never a de facto manager. Its conclusion followed from the global assessment of the evidence: prolonged physical absence, subordinate functions, no involvement in negotiation, no decision-making power, and effective concentration of management in other people.
The practical lesson is narrower and more demanding than it first appears. The signature is an indication. The power of decision is the structural element.
Trustees are a different thing
The use of fiduciary structures in Madeira is not, in itself, a legal anomaly. Portuguese law expressly regulates trust instruments registered in the Madeira Free Zone. Decree-Law 149/94 provides for the registration of those instruments and refers to trustees operating exclusively within the institutional framework of the Madeira Free Zone.
It does not follow that Portuguese company law contains a “fiduciary manager” equivalent to a trustee. A trustee administers assets held within a fiduciary instrument according to the governing law and the terms of the trust itself. The manager of a Portuguese company holds a corporate office governed by the Commercial Companies Code.
The trust registration legislation confirms the difference. In the case of a trust, the registration may cover, among other elements, the settlor, the trustee, the beneficiaries, the assets held in the fund, the governing law, and the trustee’s powers of administration and disposal.
These are legally distinct realities:
| Structure | Principal function | Source of powers |
|---|---|---|
| Company manager (gerente) | Administration and representation of the company | Commercial Companies Code, articles of association and shareholder resolution |
| Attorney (procurador) | Performance of acts on behalf of the company | Power of attorney or mandate |
| Trustee | Fiduciary administration of an autonomous or separate estate | The fiduciary instrument and its governing law |
| Nominal “fiduciary manager” | Not an autonomous legal category | Internal agreement, mandate or informal practice |
Transparency and beneficial ownership
Even where a fiduciary structure is formally permissible, it does not remove the need to identify the persons who control or economically benefit from it.
Trust instruments registered in the Madeira Free Zone are subject to the Central Register of Beneficial Ownership. The declaration must cover, among others, the settlor, the fiduciary administrators, the beneficiaries, and any other natural person exercising effective control.
The regime does not stop at formal identification of the registered holder. It requires information on the circumstances indicating beneficial owner status, on the economic interest held, and, where applicable, on the chain of control.
Anti-money laundering legislation follows the same substantive logic. It treats as beneficial owners of trusts the settlor, the trustees, the beneficiaries, and any other natural person holding ultimate control through direct or indirect participation or by other means.
A person who appears formally as manager, trustee or nominee shareholder is therefore not necessarily the end point of the analysis. What matters is who controls, who decides, and who takes the economic benefit of the structure.
The specific risk of a nominal manager in the MIBC
In the Madeira Free Zone, the use of a nominee manager may pursue legitimate objectives: facilitating local administration, securing representation before banks or authorities, meeting operational requirements, or separating day-to-day management from economic ownership.
The structure becomes sensitive where the local manager:
- has no autonomy whatever;
- does not actually know the company’s business;
- signs pre-prepared documents;
- takes no part in meetings or negotiations;
- has no means of supervising the activity;
- has no real access to the financial information;
- acts only to satisfy a formal requirement; or
- is presented as responsible to third parties while every decision is taken outside Portugal.
In those circumstances the question is not simply whether a nominee manager exists. It is whether the company has a real administration, whether the person formally appointed actually exercises the office, and whether the activity benefiting from the Free Zone regime has sufficient economic connection with Madeira.
The regime was designed as an instrument of regional development. Under Regime III, the corporate income tax reduction applied to profits resulting from activities effectively and materially carried out in Madeira, and was linked to aid ceilings determined by, among other factors, the number of jobs maintained in the region.
The European Commission has emphasised that the compatibility of the regime depended on activity effectively developed in the region, with an office, staff, adequate resources, and a real and effective decision centre.
Portuguese case law had already taken a similar line. The Supreme Administrative Court held that establishment in the Free Zone could not be merely virtual and required a physical and human structure adequate to the activity carried out. Payment of a licence fee, or the formal existence of an entity registered in Madeira, did not satisfy the regional development purpose of the benefit.
The judgment of the General Court of the European Union of 6 November 2024 reinforces the point. The court confirmed a restrictive reading of the requirements of the regime, excluding the benefit in respect of activities carried out outside Madeira, and emphasising the requirement relating to the creation or maintenance of jobs in the Region.
A local manager does not create substance
This is the point that matters most for advisory purposes.
Appointing a person resident in Madeira as manager may be relevant, but it is not sufficient by itself to demonstrate:
- that decisions are taken in Madeira;
- that the economic activity is materially carried out in the Region;
- that the profits result from functions actually performed from Madeira;
- that there are adequate human and material resources; or
- that the jobs declared correspond to real activity.
The existence of an office, an address or a services contract does not automatically resolve the question either. Substance has to be assessed against the nature, size and complexity of the activity.
A nominee manager who only signs documents at the request of a foreign entity may be a formal component of the structure. That alone is unlikely to evidence a real and effective decision centre in Madeira. The opposite is the greater risk: that configuration may be used by the tax administration or by the European Commission as an indication that the company does not genuinely carry out the activity it declares to carry out in the Region.
Tax liability cuts both ways
The judgment has a consequence that is worth stating plainly: the absence of de facto management may prevent, in the particular case, the reversal of a tax debt against the person formally associated with the company.
It would be imprudent to convert that into a safe harbour for nominal managers. The court decided on concrete evidence of the absence of decision-making power, the existence of other effective managers, and the subordinate nature of the respondent’s conduct.
Where, by contrast, the person formally appointed:
- authorises payments;
- decides on hiring or dismissal;
- negotiates with banks or suppliers;
- concludes contracts;
- controls bank accounts;
- represents the company autonomously;
- sets commercial policy; or
- has effective freedom to determine the direction of the business,
that person may be treated as a de facto manager, even where another person holds the economic ownership or transmits the instructions.
The test is not the title used in the agreement between the parties. It is the reality of the conduct.
Where this leaves an international structure in Madeira
The phrase “nominee director” may be a useful economic description of certain international structures. It is legally misleading if it suggests that Portugal has a category of manager without real responsibility.
In Portuguese law, form is not irrelevant, but neither is it decisive. A formal manager may not be a de facto manager. An attorney may, depending on conduct, come materially close to being a manager. And a person who does not appear formally as manager may be treated as a de facto manager if they exercise powers of administration and representation with autonomy and continuity.
In the Madeira Free Zone the analysis is more demanding still. A fiduciary structure, a nominee, or a local manager does not substitute for effective economic activity, operational substance, transparency as to beneficial ownership, or a genuine decision centre in the Region.
The decisive question is not “who appears on the register?” It is who decides, who controls, who benefits, and where the activity that justifies the tax benefit is actually carried out. That passage from formal appearance to economic reality is the boundary between a legally defensible fiduciary structure and the mere nominal interposition of persons.
MCS can assist with the review of management and representation arrangements in MIBC-licensed companies, with the assessment of substance against the nature and scale of the declared activity, with beneficial ownership reporting, and with the governance documentation that supports a real decision centre in the Region, subject to a case-by-case analysis of the structure, the activity and the chain of control.
Frequently asked questions
Are nominee directors legal in Portugal? Portuguese company law contains no category of nominee or fiduciary manager. A person appointed manager holds the office of manager, with its powers and duties, whatever has been agreed internally. The arrangement is not for that reason void, but it does not create a reduced-responsibility status, and it will be tested against the person’s actual conduct.
Does a nominee manager avoid liability for company tax debts? Not as a rule. Under Article 24 of the General Tax Law, subsidiary liability requires effective exercise of management functions, so a purely nominal appointment may defeat a reversal. The judgment of 16 April 2026 turned on concrete evidence of absence of decision-making power. A person who authorises payments, negotiates with banks or controls accounts may be a de facto manager regardless of the label.
Is signing cheques enough to make someone a de facto manager? No. The court treated cheque signature as a relevant indication rather than conclusive proof, where the evidence showed the person signed documents already decided by others. The finding rested on the global assessment of the evidence, not on any single act.
Does a wide power of attorney make the attorney a manager? Not automatically. What has to be examined is what was actually done under the power of attorney and on what terms. Documentary powers do not substitute for proof that they were exercised autonomously and with decision-making effect.
Is a trustee the same as a nominee manager? No. Trust instruments registered in the Madeira Free Zone are regulated under Decree-Law 149/94, and the trustee administers assets within the fiduciary instrument according to its governing law. A company manager holds a corporate office governed by the Commercial Companies Code. The two are legally distinct.
Does appointing a local manager give a Madeira company substance? No, not by itself. It does not demonstrate that decisions are taken in Madeira, that the activity is materially carried out in the Region, that profits result from functions performed there, or that resources and jobs correspond to real activity. Substance is assessed against the nature, size and complexity of the activity.
Does a nominee arrangement affect beneficial ownership reporting? No. The Central Register of Beneficial Ownership and the anti-money laundering regime look to the persons who exercise effective control, requiring information on the circumstances indicating that status, the economic interest held and, where applicable, the chain of control. A nominee is not the end point of the analysis.
This article is provided for general information purposes only and reflects the position as at the date of publication. It does not constitute legal, tax or accounting advice and does not substitute an analysis of the concrete circumstances of each company, structure or officeholder. Judicial and arbitral decisions bind the parties to the proceedings in which they are given, and the characterisation of management in fact depends on the evidence in each case. The Madeira International Business Centre regime operates within the European Union State Aid Framework and its requirements, including those relating to activity carried out in the Region and to job creation and maintenance, are subject to supervision and to evolving case law. Madeira Corporate Services accepts no liability for any action taken, or omitted, on the basis of this article. Readers should obtain specific advice before acting.
Rosana Rodrigues is a co-founder and partner of TFRA Law Firm. Her work mainly involves advising foreign investors in Portugal, particularly in areas of Corporate and Tax law. She has also worked extensively in Shipping law… Read more
