Governments have always used immigration policy to pursue economic objectives. Investment migration programmes are a particularly clear example. They allow countries to attract international capital while offering investors a route to residence, and they have become an established part of the competition between jurisdictions for internationally mobile wealth.
But there is an important distinction between deciding where investment should go and determining how that investment must be made.
Portugal’s latest proposed changes to its Golden Visa investment-fund route bring that distinction into focus.
An amendment submitted to the Portuguese Parliament as part of the 2027 State Budget process would increase the proportion of qualifying fund investments directed towards Portuguese companies from 60% to 80%. More significantly, it would require the relevant investment to be made through the reinforcement of those companies’ share capital.
The proposal has not yet become law. Nevertheless, the direction of travel raises a question that deserves careful consideration: when does an immigration policy designed to attract productive investment begin to dictate the investment strategy of the funds through which that capital is deployed?
The distinction is not merely technical. It goes to the heart of how investment funds operate, how companies obtain financing and how managers exercise their commercial judgement.
From Property Investment to Productive Capital
Portugal has already made a significant change to the economic structure of its investment-residence program.
The traditional property route was removed for new applications in 2023. The programme continued, but the emphasis shifted towards other forms of investment, including qualifying non-real-estate collective investment undertakings.
The fund route requires a minimum investment of €500,000. Under the rules currently published by AIMA, the fund must have a maturity of at least five years at the time of investment, and at least 60% of the value of its investments must be realised in commercial companies headquartered in Portugal.
This was an important policy development. Rather than attracting international capital principally into residential property, Portugal sought to direct more of that capital towards businesses and the wider economy.
I considered this transition in Portugal’s Golden Visa Without Property, where the move from property ownership towards professionally managed investment vehicles was examined. The change was potentially beneficial for both sides. Portugal could attract capital into its businesses, while investors could obtain exposure to a portfolio rather than a single property.
The current proposal takes that policy a step further. It does not simply increase the proportion of investment directed towards Portuguese companies. It also seeks to prescribe the form in which a substantial part of that investment must be made.
The Proposed Change Is More Than a Higher Threshold
The distinction between the existing framework and the proposed amendment is important.
Under the current rules, the relevant 60% test focuses on the value of fund investments realised in Portuguese-headquartered commercial companies. The proposed amendment would raise that proportion to 80% and add a requirement that the qualifying investment be made through increases in the share capital of those companies.
In practical terms, this places much greater emphasis on primary equity capital: money subscribed into a company in return for newly issued shares.
There is an understandable policy rationale behind this approach. A new equity subscription can strengthen a company’s balance sheet, provide capital for expansion and reduce reliance on borrowing. Unlike the purchase of existing shares, the proceeds of a primary share issue are paid into the company itself.
The question, however, is whether this should be the exclusive or predominant mechanism recognised for the qualifying portion of a fund’s investment.
A company does not always need additional equity. Nor is an equity subscription necessarily the most efficient or appropriate way to finance its development.
The capital structure of a business should ordinarily reflect its financial position, cash flows, growth prospects, risk profile and commercial objectives. Those considerations vary considerably between businesses and over time.
A regulatory framework that places too much emphasis on one financing instrument risks confusing the policy objective with the means of achieving it.
Investment Funds Are Not Merely Capital-Transfer Vehicles
An investment fund is not simply a mechanism for moving money from an investor into a company.
Its purpose is to pool capital, assess opportunities, construct a portfolio, allocate risk and seek returns within a defined investment strategy. The fund manager is expected to evaluate each opportunity on its merits and select an appropriate structure for the investment.
That may involve subscribing for newly issued shares. It may also involve acquiring an existing equity position, providing a shareholder loan, extending secured financing, investing through a convertible instrument or combining equity and debt.
These are not interchangeable legal or financial arrangements.
A primary equity subscription may be appropriate for a business that needs permanent capital to fund expansion. A secured loan may be more suitable for a mature company with predictable cash flows and a defined financing requirement. A convertible instrument may allow an early-stage business to obtain capital before a reliable valuation can be established. An acquisition of existing shares may provide an opportunity to invest in an established company or facilitate a change in ownership.
The appropriate instrument depends on the investment opportunity.
This is particularly relevant in private markets, where the range of businesses, stages of development and financing requirements is broad. A fund manager may encounter a profitable company seeking acquisition financing, an early-stage business requiring staged funding, or an established company whose shareholders are looking for a strategic investor.
The manager’s task is to determine whether the investment makes sense and, if so, how it should be structured.
If immigration eligibility becomes dependent on using one particular instrument, the manager’s available choices may become materially narrower.
The Difference Between Capitalisation and Investment
There is also a broader economic question.
The proposed approach appears to assume that increasing a company’s share capital is the most appropriate way to ensure that investment contributes to the Portuguese economy.
There are circumstances in which that will be true. But it is not universally true.
A company can receive significant economic benefit from a loan that finances new equipment, supports working capital, funds an acquisition or enables it to complete a development project. A secured loan can provide capital while preserving a financing structure that is appropriate to the company’s cash flows. A convertible instrument can provide early-stage funding while allowing the parties to defer the final equity valuation.
Similarly, the acquisition of existing shares may provide liquidity to a founder or existing shareholder, facilitate succession or allow a new investor to take an active role in developing the business. The proceeds do not necessarily enter the company’s balance sheet, but the transaction can still support a productive change in ownership and future investment.
The economic contribution of an investment cannot always be determined by looking only at whether the company’s nominal share capital has increased.
The relevant question should be what the capital enables the business to do, how the investment supports its development and whether the transaction contributes to productive economic activity.
The Role of the Fund Manager
The issue is also one of investment governance.
A fund manager cannot approach an investment decision solely by asking whether the transaction satisfies an immigration criterion. The manager must consider the interests of the fund and its investors, the fund’s investment policy, the risks involved and the commercial merits of the proposed transaction.
This requires independent judgement.
If a business would be better financed through debt, an equity subscription may introduce unnecessary dilution or a less suitable allocation of risk. If a company has no genuine need for additional permanent equity, forcing a capital increase may result in excess capital being deployed without a sufficiently attractive use. If an attractive opportunity involves the acquisition of existing shares, excluding it from the qualifying investment calculation may distort the manager’s assessment.
The problem is not that a fund should never invest through capital increases. It is that the investment instrument should ordinarily follow the investment analysis, rather than the investment analysis being shaped around a prescribed instrument.
This is a central feature of professional investment management.
In The Return of Private Equity to Wealth Management, I examined how private equity is becoming more relevant to private-wealth portfolios. That development depends in part on the ability of professional managers to select investments and structures appropriate to the opportunities available. The credibility of the fund model rests on that investment discipline.
The Risk of Distorting Capital Allocation
A rule designed to encourage productive investment can have unintended consequences if it becomes too prescriptive.
If the qualifying portion of a fund’s portfolio must be invested through share-capital increases, managers may increasingly favour companies that are willing and able to issue new shares, rather than companies offering the strongest investment opportunities.
Some businesses may have no reason to increase their share capital. Others may prefer debt because their expected cash flows can support it. Some may be attractive precisely because they offer an opportunity to acquire an existing business or shareholder position.
The result could be a narrower investment universe.
There is also a potential concentration effect. If a large number of funds are required to deploy capital through primary equity subscriptions, they may compete for a relatively limited pool of companies seeking new equity. That could influence valuations, weaken investment discipline and encourage capital to be deployed simply because it qualifies.
None of these outcomes is inevitable. But they are legitimate policy considerations, particularly where the rules are intended to influence the behaviour of professional investment managers.
A policy designed to attract capital should be careful not to reduce the quality of the investment decisions through which that capital is deployed.
Attracting Capital Is Not the Same as Directing Every Investment
Portugal’s broader economic objective is understandable. The country wants international capital to contribute to its businesses and productive economy. It also wants an investment migration framework that can be defended as economically beneficial.
But there is a difference between setting a clear destination for capital and prescribing the precise financial instrument through which it must arrive.
The former is a legitimate policy choice. The latter risks interfering with the operation of the investment market.
In From Attracting Wealth to Attracting Capital: The Next Competition Between Jurisdictions, I argued that jurisdictions increasingly compete not merely to attract wealthy individuals, but to become places where their capital can be managed, invested and reinvested with confidence.
That requires a functioning investment ecosystem. It requires businesses with different financing needs, investors willing to accept different forms of risk, and fund managers capable of matching capital to opportunity.
The objective should be to strengthen that ecosystem, not unintentionally narrow the tools available to it.
A More Balanced Approach
There are ways to pursue the policy objective without making one financing instrument the dominant measure of qualifying investment.
Portugal could retain a high threshold for investment in Portuguese businesses while recognising a broader range of genuine financing transactions. Primary equity, shareholder financing, qualifying debt, convertible instruments and other forms of productive investment could be recognised where appropriate safeguards are met.
The legislation could distinguish between investments that provide new capital directly to a company and transactions that support productive business activity through other means. It could also establish conditions designed to prevent passive or purely financial transactions from being treated as equivalent to genuine investment in Portuguese economic activity.
That would preserve the government’s ability to direct capital towards Portuguese businesses without requiring fund managers to disregard the commercial characteristics of each investment.
The details matter, and any alternative framework would need clear definitions, appropriate anti-abuse safeguards and workable verification requirements. But the policy objective should be to encourage productive investment, not to prescribe a single method of financing.
The Question Portugal Should Be Asking
The debate should not be reduced to whether the threshold should be 60% or 80%.
Nor should it be reduced to whether funds should invest more in Portuguese companies. There is a strong case for encouraging that.
The more important question is whether the rules will allow investment funds to continue acting as investment funds: assessing opportunities, structuring transactions, allocating risk and providing capital in the form that best serves the underlying business and the fund’s investors.
Portugal has an opportunity to develop a more sophisticated investment migration model, one in which international capital is channelled into productive businesses rather than concentrated in residential property.
That is a worthwhile objective.
But the success of such a model will depend not only on how much capital is attracted, or where it is directed. It will also depend on whether the framework allows that capital to be invested intelligently.
A government can decide where it wants investment to go. It should be cautious about deciding, in advance, the financial instrument through which every investment must be made.
That distinction is at the centre of the current debate.
This article discusses a legislative proposal as it stood on 16 November 2026. The proposal may be amended, rejected or adopted in a different form. It is general commentary and does not constitute legal, tax, investment or immigration advice.
Further Reading:
Portuguese Parliament: Amendment 2692C-2
AIMA: Residence Permit for Investment, Article 90-A
IMI Daily: Portugal’s Governing Parties Propose Tighter Golden Visa Fund Rules