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Starting a business in Brazil

Introduction to starting a business in Brazil.

  • Unlike certain other countries, it is not possible to purchase a ready-made, off-the-shelf company in Brazil, nor can a company be formed over the internet.
  • By law, a Brazilian lawyer must be involved when a Brazilian company is incorporated.
  • Although a foreigner may incorporate a company in Brazil, he/she must have a permanent visa in order to be appointed the company’s Administrator or Director.

Who May Open a Company in Brazil?
Both Brazilian and foreign individuals and companies may set up a Brazilian company. Generally speaking, such businesses may be formed to carry out any legal business objective. However, foreigners may be subject to certain restrictions in some business areas (publishing, for example) or when the company’s activities are to be carried out near Brazilian borders with other countries or on coastline properties.

Types of Brazilian Companies
While it is possible to establish a branch of a foreign company in Brazil, this is not recommended as it requires the issuance of a Presidential decree and is extremely time-consuming and expensive.

The two basic types of limited liability companies in Brazil are as follows:

  • The “Limitada”: this is the most common form of Brazilian company, mainly because it is the simplest and most flexible and inexpensive type of company to operate. It is governed by Articles of Association (“Contrato Social”), there are no minimum capital requirements and it is managed by one or more Administrators appointed by the shareholders (“quotaholders”) the Administrator(s) must be resident in Brazil.
  • The “Sociedade Anonima”: this form of company is not as flexible as a Limitada and is considerably more expensive to operate. It is also open to more public scrutiny, since its corporate acts and annual financial statements must be published in newspapers. It is governed by By-Laws (“Estatutos”) and its capital may be divided into one or more classes of shares. This form of company is managed by a Management Board and a Fiscal Council, each composed of two or more Brazilian residents. If listed on the stock exchange or if it has authorized capital, the S.A. must also have a Board of Directors composed of shareholders. Generally, this type of company serves for more complex corporate relationships, where there are numerous shareholders or when more sophisticated capital instruments are required.

The tax treatment of Limitadas and S.A´s is identical in Brazil.

Documents Required to Set up a Company in Brazil
Unless a foreigner intends to be physically present in Brazil during the incorporation process, it will be necessary to provide the Brazilian lawyer handling the incorporation with a Power of Attorney containing the powers necessary to incorporate the company in the investor’s name. This applies whether the investor is a foreign individual or foreign company.

If the investor is a foreign company, it will also have to supply a copy of its Certificate of Incorporation or similar document issued by the competent authority in it’s country of origin.

Both the Power of Attorney and the Certificate of Incorporation will have to be consularized at the Brazilian Consulate or Embassy in the investor’s country of origin and then sent to Brazil for translation into Portuguese by an official translator.

Procedures for Incorporating a Company
The following procedures should be followed by the foreign investor in setting up a Brazilian business:

  • Select the Brazilian lawyer who will handle the incorporation
  • Provide for the required documents referred to in section IV above
  • Decide certain preliminary matters with the help of the Brazilian lawyers in accordance with the requirements of Brazilian law {e.g., name of company, identity of shareholders, legal address, capital, name of Administrator(s)}
  • Work with Brazilian lawyer to finalize the text of the Articles of Association or By-laws
  • Register the company with the competent state Commercial Registry or Registry for Corporate Entities. This registration will be handled by the investor’s Brazilian lawyer
  • Obtain a Brazilian Federal Tax Number (“CNPJ”), which can also be handled by the investor’s Brazilian lawyer.

 

Written by: Eric Street
ES Internacional Serviços Ltda.

For more information click: Starting a business in Brazil