Start Your Business in Brazil

This Article is meant as an introduction to, and explanation of the necessary steps to start your business in Brazil, including information on the different types of… business structure and the legal procedures involved in setting up a Brazilian business.



Things to Remember From the Outset

• 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
Incorporating a company in Brazil will take at least 30 days
• By law, the services of a Brazilian lawyer are required to incorporate a Brazilian company
• Incorporating a Brazilian company and being named its Director or Administrator are two separate things. To be able to be appointed as a Director or Administrator, a foreigner must obtain a permanent resident visa for Brazil (see Visas below)


Starting a Business in Brazil

Both foreign individuals and companies may set up a business in Brazil. The general rule is that such businesses may encompass any legal business objective. However, foreigners may find some restrictions in certain business areas (for example, publishing) or if the company’s business activities will be carried out in certain geographical areas considered to involve national security (for example, borders with other countries or coastline properties).


Visas

A foreigner does not need a Brazilian visa in order to be a shareholder in a Brazilian company. If the investor intends to appoint a Brazilian resident to be the company’s manager and only come to Brazil from time-to-time to oversee the investment, this can be done on a tourist or limited business visa. However, if a foreigner intends to move to Brazil in order to personally manage the company, a permanent visa is required. To get the permanent visa, a foreigner investor needs to prove that an investment in foreign currency equivalent to at least R$150,000 has been made in the Brazilian company.


Types of Companies

There are two basic types of limited liability company in Brazil:
1. Sociedade Limitada (LTDA): This is the most common form of company in Brazil. It is also the simplest and most flexible and inexpensive type of company to operate. It is governed by a Contrato Social (Articles of Organization) and its capital is divided into quotas (shares). There are no minimum capital requirements and the company is managed by one or more Administrators, resident in Brazil and appointed by the quotaholders. To be ensured total control of the company, a quotaholder must own at least 75 percent of its quotas.
2. Sociedade Anônima (SA): This form of company is not as flexible as a Limitada and is considerably more expensive to operate and more transparent, since all corporate acts and its annual financial statements must be published in newspapers. It is governed by Estatutos (By-laws) and its capital is divided into one or more classes of shares. An SA is managed by a Management Board and a Fiscal Council, each composed of two or more Brazilian residents. If an SA is listed on the stock exchange or has authorised capital, it must also have a Board of Directors, made up of shareholders.

Tax treatment of Limitadas and SAs in Brazil is identical.

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 to achieve.


Documents Required to Set up a Company

Unless the foreigner investor intends to be physically present in Brazil when the incorporation documents are signed, it will have to provide it´s Brazilian lawyer with a Power of Attorney containing powers to incorporate the company in it´s name. This applies to either foreign individuals or companies.
In addition, if the foreign investor is a company, it will also have to provide a copy of it´s Certificate of Incorporation issued by the competent authority in it´s country of origin and containing at least the following information:
Company name
Registered Office Address
Corporate Purposes
Registered or Authorised Capital (and classes of stock)
Names of Officers (or the name of the incorporators)
The above documents will have to be authenticated at the Brazilian Consulate/Embassy in the investor’s country of origin and then sent to Brazil, where they will be translated into Portuguese by an official translator and registered with a Documents Registry.


Preliminary Matters to be Resolved

Before a Brazilian company may be incorporated, the following preliminary matters, among others, must be decided:
Name of company: the company name must give an indication of its business area. If a foreign company is the investor, the foreign company’s name may be used followed by the words do Brasil (of Brazil) and an indication of it´s area of activities.
Names of quotaholders or shareholders: the identity of the quotaholders, in the case of a Limitada, or shareholders, in the case of an SA, must be known before the company can be incorporated
Legal address: the company must have a legal address. If a permanent office for staff is not required, the services of a company offering virtual office addresses may be used
Capital: the initial capital of the company must be decided as well as the period during which it will be paid up, which may be as long as one or two years
Management: the people who will comprise management must have been identified and named
Once the above matters have been resolved, the text of the Articles of Organization or By-laws will be drafted by the Brazilian lawyer and the company registered with the competent state Commercial Registry or Civil Registry. This registration will be handled by the Brazilian lawyer.


Step by Step 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 {See, “Preliminary Matters to be Resolved”, above}
• 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
• Have your lawyer obtain a Brazilian Federal Tax Number (“CNPJ”) for the company


Steps to be Taken After Incorporation

Once the company has been formally registered by the Commercial Registry or Civil Registry, the following actions should be taken:
Hire the services of an accountant to keep the company books
Register for State and Municipal tax: this may be done by either the lawyer or the accountant once the CNPJ has been obtained
Remit the company’s capital to be paid up initially through official banking channels and register the remittance with the Brazilian Central Bank within 30 days of entering Brazil. Registration is necessary to allow the remittance of profits abroad and the eventual repatriation of the investment. Registration is handled by the Brazilian lawyer online.
Obtain the necessary corporate and accounting books: this may be done by the accountant