How to set up a company in Brazil
How to set up a company in Brazil
Setting up a business in any country is a challenge especially having to consider each country’s laws and rules in the process of setting up. Opening and maintaining a business in Brazil also present just as much difficulty but with the right information and tools it becomes a lot easier. Having a corporation in Brazil can only come after much consideration and obeying the several types of obligations set out by the government.
Depending on various factors as well as the objective of your business there are different types of corporations such as ME’s and Ltda’s. Limited Liability Companies (LLC’s) limit your personal liability to the amount invested in the company, this is the type this blog article will focus on.
Firstly, it is important to remember that any articles of incorporation as well as amendments to those articles afterwards must ALWAYS be signed off by an attorney. Contrary to popular belief it is mandatory although doesn’t have to be a hassle as some accountants have in-house lawyers so offer these services themselves.
In order to open a corporation the followings things are needed:
a) Documents (partners and owners)
– Limitadas require at least 2 quota holders (owners) which could be 2 individuals or 2 corporations or a combination of these two, either foreign nationals or Brazilians, it does not matter.
– In case of foreign individuals, each share holders/owners will we need the following documents:
1. Five legalized copies of passport (copies must be legalized by Brazilian Consulates abroad or at local “cartorio” in Brazil)
2. Brazilian CPF number(s) for of all shareholder(s).
– Corporations must have an address in Brazil. Depending on the type of products that corporation will deal with, (import and export corporation) the government may require a minimum square footage for the address or a third-party warehouse rental contract. Legalized copies of property tax bill and/or rental contract may be required.
c) Other Legal Requirements:
– By Law, all Brazilian corporations/companies must have a local administrator simply known as Administrador. This person must be a Brazilian citizen or at least a legal resident in Brazil (if foreign national). This person shall be responsible for the corporation‘s activities before all of the different governmental authorities.
With all of these documents and information in hands, you can then seek legal help in order to open your corporation in Brazil, which, in São Paulo, can take up to 10 weeks.
Under Brazilian tax law the LLC is treated as a corporation which requires a minimum of two members (either individuals or companies) with no minimum capital required.
The LLC is managed by one or more managers (administradore/s) who must be either Brazilian or a resident alien; LLC members that fulfill these requirements can manage the company.
When the members are not the managers of the LLC, the latter’s authority is usually restricted in the articles of incorporation or in the appointment resolution. Typically, the following acts on behalf of the company are subject to prior written authorization of the members:
(I) to buy or sell materials, supplies and equipment or to contract services, involving the commitment or expenditure in excess of a certain amount (fixed in Reais or as a percentage of the capital)
(II) lease any asset, buy or sell real estate property
(III) assume any liability in excess of a certain amount (fixed in Reais or as a percentage of the capital),
(IV) to retain and discharge audit services
(V) to make or authorize any distribution of profits
(VI) to assign or encumber company assets
(VII) to file for bankruptcy or reorganization procedures, to merge, consolidate or split-up the company, or to dissolve the company
(VIII) to submit disputes to arbitration.
While the manager’s authority can be limited, certain management powers cannot be eliminated. Representation of the company before the authorities, receiving service of process, hiring employees and committing the company in the ordinary course of business, are examples of such minimal management powers.
Top Tip: when selecting the manager of the LLC it is recommended to run a financial check of the candidate; the preceding is relatively simple, quick and cheap.
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