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GLOBAL INFO

Brazil

COUNTRY:

BRAZIL

QUESTION:

ANSWER:

1.      What are the main company forms in your country?

Brazilian law provides for several forms of business organizations. The most widely adopted forms in Brazilian business practice are “sociedades limitadas” (similar to limited liability companies - LLC) and “sociedades anônimas” (similar to joint-stock companies or corporations). Other forms of legal entities are not commonly adopted due to the unlimited liability vested to their partners.

LLCs involve a more flexible corporate structure, reduced costs and less formality, including simpler and faster incorporation and regulatory procedures than corporations. This is why the “sociedade limitada” is by far the most common form of business organization in Brazil.

On the other hand, the incorporation of a “sociedade anônima” is mandatory for the development of certain few activities – for example financial institutions – and would be recommendable if the company plans to issue securities in the capital market in the short/medium term.     

 

2.      Which is the most preferred company form by foreign investors?

Limited Liability Company – LLC (“sociedade limitada”).

3.      What are the basic capital requirements of this company? (minimum amounts, types of capital, deadline of capital contribution)

The company shall have at least two (2) partners, individuals or legal entities, Brazilians or not. There is no minimum capital requirement and the corporate capital shall be paid up by means of assets or national currency and, on the other hand, it is not allowed to do so by service providing. The partners may set up a schedule to perform the payment of the corporate capital (please refer to liability implication mentioned on item 4 below).

4.      What are the basic rules of shareholders liability for company debts in this company?

The quotaholders are responsible up to their respective equity participation when the capital is already paid up. On the other hand, all partners are jointly liable for the payment of corporate capital.

5.      What are the basic management requirements for this company? (only natural persons, or nationals can be managers etc.)

The minimum number of managers of a LLC is one. Only individuals, partners or not, with Brazilian residency, are allowed to be appointed as managers (foreigners may act as managers only if they hold a permanent visa).

 

6.      How long does the registration procedure of this company take?

It usually takes from seven (7) to twenty (20) days (but this period may vary according to the corresponding Board of Trade – each State has a Board of Trade in charge of the registration of companies with head-office and branches located at such State).

7.      What are the main costs of formation of this company in local currency?

There is a registration fee which may vary from State to State (in the State of São Paulo the fees currently charged are around BRL280.00).

8.      What is the average attorney’s fee of the formation of this company in local currency?

Fees may vary from BRL 3,000.00 up to BRL 20,000.00 depending on the circumstances, including the complexity of the articles of association and possible quotaholders agreements.

9.      What are the basic publicity requirements of this company (filing of company changes, financial reports, etc.)

All and any changes to the articles of association shall be filed before the Board of Trade.  The minutes of quotaholders meetings (especially the ones by which the partners annually approve the LLC’s financial reports), also have to be registered with the Board of Trade. Additionally, LLC companies, individually or under economic group perspective, with assets over BRL 240 million or gross revenue over BRL 300 million, are supposed to publish their financial reports on the official gazette and on a commercial newspaper as well.  

 

10.   What are the main auditor requirements?

As a general rule there is no auditor requirement.