Bright Business Consulting LLP

Monday, May 21, 2018

Establishing Brazilian Companies

A short description of the main kinds of companies allowed in the Brazilian law system allows us to offer a wide range of possibilities a foreign entrepreneur has at his disposal to implement his activity on the market. Considered that companies can be distinguished in:

  • PROFIT-BEARING COMPANIES - (Sociedade-Empresaria). They carry out economic activities, organised with the aim of gaining profit or economic outcome, aimed at the production or Exchange of goods or services.
  • SIMPLE COMPANIES - (Sociedade-Simples). They do not carry out any organised economic activity, but they pursue a mutual purpose, as the Italian so called cooperatives even though they organize as "empresarias" company. The joint-stock company is always "empresaria".

Referring to partners, capital, manager and agent, below you will find listed hints in general aimed at "Establishing Brazilian Companies".

  1. Partners. Following the general rule, the Brazilian Law requires at least two partners to establish a company in Brazil. There are anyway some exceptions (EIRELI). The capital can be fully engaged by foreign partners, except for a few exceptions depending on specific activities.
  2. Capital. With reference to the capital, the Law does not require a minimal amount for its establishment. It is always better anyway to establish the amount on the basis of the activity that will be carried out in the Brazilian company (for example if the company acts as product-importer, it is required a reasonable capital in order to get the necessary subscriptions; we can consider the same in case the company intends to submit a tender. Paying the capital must take place within the deadline mentioned in the social contract, both in currency or in properties. The Brazilian Law does not require a deposit of a minimum capital aimed at Establishing Brazilian Companies , except for anonymous company for which the deposit of 10% of the capital is required for the establishment.
  3. Manager. The managers are not directly responsible for the social debentures, but they are responsible for the company and towards third parties jointly and severally for those actions carried out with a fraud on law, with violation of the rules mentioned in the social contract and for those actions committed with abuse of power.
  4. Agent. The Brazilian Law provides the right for every foreign partner, both physical person or corporate body, to appoint an agent resident in Brazil in order to receive court summons in in legal actions started in Brazil. This agent represents the foreign partner in all the acts registered at the Chamber of Commerce referring to the Brazilian company. To be validated in Brazil the power of attorney has to be signed before a notary or solicitor in the country of origin, made legal at the Brazilian Consulate located in the Country of origin, translated by an official translator and registered at a Brazilian notary office.

To set up a company in Brazil the suggested company models are Sociedade Limitada, Sociedade Anonima and the new born. Empresa Individual de Responsabilidade Limitada.

Bright Business Consulting LLP warrants and assists the customer in all the preparation stages before the establishing and also the establishing itself as well as the practical performance of the establishing company.

LTDA - SOCIEDADE LIMITADA

That is  "LIMITED COMPANY". This kind of company is the most diffused one and suitable for foreign companies (small, medium or large ones) that want to work in Brazil with easiness and autonomy. It is preferred by foreign managers to invest permanently in Brazil and enjoys the following advantages:

  • Good operative flexibility.
  • Low costs for establishing and management.

Foreign partners, at least two, both physical persons or corporate bodies, belonging to a "Limitada (LTDA) company" are allowed to:

  • Own the 100% of social shares.
  • Appoint administrators they like, by ruling and limiting their powers.
  • Acquire the conditions of being or becoming managers of the company.
  • Manage the company with their own policies and strategies.

SA - SOCIEDADE ANONIMA

That is "ANONYMOUS COMPANY". It is the kind of company used and suggested mainly in those cases you need to issue shares and when they are quoted in the Stock Exchange. They can be established after launching a public or private underwriting. Establishing a company through private underwriting requires the formalities of the public notary act.

EIRELI - EMPRESA INDIVIDUAL DE RESPONSABILIDADE LIMITADA

That is “ INDIVIDUAL LIMITED RESPONSIBILITY COMPANY”. This kind of company, in force since January 9th 2012, in an innovative way was introduced into the Brazilian system. A new juridical model that allows the establishment of a company with just one partner. Despite the existence of a sole partner, his responsibility is anyway limited. The capital of this new company model can’t be inferior to 100 times the highest minimum wages in the Country and its complete payment is the condition for the limitation of the responsibility above mentioned. In the other cases can be applied to this new juridical pattern the rules of the limited company. Due to the effect of its recent coming into force of the laws that rule the subject and its features, this kind of company requires specific in-depth analyses, case by case.

What is mentioned above, practically summed up very shortly, may be easily developed and examined with us, by asking us specific questions as regards the establishing, the administration and company control and its related documents, and we will take the charge of analysing them in detail case by case, and suggesting solutions compatible to the company needs but fully respecting Brazilian laws.

REPRESENTATIVE OFFICE

A common vehicle through wich foreign companies establish a presence in Brazil, is the registration of a representative office, a choice that should be carefully evaluated. Many foreign companies have set up representative offices in Brazil as the first step of their entry strategy into the Country, as well as in order to gain experience and a better understanding of the size and potential of the Brazilian market. Through a representative office, a foreign company may carry out a limited range of activities that can be the basis to make the company more involved with Brazil.

Representative office often carry out market research, establish relationships and formalize drafts and/or assumptions of contract with potential customers and partners. It is important to remember that the representative office is not a separate legal entity. Rather it is an extension of its parent company. In this regard, a not Brazilian juridical entity with appropriate accreditation and well structured is advisable. Bright Business Consulting LLP is the ideal partner for carrying out what has just been expressed.

VIRTUAL OFFICE

Establishing a company based abroad requires the presence of a branch office where documents and communications regarding the company may be delivered. We are highly specialized in the professional management of "Virtual Office" that will allow you to manage your virtual office in a safe and reliable way a sit were a real office. Moreover there are many services that can be activated in the seat of the "Virtual Office".

Above are listed the possibilities, but for many reasons it is imperative to activate a constitutive procedure, taking advantage of the support of those who know the Brazilian system: it is strategic and determined to benefit from "Warranty & Assistance" and so properly deal with the requirements of the Government Authorities, plus opting for the right type of team and company. To this purpose Bright Business Consulting LLP offers knowledge and expertise as essential elements.

BBC-LLP offers its first consultancy for free - First Meeting to anyone wishing to get further info about how to set up a Brazil Company.

For more details, click here.

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