Starting a Business in Brazil

Foreign companies or individuals can set up a business in Brazil and many foreigners having travelled or studied Brazil and have fallen in love with this amazing country, think it would be a great idea to open a business and make Brazil their new home. But there are a few challenges you have to be aware of before starting your business.

There are two basic types of limited liability company in Brazil:

Sociedade Limitada (LTDA): This is the most common form of company in Brazil. It is also the simplest, most flexible and inexpensive type of company to operate. It is governed by a Contrato Social (Articles of Association) 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.

Sociedade Anônima (SA): This form of company is not as flexible as a Limitada, is considerably more expensive to operate, and is 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.

You will need a lawyer to set up your business and if you want to be appointed Director or Administrator of your company you need to obtain a permanent resident visa for Brazil. If you will be just a shareholder and appoint a Brazilian citizen as administrator you can visit Brazil from time to time on a tourist visa.

Law No. 12441 dd. July 11 2011 (in force since January 2, 2012) amended the Civil Code, creating the Empresa Individual de Responsabilidade Limitada (EIRELI, Individual Limited Liability Company), which created a new possibility for entrepreneurs to incorporate a legal entity without the involvement of a second partner/shareholder. Before the creation of the EIRELI, foreign investors who did not have a Brazilian business partner usually appointed their lawyer or accountant as their second shareholder and director of the new venture. With the EIRELI company model, a foreign investor can act as the sole shareholder of his company, with the power to appoint or dismiss a director until he obtains his permanent residence, and can take up the role of director or administrator himself.

When setting up a business in Brazil you have to be aware of the corruption among politicians and business people. And there is a big lack of infrastructure throughout the country which makes it a little more difficult to run a business smoothly.

As you will have to employ local people you have to be aware of the unions that have a big influence in Brazil. There are about 900 articles in Brazil’s labour laws and they are very difficult to navigate. Not obeying these laws can lead to fines and can be bad for your reputation in Brazil’s business world.

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