Setting up a company or subsidiary in Brazil

General Information

Brazil is, undoubtedly, one of the most profitable and most promising markets in the current global economic environment. However, despite its status as a recent « Success Story », great care must be taken when dealing with administrative matters in the country.

Indeed, more than anywhere else, it is highly recommended that you take advice from an industry professional when choosing your tax strategy, this process can sometimes be complex.

Forming a Brazilian company involves a slow legal process that can last more than four months, even when using skilled lawyers. For this reason, patience must be exercised, and all legal formalities must be strictly observed when forming a company.
Failure to do this can lead to significant delays – indeed, some of our current clients came to us after having suffered setbacks in this process after accepting advice from consultants or lawyers lacking in diligence..

What you need to know

There are several types of companies in Brazil; the most common structures are the Public Limited Company, or the Incorporated Company (Sociedade Anonyma or S.A.), and the equivalent of the French SARL, a LTD in the UK, (Sociedade Limitada or S.L).

It is technically possible to register a branch of a company or a registered office in Brazil. However, although and these legal structures are generally easy to incorporate in other jurisdictions, they end up being more complex (and therefore more expensive) compared to a single Brazilian company belonging to an entity incorporated outside Brazil (with a foreign parent company or physical shareholders).

The Brazilian Limited Company (known as the « Sociedade Limitada”)

This type of business structure can be formed in accordance with article 1052 and pursuant to the relevant articles of the new Brazilian Civil Code, established 13 January 2003.

Brazilian law offers the following features for the Sociedade Limitada:

• Simplified Registration:
  Although the law simplifies the process to some extent, incorporation of a Brazilian company remains complex for someone who does not have proper knowledge of the Brazilian legal system and the local and federal government agencies.
• Limited Company:
  In the event that the share capital of the company has been fully paid, the liability of each shareholder is limited to the total of their contributions (total value of their shares). In the event that the capital of the company has not been fully paid, all shareholders are jointly and severally liable, up to the total capital of the company.

• No requirement to publish financial statements, company Proceedings and changes to statutes:
  This is a positive feature since it means lower costs and a higher degree of privacy. However, any changes to company documents remain public and these documents may be obtained directly from the Trade Register and administrative agencies upon request.

• No audit requirement:
  There is no obligation to hire an auditor.

• The minimum number of shareholders is 2:
  It is normal – in the case of small businesses with a single shareholder- for the agent responsible for the formation of the company to hold a share of the company under the name of a nominee company by virtue of a trust agreement.

• Shareholders can be natural or legal persons (companies):
  Individuals or companies.

• Minimum Capital:
  There is no requirement regarding minimum capital and there is no time limit for its release, but in practice it is advisable to have at least 10,000 BRL in capitals. The bank usually requires that capital be paid over a period of 6 months.

Import-export companies (Trading Companies) are the one exception to the above rule). A minimum capital of 50,000 BRL is required and must be paid in full prior to the first import or export.