A limited liability company is the corporate structure mostly adopted by Brazilian companies.
A limited liability company may be managed by one or more persons, partners, or not, Brazilian citizens or foreigners. The manager must always be an individual with residence in Brazil.
If the partners appoint a foreign manager, who is not a partner, this person will need a Brazilian permanent visa with authorization to act as manager of a specific company, which will be issued by the Brazilian Labor Ministry. For the issuance of this type of visa, the requirements are currently the following: (i) a foreign investment in the company in the amount of at least R$ 600,000, paid in by the partners, for each foreign citizen indicated for the position of manager of the company; or (ii) a foreign investment in the company in the amount of R$ 150,000, paid in by the partners as well as the commitment of the company to hire, within the next two years, 10 Brazilian employees (there are specific documents and information on this commitment which will need to be prepared by the company and will be analyzed by the Labor Ministry). In addition, other documents and forms need to be presented in order to obtain the permanent visa.
If the company has more than one manager, their joint signature may be required for the performance of all or certain acts. The Articles of Association may establish different levels of control for the company and may determine which matters depend on the partners' prior authorization, which matters do not depend on such authorization, and even different quorums depending on the matter.
The manager will be in charge of the company's management and representation. The manager will be entitled to validly bind the company and perform management acts within the company's purposes, with due compliance with the limits established in the Articles of Association.
In order to limit the manager's powers, the partners may establish restrictions to the manager's acts by requiring that for certain acts, the prior and express approval of the partners will be necessary. Some common limitations are, among others, the sale, purchase, and/or encumbrance of assets of a certain value; bank loans or debt confessions; and the signature of certain agreements with a value above a fixed amount determined by the partners.
As a general rule, managers are not liable for acts performed within the regular course of business and in accordance with the law and the company's Articles of Association, whereas the company is liable for acts performed by its managers within the limits of their management powers.
It should be stressed that any violation of any law by the manager will entail civil liability for losses caused to the company, in addition to criminal liability, if applicable to the case.
Even though important doctrinal sources have expressed the understanding that the restrictions imposed on management powers, as set out in the Articles of Association duly filed with the competent registry of companies, are also imposed on third parties negotiating with the company, the doctrine understands that due to the apparent authority theory, the company shall be jointly liable for any acts performed by its managers even if they were performed with abusive, or misuse of, powers or even in violation of any legal provision.
For this reason, if the current articles of association impose clear limits on the manager's powers, the third party contracting with the company shall observe the rules in this corporate document for the business to be effective.
Luciana M. Cossermelli Tornovsky is a partner in the Corporate / M&A practice at Demarest e Almeida Advogados.
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