Brazil: Avoiding The Pitfalls Of International Expansion
Last Updated: 10 September 2014

The latest issue of Latin Trade magazine speaks to our Americas directors about how to navigate the complexity of that challenging market. We republish the interview below with permission.

Launching a foreign-owned business venture in Latin America can be a challenge. In order to capitalise on a promising new market opportunity, multinational companies must navigate a complex set of legal, accounting, tax, real estate and human resource (HR) issues.

To minimise risk and avoid the pitfalls, many multinationals are turning to global firms that can provide valuable back-office services and support for their international expansion plans.

"As confidence in the global economic outlook improves, more and more multinational businesses are looking to Latin America grow their revenues and profitability," says Luigi Garlati, head of Americas at TMF Group, a leading global provider of support services to multinational businesses. "However, a failure to understand the numerous legal, regulatory and cultural issues that shape the business environment can be potentially disastrous."

If a company violates the U.S. Foreign Corrupt Practices Act (FCPA), the UK's Anti-Bribery Law or international anti-money laundering (AML) regulations, the consequences can be severe. For instance, failure to comply with the FCPA, which prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business, can lead to substantial fines against a publicly traded company, as well as its officers, directors, employees, stockholders, agents, consultants, distributors, joint-venture partners, and others. That makes it essential to maintain accurate accounting and financial records as well as a system of internal controls.

The compliance environment is particularly daunting in Latin America, where Argentina, Bolivia and Peru took the top three positions in TMF Group's Global Benchmark Complexity Index, a survey of corporate secretarial experts based in more than 100 offices around the world. The study combined responses from both objective and subjective questions to evaluate the difficulty of doing business in jurisdictions in the Americas, Asia, Europe, Africa and Australia. Other Latin American jurisdictions in the top 25 were Nicaragua, Ecuador, Brazil, Venezuela, Chile, Dominican Republic, Guatemala and Honduras.

When expanding across borders, multinationals need to allocate more internal and external resources to comply with the requirements of complex jurisdictions, according to Garlati. To make good business decisions, international companies must also conduct in-depth due diligence research in a variety of fields, including the following:

  • Determining the most appropriate type of legal entity for compliance, risk management and tax purposes.
  • Finding trustworthy local business partners, suppliers and service providers.
  • Identifying a safe and secure location for a physical facility and whether to lease or purchase the property.
  • Screening, recruiting and hiring a productive workforce in compliance with local and national labour laws.

Rather than try to resolve these issues with an in-house task force or rely on the advice of independent local professionals in each country, Garlati suggests engaging a firm with global expertise in functional areas like tax, accounting, and human resources as well as on-the-ground knowledge of local markets.

"Our company's slogan, 'Global reach, local knowledge,' reflects that combination of strategies," says Garlati. "TMF Group has dedicated specialists in place around the world that take care of the administrative burden so companies can focus on their global ambitions. Our teams of professionals have an in-depth knowledge of the requirements necessary to help establish and maintain fully compliant operating, holding and finance entities around the world."

Ari Ackerman, marketing director (Americas) at TMF Group adds, "TMF Group offers several QuickStart service packages to streamline entry into new markets, including a program for Latin American businesses considering a northward expansion to the United States or for companies around the world looking to penetrate markets in the Americas. Other QuickStart packages are designed to help multinationals simplify functions throughout a geographic region, or consolidate back-office service providers from multiple countries into a single provider."

"As an independent global firm, we can provide multinationals with consistent reporting procedures across jurisdictions, while being fully compliant with local regulations," Garlati says. "We provide a single point of contact no matter where a company operates, increasing accountability while reducing the time spent on compliance-related matters."

One of TMF Group's multinational clients is ISS Group, a Denmark-based multinational facility services company with local operations in more than 50 countries in Latin America, Europe, Asia and other locations. "TMF Group is a trustworthy global partner that supports our value proposition of mitigating our clients' risk through a consistent and reliable accounting, back-office and compliance service in countries where ISS is not currently present," says Søren Gammelgaard, compliance manager.

Being able to focus on the core business issues is particularly important at a time when many multinationals are expanding their operations. TMF Group recently partnered with global research firm IDC to survey senior decision makers from corporations which were either planning to expand overseas or already had done so.

A large proportion of those surveyed – around 30 percent – plan to enter new markets within the next 12 months with this figure rising to 64 percent within two years, according to the IDC white paper, 'Avoiding the Pitfalls of International Expansion.' This suggests a significant shift in business attitudes and priorities away from a conservative, often inwardly looking approach to a more confident, expansionist one, said the report.

Other findings of the report include:

  • The need to set up efficient financial procedures and banking facilities is also a major issue, and is quickly supplemented by the challenge of reconciling data from multiple subsidiaries, often involving delays and costs for the corporate finance function. Getting local financial reporting and regulatory filings done on time and to the exact local standards is a major issue. This is an area where on-the-ground local partners can play an important supporting role.
  • Local expertise and on-the-ground service providers can play a critical role in successful territorial expansion, particularly in terms of creating the new legal entity, recruiting and training its senior management and its operational workers, and creating and supporting the running of the day-to-day "mechanics," such as payroll processing, cash management, regulatory reporting, and so on. These are areas where local knowledge and experience is often vital, if not an absolute necessity.
  • Enterprises considering international expansion should begin planning early and carry out extensive research into the specificities of the territory's political, legal, and cultural environments, as well as into the competitive landscape and the target market and/or workforce.
  • Enterprises should give serious consideration to using third parties with strong local presence, particularly in the early phases of territorial expansion.

"One of the key recommendations in the IDC report was for expanding multinationals to consider working with third parties who have the requisite experience and local knowledge to help avoid the pitfalls," says Garlati. "Our team can deliver the right package of corporate compliance services to ensure that new subsidiaries are properly constituted and remain compliant with legal and working practices."

To read the article in the latest issue of Latin Trade, visit the site in English or Spanish.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Press Releases from this Firm
Recent Content from this Firm
By TingTing Cui
By Andrew Steck
By Raimundo Diaz
By Maria Scofield
By TMF Group
By Partho Guha
By Raimundo Diaz
By Alfonso Pagano
By TMF Group
By Emine Constantin
Font Size:
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions