1.         A foreign company may establish itself in Brazil either through a branch or a subsidiary. Foreign individuals can also set up their own companies in Brazil. Branches are subject to prior approval being obtained from the Federal Executive Branch of Brazil and are most commonly used by foreign banks and airline companies.  Due to the extremely complex procedure involved, the opening of a branch in Brazil is not generally recommended.  Subsidiaries, which are Brazilian companies established under Brazilian law, represent a more straightforward approach to establishing a presence in Brazil.  Although various types of companies exist under Brazilian law, the two most frequently used are the Limited Liability Company (Limitada) and the Corporation (Sociedade por Ações - S. A.). A new type of company having a single member and known as the single-member or individual limited liability company (EIRELI) also became available for individuals since January 20121.


1.          The "Limitada" (or "Ltda.")

1.1       FormationThe Limitada is the most simple, flexible and inexpensive type of company to operate.  A Limitada requires at least two shareholders, also known as "quotaholders", whether or not Brazilian resident individuals or corporate entities. The quotaholders may incorporate a Limitada by executing a "Contrato Social" (Articles of Association) and comply with registration requirements of the local applicable registry in which the registered office of the company is to be located (either the Commercial Registry – or Junta Comercial – for business companies, and the Registry for Corporate Entities – Registro de Pessoas Jurídicas- for non-business companies).

1.2       Capital.  The corporate capital of the Limitada is divided into quotas, which represent each quotaholder's interest in the same.  In this type of company, participants are liable only up to the value of the quotas for which they have subscribed.  However, until the capital of the company is fully paid up, their liability extends to the entire capital of the company.  All quotas usually have the same voting rights as well as a par value which is designated in the company's Articles of Association.

1.3       Management.  The Limitada must be managed by one of more individuals resident in Brazil (whether quotaholder(s) or not), appointed by the quotaholders in the Articles of Association or in a separate corporate document.  Decisions are taken as set out in the Articles of Association.

1.4       Resolutions/Quorum.  Unless approved in writing by all quotaholders, all matters to be decided by the quotaholders must be submitted for approval in a quotaholders' meeting.  The Limitada is required to produce annual accounts2 which must be approved by its quotaholders at an Annual Quotaholders' Meeting. Minutes of such Annual Meeting, as well as the company's Articles of Association (and amendments thereto), are required to be publicly filed at the Commercial Registry.  Decision-making in the Limitada is generally a simple process, particularly where there are only two quotaholders.  Each quota usually entitles the holder to one vote at a quotaholders' meeting. However, quorum for resolutions in the Limitada is in general higher than a majority vote (i.e., 50% of the voting capital plus one voting quota) and that an equity interest of 75% is really required to ensure control.

1.5       The following chart illustrates the types of quorum required for resolutions in the Limitada:



Unanimous decision

  • appointment of managers/directors who are not quotaholders (until capital is fully paid up)

3/4 of the capital

  • merger, consolidation, dissolution and termination of liquidation procedures
  • amendments to the Articles of Association, including the appointment of directors/managers in the Articles of Association

2/3 of the capital

  • appointment of directors/managers who are not quotaholders, where the capital has been fully paid up
  • removal of directors/managers who are quotaholders and have been appointed in the Articles of Association; except as otherwise established by the same

More than half of the capital

  • dismissal of directors/managers who are not quotaholders
  • court-relief proceedings
  • appointment of quotaholder directors/managers at a Quotaholders' Meeting
  • manager/director compensation if not established in the Articles of Association
  • liquidation of the Limitada for an indefinite term

Majority of the capital in attendance

  • appointment and dismissal of liquidators, and approval of their accounts
  • approval of management's accounts

  • other cases not contemplated by law or in the Articles of Association (if these do not require a higher quorum)

Majority of the remaining quotaholders

  • exclusion of quotaholders in default
  • judicial exclusion by gross negligence or supervening default

No opposition by more than one-quarter of the capital

·        assignment of quotas to third parties

2.         The "S.A."

2.1       Formation. S.A.s are not as flexible and inexpensive to run as Limitadas.  The S.A. is incorporated by private subscription of the company's capital by at least two individuals or corporate entities or any combination thereof, whether or not resident in Brazil.  An S.A. may be a listed corporation (S.A. de capital aberto) or a non-listed corporation (S.A. de capital fechado), depending on whether or not its securities, including shares, are traded on the over-the-counter market or on the stock exchange. The S.A.'s corporate purposes must be specifically and fully described in its "estatuto social" (By-Laws).  Once approved, the By-Laws must be registered and published, prior to the commencement of the company's activities.  Corporate documents of the S.A. are also registered with the competent Commercial Registry.

2.2       Capital. The S.A. is a corporate entity whose capital is divided into shares and the liability of its shareholders is limited to the issue price of subscribed shares. The shares of the S.A. may be classified as (i) common shares; or (ii) preferred shares with or without voting rights.  It should be noted that for S.A.s. incorporated after 31st October 20013, the number of non-voting or restricted voting preferred shares may not exceed 50% of the total number of issued shares.  Further,preferred shareholders in a non-listed S.A. are entitled to: (i) priority distribution of fixed or minimum dividends, which may be cumulative or not; (ii) priority in the reimbursement of capital upon liquidation of the company, with or without a premium; or (iii) a combination of items (i) and (ii).  It is worth mentioning that in addition to common and preferred shares, the S.A. may also issue other types of securities, such as "partes beneficiárias" (beneficiary parts), "debentures" (debentures) and "bônus de subscrição" (subscription rights).

2.3       Management.      S.A.s are composed of up to four 4 main administrative bodies: the General Shareholders' Meetings, the Board of Directors, the Management Board and the Inspection Committee.  The Board of Directors until recently was composed only of shareholders (but this legal requirement no longer exists) while the Management Board and the Inspection Committee are composed of two or more Brazilian resident individuals. A Board of Directors is only mandatory for listed S.A.s and corporations with authorized capital.

2.4       Resolutions/QuorumMatters submitted for resolution at a duly convened general shareholders' meeting may be approved by shareholders representing 50% of the voting capital plus one voting share.  Applicable legislation contemplates a higher quorum for a few specific matters. Further, the By-Laws may specify a higher quorum than that established by law.

3.         The Limitada vs. the S.A.

3.1       Formalities/Costs. The extensive provisions governing the S.A. provide a more detailed regulatory framework for corporate activities, management and shareholder relations and enhanced transparency, although at the cost of increased administrative and publication costs associated therewith.  In contrast to the S.A, the Limitada is not required to publish financial records and statements which results in cost savings and confidentiality benefits for the Limitada.

3.2       Control. Additionally, a shareholder in the S.A. may retain absolute control by holding 50% of the voting capital plus one voting share. As previously mentioned, in the Limitada, certain fundamental matters affecting the company require approval from quotaholders representing at least 75% of its capital.  Moreover, an S.A. is authorized to issue several classes of shares, not to mention the non-voting preferred shares, which, although lacking voting rights could pay dividends in addition to being less expensive than common shares.

3.2       Financing flexibility. Unlike the Limitada, the S.A. may issue securities and other negotiable instruments.

3.3       Tax. The Limitada and the S.A. are afforded the same treatment under Brazilian tax legislation; however, the home tax jurisdiction of the company's investors may treat related Limitada and S.A. company profits and losses differently.

4.         The Individual Limited Liability Company (the "EIRELI")

4.1       Law No. 12,441, of 11th July 2011, which became effective in January 2012, introduces a new corporate figure into the Brazilian Civil Code, namely the Single-Member Limited Liability Company or Empresa Individual de Responsabilidade Limitada, as it is called in Portuguese.

4.2       Such companies are to have limited liability (just like a Ltda.) and a single member. The following requirements should be satisfied for incorporating one:

(i)                 A sole member (necessarily an individual and not a corporate entity) can hold its entire capital, which must be fully paid up and set in an amount equivalent to at least 100 (one hundred) times the highest minimum salary in force in Brazil.

(ii)               The company name must adopt the abbreviation "EIRELI".

(iii)             The single member can only figure as the owner of only one such company type.

4.3       The new law also contemplates the possibility of converting an existing Ltda. into an EIRELI with the concentration of quotas of such Ltda. into a single owner.


1.1       Once the company has been duly incorporated, the next step is to obtain all necessary registrations, permits and enrolments. The list of the same can be longer or shorter depending on the activities to be conducted. The following chart contains an idea of such registrations, permits and enrolments.

Fiscal licences, registrations, permits and authorisations

  • Federal taxpayer registration
  • State taxpayer registration
  • Municipal taxpayer registration
  • Invoice registration

Labour and social security licences, registrations, permits and authorisations

  • Registration with relevant employers' union
  • Registration with Accrued Severance Pay Fund (FGTS)
  • Registration with Social Security Institute (INSS)
  • Registration with Labour Inspection Register
  • Maintenance of employee register
  • Maintenance of each employee's individual registration file

Operational licences, registrations, permits and authorisations

  • Sanitary operational registration with state health department
  • Municipality licence for localisation and operation
  • Building occupancy permit
  • Building permit
  • Inspection certificate issued by the fire department
  • Permit to operate the plant
  • Registration of trademarks with the National Industrial Property Institute
  • Registration of domain names with the São Paulo State Foundation for Research Assistance Registration with SISCOMEX (the Integrated Foreign Trade System)
  • Registration with RADAR (which tracks the activities of foreign trade players)

Environmental licences, registrations, permits and authorisations

  • Preliminary environmental licence
  • Installation licence
  • Operational licence

1.2       It is also essential that foreign individuals and companies willing to set up a company in Brazil register their intellectual property rights (trademarks, patents, domain names, etc.) in Brazil even before the Brazilian company is incorporated. This will prevent third parties from unduly using such intellectual property.


1.1       All remittances of capital effected by foreign shareholders or quotaholders (whether individuals or corporate entities) to companies in Brazil must be registered with the Brazilian Central Bank - BACEN within 30 days as of the respective exchange contracts being executed.  Such registration allows such foreign shareholders or quotaholders to repatriate profits and capital through the commercial exchange rate market.

1.2       Prior to such exchange contracts being executed, an RDE-IED code must be obtained from BACEN for each pair comprising the foreign shareholder or quotaholder and the Brazilian company recipient of the foreign investment.


1.1       Foreign individual investors can obtain a permanent visa for residing in Brazil:

(i)         if he/she invests R$150,000.00 (one hundred and fifty thousand reais) in the company in which the investment is made; or

(ii)        in the event he/she invests less than R$150,000.00 (one hundred and fifty thousand reais) in the company in which the investment is made, the Brazilian immigration authorities may, exceptionally, grant the investor a permanent visa if the company and the investment satisfy certain requirements. Such requirements include: (a) submitting a business plan to such authorities contemplating the number of Brazilian employees to be hired every year; (b) indicating the level of investment to be made and the Brazilian region where the same will be applied; (c) the economic sector involved; and (d) the contribution to increasing productivity and assimilation of technology.

1.2       Further, as previously mentioned, director(s) of Brazilian-incorporated companies must be resident in Brazil and may be either Brazilian or foreigner(s) (holding a permanent visa). A permanent visa may be obtained in the latter situation if:

(i)                 the foreign quotaholder/shareholder effects a minimum investment of R$600,000.00 (six hundred thousand reais) in its Brazilian subsidiary;

(ii)               the foreign quotaholder/shareholder invests R$150,000.00 (one hundred and fifty thousand reais) in its Brazilian subsidiary, which such Brazilian subsidiary must undertake to hire at least 10 employees within two years of its incorporation or arrival of the foreign Director holding the permanent visa; or

1.3       If the foreigner is a national of a Mercosul Member State (Argentina, Paraguay, Uruguay and Venezuela) or of an Associated State (Bolivia, Colombia, Chile, Ecuador and Peru), he/she may obtain a two-year temporary visa which, exceptionally, will fulfill the residence requirement for director(s) of Brazilian-incorporated companies. In this case, there is no minimum capital requirement.


1.         Since setting up a company Brazil is usually a not so straightforward exercise, expert legal advice must be sought from the outset in order to avoid any unpleasant surprises and to maximize the local business opportunities.


1 For the time being, due to recent regulations issued by the National Commercial Registry Department, an EIRELI can only be incorporated by an individual, not by a corporate entity.

2 However, recently enacted legislation requires that "large sized companies", i.e., those incorporated as S.As. or Ltdas., should comply with the provisions of such legislation in respect of bookkeeping accounting records and drawing up of financial statements, as well as the obligation to have their books and financial statements examined annually by an independent auditing firm. In accordance with such new legislation, "large sized companies" comprise a corporate entity or all corporate entities under the same control, with total assets in excess of R$240 million or annual gross turnover above R$300 million.

3 Effective date of major revision of the Brazilian Law of Corporations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.