The two main types of companies incorporated in the country include Sociedade Anônima (S.A.) also known as a corporation and Sociedade Limitada (Ltda.) known as a Limited Liability Company. The incorporation of entities is backed by the Brazilian Civil Code (Law No. 10,406, of January 10, 2002). According to the Brazilian Corporation Law, the Articles of Association can state that the company upon registration will be governed by the rules, which apply to all corporations as regard matters not covered by the Brazilian Civil Code or the Articles of Association. A Limitada has a separate legal personality and can exist for a long period. The LLC is usually governed by its Articles of Association known as the Contrato Social, which is duly registered before the Board of Trade (Junta Comercial). During registration, the entity name has to include Limitada or Ltda and indicate the nature of the business of the company.
Generally, partners are not liable for the obligations of the entity but for the joint payment of the subscribed capital. A Limitada is usually managed by a Diretoria, with at least one person appointed by the partners. The board members are also not liable for the company’s obligations. A Limitada can merge with two or more companies in a cross-border acquisition. However, Brazilian companies can only participate in corporate restructuring transactions.
This guide explains how to register a Sociedade Limitada (Ltda.) in Brazil and the incorporation process.
Features of a Limitada
It can be set up by one or more persons, who can be entities or individuals, either living within the territory or overseas. Foreign partners have to appoint legal representatives in the country. The partners must appoint at least one resident officer. There is no minimum capital requirement. However, if the partners wish to appoint an expat as an officer, the company must apply for a visa and resident permit, with a minimum of BRL 600,000 in the Brazilian Central Bank as capital investment. The partners must pay their share of the capital as agreed in the Articles of Association in a bank account opened in Brazil after its incorporation. Executing the Articles of Incorporation can be done by a power of attorney granted to the resident officers.
Note that every Brazilian company and their foreign partners must enroll with the Brazilian Federal Tax Authority (Receita Federal) and obtain the tax identification number (CNPJ) before operations.
The process of incorporation
Incorporating an entity in the country is quite easy, except for a few requirements. The process entails the following steps:
- Preparing the necessary documents for incorporation,
- Registering the articles of incorporation with the local board of trade,
- Obtaining supporting documents for registering partners and board officers, which may include powers-of-attorney (if applicable),
- Registering the company with the Brazilian federal revenue,
- Acquiring business licenses and permits,
- Involving a public notary,
- Registering the company, and so on.
The duration of the process has to do with the activities of the company. However, it usually takes two to three months to finalize. The costs to be incurred include legal fees, fees charged by the public authorities, notarial fees to legalize foreign documents, and fees charged by fiscal agents for legal representation (if necessary). The costs vary depending on the location, type of activities, number of partners, etc.
Information to be provided during the incorporation
The following information has to be filed with the Board of Trade and then made publicly available:
- Articles of Association
- Company name and address of the place of business
- Activities of the company
- Capital amount, payment terms, and quotas between the partners
- Details of the managers
- Details of the partners
