Zilveti Advogados – Corporate
The post-pandemic recovery of the Brazilian economy made many foreign investors and entrepreneurs see an opportunity to invest in Brazil. However, such investors often find themselves with several doubts about how to make this investment, especially if they are planning to set up a company in Brazil.
With this scenario in mind, we intend to provide a brief step-by-step explanation of how a company is incorporated in Brazil.
1.First Step and Legal Representation
After deciding the business model, its activities and the corporate name, the first step is to hire a specialist lawyer, who can help you with the corporate type of the company and the tax regime that will be adopted, as well as with the Articles of Incorporation.
If a foreign company or person intends to set up a company in Brazil, it should be represented by a person domiciled in Brazil, which means that a power of attorney should be granted to this person. It is worth noting that the power of attorney must be apostilled under the Hague Convention rules and in Brazil the documents should be sworn translated and registered with the Public Deeds Registry.
2.Brazilian Central Bank
The Brazilian legislation provides that any investment made by a foreign company or person in Brazil should be registered before the Brazilian Central Bank. Therefore, the foreign company must be enrolled with the Brazilian Central Bank and should be enrolled before the Brazilian Federal Revenue to be assigned a Taxpayer’s Registry Number. Any wire of money to the new Brazilian company should be made through the Brazilian Central Bank.
The most common corporate types in Brazil are: i) the limited liability company; ii) the sole proprietorship limited liability company; and iii) the joint stock company (corporation).
The limited liability company is the most common in Brazil, as its name says it limits the partners’ liability, protecting their personal assets. It is important to emphasize that, if the Court finds fraud or irregularity in the company’s administration, such protection may be withdrawn.
In turn, the sole proprietorship of limited liability, as its name implies, has the same characteristics as the corporate type abovementioned, the only difference being the fact that it has a single partner.
Finally, we will mention the joint stock company, which is very common in the case of large companies, and its main characteristic is the fact that its capital is divided into shares. This type of company has privately held companies (those that do not trade their shares) and publicly traded (those that offer their shares on the stock exchange).
If the company has more than one partner, it is always recommended that a Quotaholder’ Agreement should be executed, which will give the guidelines that will be taken in the company’s business and will regulate the relationship between the partners.
Its importance is due to the many challenges in managing the personal relationship between the partners, which can often end up jeopardizing the business if there is no agreement between them.
5.Articles of Incorporation/Association
We can say that the company’s Articles of Incorporation is the soul of the business, since it is in it that the main conditions and characteristics of the business are established (company activity, headquarters, corporate name, share capital, administration rules, form of distribution of profits, quotas transfer conditions, succession of rights over quotas and others).
Given its importance, it is essential that partners seek the help of an expert, to avoid any type of future problem.
6.Registration before the Board of Trade
According to Brazilian law, the Articles of Association and other corporate acts of the company must be registered with the Board of Trade.
In the state of São Paulo, the average cost to register the Articles of Incorporation at JUCESP (Commercial Board of the State of São Paulo) is approximately R$ 1,500.00 (one thousand five hundred reais) and, thanks to the process being fully digital, the registration will be carried out in 5 (five) days.
At the same time, registration of the company in the National Register of Legal Entities of the Ministry of Economy (CNPJ/ME) and in the State Registration is required. After registering the Articles of Incorporation and approving the application for registration with the CNPJ/ME, the company has legal personality, existing for all legal purposes.
The documents that must be presented by the partners are:
- a) Identity document of the partners;
- b) Proof of address, if residing in Brazil;
- c) JUCESP application signed;
- d) 3 (three) copies of the Articles of Incorporation duly signed;
- e) If the Articles of Association is signed by an attorney, a certified copy of the powers of attorney; and
- f) Proof of address and property registration number/SQL, to verify the viability of the address of the company’s headquarters.
If you adopt these steps, you can start your company without problems, remembering that the average time for all this to occur varies from 15 (fifteen) to 30 (thirty) days.
Should you need any further information, please contact Cauê Oliveira by e-mail on firstname.lastname@example.org or by phone +55 11 3254-5500.