Foreigner participation in limited liability companies in Brazil

Brazil has been a popular destination for foreign investment, and many entrepreneurs are interested in establishing companies in the country[1]. In this context, the following question arises: can a foreigner participate in a company in Brazil?

Yes! A foreigner can participate in a company in Brazil, and in this article, we will outline the necessary steps for a foreigner to form or join a limited liability company (LTDA) in Brazil. Let’s get started:

1. Determining the company’s partners and identifying the partners’ representatives in Brazil: First, it is necessary to determine who the company’s partners will be, the capital to be invested, the activity to be carried out, the location, and other business-related details.
2. Appointing a legal representative in Brazil with the power to receive service of process on behalf of the foreign partner: It is necessary (legally required) for the foreign partner to appoint an individual residing in Brazil as their legal representative in the country, granting the latter the power to receive service of process in lawsuits filed against them.

This power of attorney must: (i) have the foreigner’s signature notarized in Brazil or (ii) be notarized (by a notary located in another country) and consularized (recognized by a Brazilian consulate in the same country where it was notarized). After that, the power of attorney must be registered with a notary’s office in Brazil and with the Commercial Registry of the state where the company to which the foreigner will be a member is headquartered. We emphasize that Brazil is a signatory to the Hague Convention, so for documents notarized in other countries that are also signatories, the notary simply issues the document with the Hague Convention Apostille, and consularization will not be necessary. However, the other steps set out in item (ii) will still be required.

3. Submission, presentation, and validation of foreign partners’ documents: Foreign partners’ personal documents must be legalized in their country of origin (similar to a certified copy) and consularized at a Brazilian embassy or consulate located in the country where they are legalized. If the country is also a signatory to the Hague Convention, the same rules apply as for power of attorney. These documents must then be translated by a sworn translator in Brazil and registered with a notary public.
4. Registration of foreign partners with the Federal Revenue Service: Foreign partners must register with the Brazilian Federal Revenue Service, both as an Individual (CPF) (Federal Revenue Service) and as a Legal Entity (CNPJ). Legal entities must be registered with the Central Bank of Brazil, through CADEMP (Brazilian Central Bank of Brazil), within the SISBACEN system.
5. Determination of the initial address of the company’s headquarters and execution of a lease agreement: The initial address of the company’s headquarters must be determined, and a lease agreement or other agreement, as applicable, must be executed.
6. Drafting and Registering the Company’s Articles of Association with the Commercial Registry: The first step is to conduct a business name search and consultation with the Commercial Registry to ensure that the chosen name is available and usable. Next, it is necessary to determine the extent of the administrator’s powers. Finally, it is necessary to determine the address and purpose of the company, that is, where the company will be located and what its line of business will be.
7. Hiring an Accountant: Hiring an accountant is mandatory for companies in Brazil. The accountant will be responsible for assisting with the preparation of financial statements, tax calculations, and other accounting matters.
8. Registering the Incorporated Company with the Federal Revenue Service (CNPJ): After drafting and registering the articles of association with the Commercial Registry, the company must be registered with the Federal Revenue Service. To do this, it is necessary to provide information about the company. After reviewing the documentation, the Federal Revenue Service will issue the National Registry of Legal Entities (CNPJ), which is the company’s official registration. This item does not apply to locations with agreements between the Board of Trade, Revenue, or other agencies.
9. Registration with the Central Bank of Brazil (BACEN): Registration with the Central Bank of Brazil (BACEN) for a limited liability company is required when the company intends to conduct transactions involving foreign exchange, such as imports, exports, and transfers of funds between Brazil and other countries. Registration of investments between legal entities with the BACEN (a transaction carried out by partners when they contribute capital to a company) is done through the Foreign Direct Investment Registration System (RDE-IED) and is mandatory for all companies that fall within the scope of these regulations.

10. Opening a Bank Account – Legal Entity: To open a bank account in your company’s name, you must have a CNPJ (Brazilian Taxpayer Registry) and articles of incorporation registered with the Commercial Registry (Board of Trade). Additionally, it is important to verify the documents required by your chosen bank, such as a certified copy of the articles of incorporation, proof of address, and documents of the partners and the company’s legal representative.
11. Registering the Company with the State Revenue Service (State Registration): Registration with the State Revenue Service is mandatory for companies that sell products or services subject to ICMS (Tax on Goods and Services). To apply for registration, you must submit the documentation required by the state agency, which may vary depending on the state where the company operates. This item does not apply to locations with agreements between the Board of Trade, the Revenue Service, or others.
12. Registering the Company with the FGTS (Severance Indemnity Fund) and the INSS (National Institute of Social Security): Registration with the Severance Indemnity Fund (FGTS) and the National Institute of Social Security (INSS) is mandatory for companies with registered employees. This item does not apply to locations with agreements between the Board of Trade, Revenue, or other agencies.
13. Municipal Registration: Municipal registration is mandatory for companies whose activities are subject to municipal taxation, such as the Tax on Services of Any Nature (ISS). To apply for registration, you must submit the documentation required by the municipal agency, which may vary depending on the city where the company operates. This item does not apply to locations with agreements between the Board of Trade, Revenue, or other agencies.
14. Obtaining Licenses and Permits: Depending on the company’s activity, it may be necessary to obtain licenses and permits from specific agencies, such as SISCOMEX Registration/RADAR Accreditation, Professional Chamber Registration (CREA, CORCESP, etc.), Operating Permit (Fire Department Safety Inspection); Anvisa; Environmental Licensing; Ministry of Agriculture, Livestock, and Supply (MAPA), and others.

In addition to legal procedures, foreigners should also be aware of certain limitations when it comes to investing in Brazil. For example, there are restrictions in certain sectors, such as mining services, hydropower, and telecommunications.

Therefore, once regulatory procedures are overcome, with Brazil’s economic growth, creating a limited liability company can be an excellent option for foreigners looking to start a business in the country.

Sabrina de Melo – Bachelor of Laws from Padre Anchieta University Center (2022). Paralegal in the Advisory Department at TM Associados.

Leonardo Theon de Moraes – Attorney, graduated in law, with an emphasis on business law, from Mackenzie Presbyterian University (2012), registered with the Brazilian Bar Association, São Paulo Section (OAB/SP) (2012). Postgraduate and Specialist in Business Law from the São Paulo Law School of the Getúlio Vargas Foundation (2014), Master’s in Political and Economic Law from Mackenzie Presbyterian University (2017), author of books and articles, speaker, professor in undergraduate, MBA, and Executive Education programs at FIPECAFI, and member of the São Paulo Lawyers Association (AASP). Founding partner of TM Associados.

[1] https://www.cnnbrasil.com.br/economia/em-recorde-36-empresas-estrangeiras-solicitaram-instalacao-no-brasil-em-2021/