The participation of a foreigner in a limited company in Brazil

Brazil has been a popular destination for foreign investment, and many entrepreneurs have an interest in establishing companies in the country[1]. In this context, the following question arises: Can a foreigner participate in a society in Brazil?

Yeah! A foreigner can participate in a company in Brazil and in this article we will point out the necessary steps for the Constitution or entry of a foreigner as a partner in a limited company (LTDA) in Brazil, let’s go:

1. Determination of the partners of the company and determination of the representatives of the partners in Brazil: first, it is necessary to determine who will be the partners of the company, the capital that will be invested, the activity that will be carried out, loca, among others pertinent to the business.
2. Appointment of legal representative in Brazil with powers to receive subpoenas on behalf of the foreign partner: it is necessary (legal obligation) for the foreign partner to appoint a natural person resident in Brazil, as his legal representative in the country, giving him powers to receive subpoenas in lawsuits filed against him.

This power of attorney must: (i) have the signature of the foreigner 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 in which it was notarized), after the power of attorney must be registered in a notary’s office in Brazil and in the commercial Board of the state headquarters of the company that the foreigner will be part of. We emphasize that Brazil is a signatory to The Hague Convention, so for documents notarized in other countries that are also signatories, it is enough for the notary to issue the document with the Apostille of The Hague Convention and consularization will not be necessary, however the other steps provided in item (ii) will continue to be necessary.

3. Sending, presenting and validating the documents of foreign partners: the personal documents of foreign partners must be legalized in the country of origin (similar to a certified copy) and consularized in a Brazilian embassy or consulate located in the country in which they are legalized – if the country is also a signatory of The Hague Convention, the same rule applies to the power of attorney. Then, these documents must be translated by a sworn translator in Brazil and registered in a notary’s office for titles and documents.
4. Registration of foreign partners in the Internal Revenue Service: foreign partners need to register with the Federal Revenue Service of Brazil, both as an individual – CPF – federal revenue and as a legal entity – CNPJ. The registration of legal entities will be through registration with the Central Bank of Brazil, through CADEMP within the system called: SISBACEN.
5. Determination of the initial address of the headquarters and conclusion of a rental agreement: the initial address of the company’s headquarters must be defined and concluded a rental agreement or other as the case may be.
6. Preparation and registration of the company’s articles of Incorporation with the Board of trade: the first step is to conduct a business name search and consultation with the Board of trade in order to ensure that the name chosen for the company is available and can be used. Next, you need to determine the extent of the administrator’s powers. Finally, it is necessary to determine the address and object of the company, that is, where the company will be located and what will be its field of activity.
7. Hiring an accountant: hiring an accountant is mandatory for companies in Brazil. The accountant will be responsible for assisting in the preparation of financial statements, calculation of taxes, among other accounting issues.
8. Registration of the company incorporated in the Internal Revenue Service (CNPJ): after preparing and registering the social contract with the Board of trade, you must register the company with the Internal Revenue Service. For this, it is necessary to provide information about the company and after analyzing the documentation, the IRS will issue the National Register of legal entities (CNPJ), which is the official registration of the company. This item does not apply to localities that have an agreement between the Board, revenue, among others.
9. Registration with the Central Bank of Brazil (BACEN): registration with the Central Bank of Brazil (BACEN) for a limited company is necessary when the company intends to carry out operations that involve foreign exchange, such as imports, exports and transfers of resources between Brazil and other countries. The registration of investments between legal entities in BACEN (operation carried out by partners when they contribute capital to a company) is made through the Foreign Direct Investment Registration System (RDE-IED) and is mandatory for all companies that fall under the activities subject to this regulation.
10. Opening a bank account-legal entity: to open a bank account in the name of the company, it is necessary to have the CNPJ and the social contract registered with the Board of trade. In addition, it is important to check the documents required by the chosen bank, such as a certified copy of the articles of incorporation, proof of address, documents from the partners and the legal representative of the company.
11. Registration of the company in the State Revenue (state registration): registration in the state revenue, is mandatory for companies that carry out operations for the sale of products or services subject to ICMS. To apply for registration, it is necessary to present the documentation required by the state body, which may vary according to the state of operation of the company. This item does not apply to localities that have an agreement between the Board, revenue, among others.
12. Registration of the company in the FGTS and INSS: registration in the Guarantee Fund for length of Service (FGTS) and in the National Social Security Institute (INSS) is mandatory for companies that have registered employees. This item does not apply to localities that have an agreement between the Board, revenue, among others.
13. Municipal registration: municipal registration is mandatory for companies that have activities subject to municipal taxation, such as the tax on services of any nature (ISS). To apply for registration, it is necessary to present the documentation required by the municipal body, which may vary according to the city in which the company operates. This item does not apply to localities that have an agreement between the Board, revenue, among others.
14. Obtain licenses and permits: depending on the activity of the company, it may be necessary to obtain licenses and permits from specific bodies, such as registration in SISCOMEX/qualification in RADAR, registration of professional cameras (CREA, CORCESP, e. g), operating license (Fire Safety Inspection); Anvisa; environmental licensing; Ministry of Agriculture, Livestock and supply (MAPA) and others.

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

Thus, once regulatory procedures have been overcome, with the economic growth of Brazil, the creation of a limited company can be an excellent option for foreigners looking to start a business in the country.

Sabrina de Melo-Bachelor of laws from Centro Universitário Padre Anchieta (2022). Paralegal Advisory Department at TM Associates.

Leonardo Theon de Moraes-lawyer, graduated in law, with emphasis in business law, from Universidade Presbiteriana Mackenzie (2012), enrolled in the Brazilian Bar Association, São Paulo Section (OAB/SP) (2012). Postgraduate and Specialist IN Business Law from the São Paulo School of Law of the Getúlio Vargas Foundation (2014), Master in political and Economic Law from the Mackenzie Presbyterian University (2017), author of books and articles, lecturer, Professor in undergraduate, MBA and Executive Education 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/