Internationalization processes are never simple and always require a lot of expertise and knowledge about the ways for adapting a business to the legal specificities of a country. Looking to the Brazilian scenario, this process tends to be very vast, requiring a series of obligations in different instances. Therefore, the simpler and agile path to find the growth business perspective in Brazil is to consider been having as partners a set of specialist suppliers. Consequently, companies who’re coming to Brazil could guarantee all the necessary tools to operate.
For companies looking to Brazil as a potential market for increase, having the support of a specialist in legal representation, of paralegal providers, accounting, and Human Resources management is a great way to speed up the formal constitution of companies and, also, to simplify the relationship with public agencies.
As a unique market for the increase of any business, Brazil is one of the most complex states in the world when it comes to setting up companies. It frequently requires numerous documents and procedures for formalization — especially for foreign investors.
If your company finds in the Brazilian market opportunities for expansion, we briefly explained below the five main steps to establishing a company in Brazil. Check out!
1. Have a Legal Representative partner
Therefore, the first action that international investors must take when bringing their investments or establishing a subsidiary in Brazil is to define who will be the legal representative of the institution in the country.
The company’s attorney must be a Brazilian, naturalized foreigner, or have a permanent visa. Besides, it is mandatory to have a tax domicile in Brazil. It is noteworthy that as well as the need to choose a legal representative, the choice of a legal administrator is required (you can read more about the difference between a legal representative and administrator by clicking here).
2. Establish the Articles of Incorporation
After choosing a legal representative, it is time to form the company. In Brazil, this step is carried out by writing a social contract: a document that determines the rules and contexts in which the company will operate, in addition to specifying all partners (national or foreign), corporate purpose, official address, capital of the company, corporate name, governance clauses, among other aspects. Here, it is essential to have the support of a law firm, in order to guarantee its correct constitution.
At this stage, knowing what should go into a social contract can greatly simplify the interaction with your company’s partner lawyer. Check out what can’t be missing in the drafting of the social contract:
- Discrimination of partners: define and inform competent data to the organization’s partners;
- Specify the company’s core activity: describe the products or services marketed by the company.
- Determining the place where the company will operate: here the support of an accountant or tax specialist is essential, as, depending on the activity, the choice of a particular municipality to work in can contribute to reducing the tax burden;
- Choose the type of company classified by the Federal Revenue: there are more than 20 categories, but, in common terms, foreign companies that are set up in Brazil tend to opt for one of the following options:
- Sociedade Anônima (SA)
- Sociedade Limitada (LTDA)
Do you know the types of companies operating in Brazil? Click here and read our article to learn more.
- Introduce the administrators and specify the participation of each partner: it is mandatory that the articles of association state how the division of shares (based on the amounts invested) between the partners was arranged. It should also be pointed out who is (or who is) responsible for managing the new company.
- Determines the pro-labore (salary for the partners): the partners have a percentage of pro-labore, and this amount can be documented in the articles of incorporation.
- Inform the rules for deliberations: all important decisions can also be documented in the articles of incorporation. From the net income distribution structure to the rules for M&A processes or the participation of new partners.
At Raleigh, together with lawyers, we help to simplify this process, guiding investors from listing the documents necessary for the incorporation of the company and drafting the articles of incorporation, to the preparation of powers of attorney, registration of foreign partners, and composition of handouts and notaries abroad.
For companies that have already established themselves in Brazil and are looking for a new legal representative, in addition to the details mentioned above, we carry out consultations and survey all possible pending issues (such as CND – Negative Debt Certificate) or legal proceedings (protests in the notary’s office, labor lawsuits, between others).
3. Enroll in public entities
At this time, the approval, and incorporation of the company must pass through Brazilian municipal, state, and federal bodies. In Brazil, to operate legally, investors need to obtain a set of licenses and, finally, the National Register of Legal Entities (CNPJ).
From this information, it is possible to define the tax collection format and which ancillary obligations will be delivered.
4. Have a supplier for accounting and HR management – or act in the in-house model
With the company incorporated and registered with government agencies, an accounting and human resources structure must be created (essential areas for back-office management, guarantee of compliance with labor/social security legislation, and tax collection).
It is important to emphasize that companies also have the option of internalizing these operations, as long as they have qualified and qualified professionals with federal councils.
5. Register with the Central Bank
For foreign partners to make investments in Brazil, it is essential to register with the Central Bank of Brazil system, which allows and formalizes access to foreign resources in Brazil.
Law 4,131/62, which describes rules for foreign investment, determines the deadlines for the declaration to the Central Bank through the module of Electronic Declaratory Registration – RDE. Important: here it is necessary that the company is already in the process of opening a checking account in a bank established in Brazil.
