Having many questions related to the process of opening foreign companies in Brazil is something common for most companies. This is because it is a process that requires expertise and a series of care so that everything is carried out as the legislation allows and foresees.
Especially when we talk about exercising the role of the legal representative of a company. And some of these crucial points have a fundamental need for discussion at the time of incorporation of the company, whether national or foreign. Read on and stay on top of more details on the topic.
What is a legal representative?
In a simplified way, we can understand the legal representative as the natural person indicated in the contract or bylaws of a company. Its task is to represent it, in practice, in different legal acts.
In this sense, the legal representative is granted some attributions and powers. Among them, the possibility of signing contracts, assuming obligations, and granting powers of attorney — including, to define who will be the legal responsible for the company.
Unlike what many might imagine, the legal representative does not have absolute powers, but only those defined by legislation and/or social contract. In addition, this person does not act in his own name, but always in the interest of the entity represented, having full responsibility for the business.
Who can be a legal representative in Brazil?
Under Brazilian law, the legal representative must be a natural person, Brazilian or foreign, residing in Brazil and, if the individual is a foreigner, the person must have a permanent visa.
Such requirements are determined by the IRS and the objective is to protect the tax authorities. Thus, the legal representative of a foreign company may be personally liable for non-compliance with legal obligations, notably tax obligations.
For this reason, for a power of attorney granted by a foreigner to be valid in Brazil, it is mandatory that the powers granted include the receipt of court summons on behalf of the foreign partner. Once these requirements are met, you will avoid future surprises regarding your representation.
The responsibilities of a legal representative
It is important to emphasize that for legal representation to take place, the attributions are defined by the partners in an instrument of mandate. Within this, the responsibility of the representative becomes important and can reach spheres and situations such as:
- Accountability for liabilities and debts;
- Criminal liability;
- Civil liability;
- Receipt of citation;
That is, the magnitude of the representation is wide and the person occupying this position needs to have full knowledge about the fiscal, economic and administrative situation of the company so that personal losses do not occur due to lack of knowledge.
That is to say: it is essential that everything is exposed to the legal representative so that there is real knowledge of the company’s situation, before accepting this position since it can be held responsible before the criminal and civil spheres.
In this case, illegal acts or acts that go against what is established in the articles of association, for example, by the partners, may be charged with civil damages from the legal representative, in addition to receiving criminal convictions.
It is also important to remember that: it is not because the legal representative has this burden of responsibility that his actions are always unilateral and isolated. The responsible person cannot carry out acts without the express instruction of the partners he represents. This provides security to the partners and prevents any action from taking place on the part of the representative that could be contrary to the interests of the partners.
After all, he is there to defend the interests of the partners and the company and not his own interests. This means that the definition of who will carry out this representation needs to be evaluated according to the trust that the partners have in the person and in the professional capacity that the person has.