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Legal Representation and Administration in BrazilPosted 26/09/2017
When doing business in Brazil, a foreign company must permanently maintain a local legal representative with powers to sign on behalf of the foreign partners, deal with issues related to the business and respond in a legal capacity. This legal representative does not necessarily have to be a Brazilian and it is not necessary to have a Brazilian partner either. On the other hand, if the legal representative is a foreigner he must be resident and domiciled in Brazil with a permanent visa.
In the same way, the foreign company that intends to operate in Brazil must comply with the Brazilian legislation regarding the directorship of the company (called administration in Brazil). The administrator of a Brazilian company must be Brazilian or have permanent residence (visa) in Brazil.
Legal Representative Liability
A partner of a company can be either an individual or a legal person and needs legal representation in Brazil when not Brazilian resident. In addition two partners are needed to create limitada-type companies (equivalent to LLCs) in Brazil, these can either being foreign or Brazilian partners.
The legal representative is the person who responds by acts on behalf of the partners/clients before the Brazilian justice. The representative shall follow the client’s directives, subject to the legal issues.
Usually, the representative participates in meetings, assemblies and other general meetings and signs any documents regarding his company’s decisions. It’s important to understand the potential liabilities and the risks that come with this role; it may be related to civil, administrative or criminal matters.
The administrator is the person who will legally answer for all activities that the company performs in Brazil. The administrator must be an individual and must have his/her address in Brazil, however, he or she does not need to own shares in the Brazilian company, it occurs through appointment.
Any negligent decision or performance against the company’s goals makes him personal liable. Moreover, the administrator cannot be replaced in his duties, because he needs to be permanently available.
In both cases, any misrepresentation or mismanagement can make them personal liable by wrong doing. Due to the high responsibility it’s essential to choose a reliable person who will give credibility and transparency to the partners and to your company.Author's post: Europartner Accounting