Before open a company in Brazil, the first decision an entrepreneur has to make concerns the type of company he will create. Even though the Brazilian law offers a large choice in terms of types of companies, most of the firms who come to settle in Brazil chose between the Limited Liability Company – LLC (Sociedade Limitada – Ltda.) and the Joint-Stock Company – Business Corporation (Sociedade Anônima – S.A.). So, with these two types of companies, partners and associates are hold liable in a limited way, which is a plus for foreigners who don’t yet know very well the ins and outs of the Brazilian market.

Ltda.

A Ltda. is a business company formed by individuals or capital with limited liability partners. Furthermore, the management is carried out by one or more individuals, shareholders or not, as indicated in the bylaws. The capital is divided into equity units, named quotas, which are registered and no minimum corporate capital is legally required.

The company needs to be constituted by at least two partners. Therefore, a partner can be either an individual or a legal organization, and need legal representation in Brazil, if the professionals are not Brazilian resident. There is no obligation to publish annual financial statements, although banks, lawyers, and other creditors usually require yearly approval of Balance Sheets.

S.A.

A S.A. is a business corporation formed by either public or private capital (either publicly- or closely-held companies) and has at least two shareholders for closely-held companies and three for publicly-held ones. A S.A. is divided into shares and no minimum capital is required. Dividends are distributed to the shareholders in the form of interest over capital.

The Board of Directors represents the S.A. and ensures that everything is in place for its day-to-day activities. It is composed of at least two Directors, who may be shareholders and individuals, and who must be Brazilian residents. They may be elected for a maximum of 3 years. An Audit Committee is established to ensure that the company follows best practices in corporate governance. In S.A., the liability is limited at the price of the shares emited.

Step by step to open a company in Brazil:

• 1. Drafting of the “Contrato Social” – equivalent of the company’s by-laws
• 2. Registration of the contract at the trade register
• 3. Enrolement and registration at the National Registry of Legal Entities – to obtain the company’s identification
• 4. Opening of the bank account
• 5. Capital registration and release at the Central Bank of Brazil (BACEN)
• 6. Modification in the by–laws of the exact amoun in reais of the capital – after the currency exchange, and registration in Brazil’s Central Bank
• 7. Acquisition of the exploitation licences – depending on your area of activity, additional certifications might be required
• 8. Enrolement and registration at the ICMS – tax office for the circulation of goods and services
• 9. Registration at the electronic invoicing service – mandatory invoicing system for Brazilian companies
• 10. Enrolment and registration in the services in charge of collecting employer’s contribution