Forms of Business Associations in Brazil

If you plan on opening a branch of your business in Brazil from another country such as the United States, you will first need to be authorized by the Brazilian federal government. For such authorization, you must prove that your business also exists in your homeland. It is also required a list of the managers, minutes from all shareholders’ meetings, evidence that you have appointed a Brazilian legal representative, and the latest balance sheet.

Much like in the United States, there are a few different forms of business associations in Brazil. Once you decide to work with a partner in developing your own business, you need to identify what type of association you are operating. To define your business correctly, you must first understand the different types of business associations in Brazil.

Your business might be a partnership not organized as a business enterprise, a limited partnership, a silent partnership, a limited liability company, or a corporation. The two most popular forms of business associations opened in Brazil by people from the United States are limited liability companies and corporations.

Limited Liability Company

To open a limited liability company in Brazil, you must first draw up a “Contrato Social” with at least one other partner. This must be written in Portuguese. Included in the provisions should be:

• The name of all partners and their personal data
• The name of the company and its purpose
• The address of the company’s headquarters
• The company’s goal
• The duration of the company, if it has been defined
• The company’s capital and each partner’s participation in that capital

With a limited liability company, the shareholders all enter into the contract together. Therefore, the shareholders are all equally responsible for the success or failure of the company.

Corporation

If you open a corporation in Brazil, your business is subject to a subscription of all issued shares, a deposit, and an issuance price of the capital. Corporations may issue:

• Debentures
• Mortgages on real property
• Guarantees to general creditors
• Debenture-Backed Securities
• Subscription Bonuses
• Founders’ Shares
• Commercial Paper

Corporations have much more freedom in the operations of their enterprise, but it comes at a higher cost with higher taxation.

Opening a business

To open any type of business in Brazil you need representation from a certified Brazilian attorney. Even if this were not a requirement, finding an attorney to guide you through the process would be wise. While the laws are similar, there are some major legal variations between Brazil and the United States and you could inadvertently break a law if you do not understand the legal system.

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