Portuguese Language Website

The New York Times’ efforts to launch a Portuguese edition of its website – currently scheduled for the latter half of 2013 – could be impeded by a Brazilian law that limits the ownership stake of foreign entities.

While it’s unclear whether the publication’s ownership group has consulted directly with a lawyer in Brazil, its publisher Arthur Sulzberger, Jr., recently told the Brazilian newspaper Folha that he is aware of the law that dictates that media or news organizations must have at least 70 percent Brazilian ownership.

“We are absolutely going to do everything within the laws in Brazil,” Sulzberger told the newspaper last week. “We are talking to people about what that means, and how we can best accomplish our goal in a way that meets the legal requirements.”

The law stems from a 2002 amendment to Brazil’s Federal Constitution intended to restrict the investment stake of foreign companies and individuals in media organizations to no more than 30 percent. Furthermore, foreign investors may not possess direct ownership of a Brazilian business. According to a 2011 report by Ernst and Young – “Doing Business In Brazil” – a foreign investment must be performed through a duly incorporated Brazilian company.

Brazilian media entities are not the only organizations impacted by operational limitations – transportation and public utilities companies face similar restrictions.

For foreigners with legal interests in Brazilian entities in these sectors, the onus rests on them to abide by local laws. These parties should consult a lawyer in Brazil in order to better understand the legal ramifications of all business actions that they take. Given that Brazil is now the sixth-largest economy in the world, businesses are likely to expand their presence in the country, so they must have a savvy legal team in place as they work through contract disputes, property infringement cases, asset acquisition questions and other related business issues.