Both foreign individuals and companies may set up a business in Brazil. The general rule is that such businesses may encompass any legal business objective. However, foreigners may find some restrictions in certain business areas (for example publishing) or if the company's business activities will be carried out in certain geographical areas considered to involve national security (for example borders with other countries or coastline properties).
There are two basic types of limited liability company in Brazil:
- Sociedade Limitada (LTDA): This is the most common form of company in Brazil. It is also the simplest and most flexible and inexpensive type of company to operate. It is governed by a Contrato Social (Articles of Association) and its capital is divided into quotas (shares). There are no minimum capital requirements and the company is managed by one or more Administrators, resident in Brazil and appointed by the quotaholders. To be ensured total control of the company, a quotaholder must own at least 75 percent of its quotas.
- Sociedade Anônima (SA): This form of company is not as flexible as a Limitada and is considerably more expensive to operate and more transparent, since all corporate acts and its annual financial statements must be published in newspapers. It is governed by Estatutos (By-laws) and its capital is divided into one or more classes of shares. An SA is managed by a Management Board and a Fiscal Council, each composed of two or more Brazilian residents. If an SA is listed on the stock exchange or has authorised capital, it must also have a Board of Directors, made up of shareholders.
Unless the foreigner intends to be physically present in Brazil when the incorporation documents are signed, they will have to provide their Brazilian lawyer with a Power of Attorney containing powers to incorporate the company in their name. This applies to either foreign individuals or companies.
In addition, foreign companies will also have to provide a copy of their Certificate of Incorporation issued by the competent authority in their country and containing at least the following information:
- Company name
- Registered Office Address
- Corporate Purposes
- Registered or Authorised Capital (and classes of stock)
- Names of Officers (or the name of the incorporators)
Before a Brazilian company may be incorporated, the following preliminary matters must be decided upon:
- Name of company: the company name must give an indication of its business area. If a foreign company is the investor, the foreign company's name may be used followed by the words do Brasil (of Brazil). The individual may check the company name with the State Commercial Registry Office (Junta Comercial) to ensure that the name of the company is not already registered (although this is not obligatory)
- Names of quotaholders or shareholders: the identity of the quotaholders, in the case of a Limitada, or shareholders, in the case of an SA, must be known before the company can be incorporated
- Legal address: the company must have a legal address. If a permanent office for staff is not required, the services of a company offering virtual office addresses may be used
- Capital: the initial capital of the company must be decided as well as the period during which it will be paid up, which may be as long as one or two years
- Management: the people who will comprise management must have been identified and named
