Due to the
positive economic outlook Brazil has been experiencing, before the scenery of
economic crisis facing Europe, the country has become an interesting investment
choice. Thus, Brazil has been sought as a destination for investors of all
economical sizes.
However,
starting a business in Brazil is a bureaucratic process that started without
proper guidance, can discourage investors and even derail the operation of the
business. Accordingly, Saraiva Barroso
Law Firm has prepared a practical guide on how to open a company in Brazil.
1) Types of company existing in Brazil
Sole Proprietorship Companies
These companies are registered
under an individual owner. In this case, the individual entrepreneurs’ assets as
well as the company’s assets are the same. That way, the owner will have
unlimited liability over the company’s debts.
ATENTION: This type
of company only allows as foreigners, the Portuguese people in the enjoyment of
rights and obligations laid down on the
Equality Statute.
Limited Liability Individual Company (EIRELI)
Consists of a single person holding the entire share capital, fully
paid, which shall not be less than one hundred (100) times the highest minimum
wage in force in the country. The holder does not respond with their personal
assets for the company’s debts.
Limited Liability Company
Sociedade limitada é aquela que realiza atividade empresarial, formada
por dois ou mais sócios que contribuem com moeda ou bens avaliáveis em dinheiro
para formação do capital social. A responsabilidade dos sócios é restrita ao
valor do capital social, porém respondem solidariamente pela integralização da
totalidade do capital, ou seja, cada sócio tem obrigação com a sua parte no
capital social, no entanto poderá ser chamado a integralizar as quotas dos
sócios que deixaram de integralizá-las.
Limited
partnership is one that performs business activity, formed by two or more
partners who contribute with money or property valued in money for the
company’s capital formation. The liability of shareholders is limited to the
amount of capital, however, they are jointly liable for payment of the entire
capital, ie, each member has an obligation to its share in the capital, but may
be required to full pay what is left unpaid of social capital.
Joint Stock Companies
The Joint
Stock Company is
essentially a mercantile corporation by legal definition, whose capital stock
is represented by shares. It is a partnership of capital contributions existing
essentially for the purpose of earning profits to be distributed to the
shareholders, regardless of the economic activity developed by it. The social
capital is divided into shares of equal nominal
value, which can be freely negotiable. The shareholders’ liability is limited
to the issue-price of the shares subscribed and acquired by them.
ATENTION: In the case of Corporations with
foreign participation, the manager of the company, either partner or a
third party must be resident in Brazil, with permanent visa, in the case of
foreigners.
2) Choosing the Corporate Name
The
corporate name is the one under which the company carries out its activities
and undertake the acts related thereto.
The corporate name must comply with 5 general rules,
which are: accuracy, novelty, type identification, protection of morality and prohibited
usage of acronyms and designations of public agencies. There are also specific
rules for drawing up some of the species of corporate names, which can be
explained on a case by case basis. As for novelty, it must be requested a
search by corporate name, to avoid any conflicts, before the competent Trade
Board.
3) Choosing the Corporate Purpose
Chosen
corporate name, it must be established the corporate purpose, which shall state
clearly and accurately the activities to be undertaken by the entrepreneur. Also,
it is necessary to point the CNAE code corresponding to the activity to be
developed, which is available for consultation on the following link http://www.cnae.ibge.gov.br/.
4) Drafting and registering the Articles of Association before the Trade
Board
Chosen the
corporate name and the object of the society, it is time to draft the Articles
of Association. This should be done with the participation of a lawyer,
which, by legal requirement, will need to sign it, providing his visa.
The
Articles of Association is the instrument of incorporation. it shall be duly
registered before the competent Trade Board. It shall rule the relationship
between the company, its shareholders and third parties, establishing rights
and obligations.
Once the
Articles of Associationis finished, it shall be taken to registration before
the competent Trade Board. Each Brazilian state has its own Trade Board.
In the case
of foreign shareholders (individual or company) not resident or headquartered
abroad, it is necessary they grant specific power of attorney for their
representative in Brazil to receive judicial summons in lawsuits proposed based
on the laws governing its corporate type.
5) Obtaining the Corporate Tax Registration Number (CNPJ)
After
registration of the company’s articles of association before the the competent
Trade Board. the company must obtain its Corporate Tax Registration Number
(CNPJ) with the Brazilian Federal Revenue Office.
6) Obtaining the State Taxpayer Identification Number and the Municipal Taxpayer
Identification Number.
The company
must also be registered before the State Treasury Office and the Municipal
Finance Department according to the developed activities. If the company carries
industrial or commercial activities it shall be registered before the State
Treasury Office for control purposes of the Value-Added Tax on Sales and
Services (ICMS).
In case the
activities developed by the company are services only, it should be registered
before the Municipal Finance Department, for control purposes of the Services
Tax (ISS).
7) Licenses and Permits
Now that
you have a legally constituted company it is necessary to identify which
licenses must be obtained so the Operation Permit may be granted.
The
required licenses may differ, depending on the company’s activities, however,
the most common required licenses are: Fire Department, Sanitary and
Environmental. The requirements for granting each of these licenses vary
according to the nature of the activity to be performed by the company. Once granted the Operation Permit, as
applicable, the company may start exploring their activities.
RELEVANT INFORMATION
a)
Time spent on the opening of the
company: One of the
biggest complaints of entrepreneurs in Brazil is the time taken to start a business,
ranging from 45 up to 120 days.
b)
Costs: the average cost of starting a business in
Brazil is R$ 2,038.00 (BRL). according to data published on the blog do Jornal O Povo. However the variation of these
costs in Brazil may range from R$ 963.00(BRL) (in the state of Paraíba) up to R$
3,597.00 (BRL) (in the state of Sergipe). In Ceará, the cost of starting a
company lays around R$ 1,796.00 (BRL).
c)
restrictions / impediments to
participation by foreign (individuals or corporations) in Brazilian companies: The National Commerce Registration
Department establishes some restrictions to foreign participation in Brazilian
companies, such as:
- Companies of foreign capital in health care;
- Coastal shipping companies;
- Newspaper companies and broadcasters of sound and
sound and images;
- Cable operators;
- Mining and hydropower;
- National airlines;
- Companies in the border area (broadcasting of sound
and sound and image, mining and colonization and rural allotment).
Links to
more information:
National Commerce
Registration Department: Departamento
Nacional de Registro do Comércio - http://www.dnrc.gov.br/
Brazilian Federal
Revenue Office : Receita Federal do
Brasil - http://www.receita.fazenda.gov.br/
Portal do Empreendedor - http://www.portaldoempreendedor.gov.br
