Participation of a Foreigner in a Limited Liability Company in Brazil

Brazil has been a popular destination for foreign investment, and many entrepreneurs are interested in establishing companies in the country. In this context, the following question arises: can a foreigner participate in a company in Brazil?

Yes, a foreigner can participate in a company in Brazil. In this article, we will outline the necessary steps for the constitution or entry of a foreigner as a partner in a limited liability company (LTDA) in Brazil.

1. Determining the company’s partners and determining the partners’ representatives in Brazil.

First, it is necessary to determine who the company’s partners will be, the capital that will be invested, the activity that will be carried out, the location, among others relevant to the business.

2. Appointment of a legal representative in Brazil with powers to receive summons on behalf of the foreign partner.

It is necessary (legal obligation) that the foreign partner appoint an individual resident in Brazil, as its legal representative in the country, granting this person powers to receive summons.

This power of representation must:

• Have the signature of the foreigner recognized in a Brazilian notary; or
• Be authenticated (by a notary located in another country) and consularized (recognized by a Brazilian consulate in the same country in which it was authenticated).

For both, the power of attorney, must be registered in the registry office of deeds and documents in Brazil and at the board of trade of the state in which the company its filed.

We emphasize that Brazil is a signatory of the Hague Convention, so that, for documents authenticated in other countries that are also signatories, it is enough for the notary to issue the document with the Apostille of the Hague Convention and consularization will not be necessary. However, the other steps mentioned above will continue to be necessary.

3. Submission, presentation and validation of documents for foreign members.

The personal documents of foreign members must be legalized in the country of origin (similar to a certified copy) and consularized at a Brazilian embassy or consulate located in the country where they are legalized. If the country is also a signatory of the Hague Convention, the same rule as for the power of attorney applies. Then, these documents must be translated by a sworn translator in Brazil and registered in a notary of titles and documents.

4. Registration of foreign partners with the Federal Revenue.

Foreign partners need to register with the Federal Revenue of Brazil, both as Individuals (CPF) and as Legal Entities (CNPJ). The registration of legal entities will be done through registration at the Central Bank of Brazil, through CADEMP within the system called: SISBACEN.

5. Determining the initial address of the headquarters and entering into a lease agreement.

The initial address of the company’s headquarters needs to be defined and a lease agreement or another, as the case may be, entered into.

6. Elaboration and Registration of the Company’s Articles of Incorporation at the Board of Trade.

The first step is to carry out a search and query of the business name at the Board of Trade, in order to ensure that the name chosen for the company is available and can be used. Next, you need to determine the extent of the administrator’s powers. Finally, it is necessary to determine the address and object of the company, that is, where the company will be located and what its field of activity will be.

7. Hiring an accountant.

Hiring an accountant is mandatory for companies in Brazil. The accountant will be responsible for assisting in the preparation of financial statements, calculation of taxes, among other accounting issues.

8. Registration of the incorporated company with the Brazilian Revenue Service (Receita Federal) (CNPJ).

After preparing and registering the articles of incorporation with the Board of Trade, it is necessary to register the company with the Brazilian Revenue Service. For this, it is necessary to provide information about the company and, after analyzing the documentation, the Brazilian Revenue Service will issue the CNPJ.

9. Registration with the Central Bank of Brazil (BACEN).

A registration with the Central Bank of Brazil (BACEN) for a limited liability company is necessary when the company intends to carry out operations involving exchange, such as imports, exports and transfers of funds between Brazil and other countries. Registration of investments between legal entities at BACEN (this operation is carried out by partners when they contribute capital to a company) is done through the System of Registration of Foreign Direct Investment (RDE-IED) and is mandatory for all companies that fall under the activities subject to this regulation.

10. Opening a bank account – Legal Entity

To open a bank account in the name of the company, it is necessary to have the CNPJ and the articles of incorporation registered within the Board of Trade. In addition, it is important to verify the documents required by the bank, such as a proof of address, and the documents of the company’s legal representative.

11. Registration of the company with the State Revenue Service (State Registration)

Registration with the State Revenue Service is mandatory for companies that carry out sales of products or services subject to ICMS (similar to IVA). To apply for registration, it is necessary to present the documentation required by the state body, which may vary according to the state in which the company operates.

12. Company registration with the FGTS and INSS

Registration with the Severance Indemnity Fund (FGTS) and the National Institute of Social Security (INSS) is mandatory for companies that have registered employees.

13. Municipal Registration

Municipal registration is mandatory for companies that have activities subject to municipal taxation, such as the Tax on Services of Any Nature (ISS). To apply for registration, it is necessary to present the documentation required by the municipal body, which may vary according to the city where the company operates.

14. Obtaining licenses and permits

Depending on the company’s activity, it may be necessary to obtain licenses and permits from specific bodies, such as:

• Registration with SISCOMEX/Qualification with RADAR
• Registration of professional chambers (e.g., CREA, CORCESP)
• Operating license (inspection of fire safety)
• Anvisa
• Environmental Licensing
• Ministry of Agriculture, Livestock and Supply (MAPA)
• Others

In addition to the legal procedures, foreigners must also be aware of some limitations when it comes to investing in Brazil. For example, there are restrictions in certain sectors such as mining services, hydropower, and telecommunications.

Once regulatory procedures have been overcome, with Brazil’s economic growth, the incorporation of a limited liability company can be an excellent option for foreigners looking to start a business in the country.

Sabrina de Melo

• Bachelor of Laws from Centro Universitário Padre Anchieta (2022)
• Attorney at law in the Advisory Department at TM Associados

Leonardo Theon de Moraes

• Lawyer, graduated in law with emphasis in business law from Universidade Presbiteriana Mackenzie (2012)
• Registered with the Brazilian Bar Association, São Paulo Section (OAB/SP) (2012)
• Postgraduate and Specialist in Mergers and Acquisitons and in Business Law from the São Paulo Law School of Fundação Getúlio Vargas (2014)
• Master in Political and Economic Law from Universidade Presbiteriana Mackenzie (2017)
• Author of books and articles
• Lecturer, undergraduate professor, MBA and Executive Education at FIPECAFI
• Member of the São Paulo Lawyers Association (AASP)
• Chairman of The State Board of Corporate Law at FEDERAMINAS
• Founding partner of TM Associados