By Fabiano Deffenti
So you've arrived in Brazil. You've spent a bit of time here and like it. Perhaps you were lucky enough to find your loved one here, have foreign backing for a great new idea or somehow got through the red tape and now have a permanent resident's visa.
You want to open a business. What do you do?
Brazil is governed by civil law, that is, it follows the Franco-German (also called "European") legal tradition. This means that there is at least twice as much red tape for everything. You probably already discovered that at the Brazilian Consulate overseas where you got your visa in the first place...and everything takes three times as long.
Well, bad news. registering a company here can take a 100 times longer!
What type of company should I register?
There are various types of companies which can be registered pursuant to Brazilian law, but the key one for starters is a Limited Liability Company by Shares "Sociedade por Quotas de Responsabilidade Limitada", generally abbreviated by "Ltda".
How does a "Limitada" operate?
The Limitada is a mixture between a partnership (in the pure English sense) and a company. It is somewhat like a Limited Liability Partnership as operated in the U.S.
"Partners" are effectively shareholders of the company and have limited liability. Well, limited liability in the Brazilian way of doing it - partners (even those who are not directors) are still personally liable for many things, such as for debts under the draconian Brazilian Labor Code. However, it is still a company in some ways and it can go into the Brazilian equivalents of external administration/Chapter 11 and liquidation.
Where do I register the company?
This is generally done at the Juntas Comerciais, or the state-based Commercial Registries. In some less developed areas registration takes place at Civil Registries.
What documents do I need to register the company?
Brazil is the country of paperwork, so you will need:
· another partner - you cannot register a Ltda with one shareholder only;
· the "contrato social" (articles of association or by-laws) which is a contract between the partners signed by both partners;
· a notarised copy of your Brazilian ID and your business partner's;
· a notarised copy of your CPF (your Brazilian tax file number) and your business partner's;
· a notarised copy of your marriage certificate (if you have registered your marriage in Brazil) and your business partner's; and
· an account or some document showing that you reside at the address where you live and the same for your partner.
You also need to pay some small fee and choose a name which reflects the business you want to run - for example "Joe Bloggs Distribuidores Ltda" if you want to run a distribution and representation business.
Then you need to wait, and wait, and wait a bit more. sometimes even several months. Your application will be analysed by a "vogal" or a bureaucrat who checks whether your application complies with all relevant laws. If you are lucky you won't need to respond to an "exigência" from the vogal - a demand for rectifying something which you may have got wrong in your application. The vogal will point out the error to you and you should be able to rectify it, with some help from the guys at the counter of the Junta Comercial or help from a local lawyer.
After that, the vogal will check your application for a final time and you should get your company registered.
This is just a brief summary of the steps involved. I recommended getting the help of a professional such as an accountant or lawyer to help with the formalities of setting up a company in Brazil. Good luck with your new venture!
You can get further information on how to register a company from the Junta's websites:
www.jucergs.rs.gov.br (Rio Grande do Sul)
www.jucesp.sp.gov.br (São Paulo)
www.jucerja.rj.gov.br (Rio de Janeiro)
www.pr.gov.br/jucepar (Paraná)
www.jucemg.mg.gov.br (Minas Gerais)
Fabiano Deffenti, Esq. is an Attorney and Counsellor at Law (New York), Barrister and Solicitor (New Zealand) and Solicitor and Legal Practitioner (Australia). He practises international law in Brazil under the name Deffenti Consulting. You can contact him by email on fabiano@deffenti.com
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