With a population of over 214 million people, Brazil introduces several opportunities for foreign investors to carry out business activities in the country.
In addition to its beneficial large consumer market and international trade access to the rest of the Americas, local companies can be incorporated in Brazil without the need to physically visit the country; the process can be conducted through a Power of Attorney.
If you are contemplating forming business relationships within the Brazilian marketplace, it is crucial to comprehend the Brazilian corporate business structures.
Presently, the two most popular Brazilian corporate structures are the SRL (Sociedade de responsabilidade limitada) and the (EIRELI) Empresa individual de responsabilidade limitada.
Limited liability company (limitada / SRL)
The limitada is one of the most common types of companies in Brazil. It represents a combination of a company and a common partnership, similar to the Brazilian Limited Liability Company (Sociedade de responsabilidade limitada).
One of the main features of a Brazilian limitada is the fact that each shareholder’s responsibility is limited to their assigned capital, being based on their investment.
Some more features of the limitada versions of an Limited Liability Company include:
- No minimum capital is required unless the entity is involved in trading or hires foreigners as managers or directors
- The Sociedade de responsabilidade limitada is incorporated through an Article of Association which must be registered before the Board of Trade.
- Only one shareholder is required,
- Non-residents must be represented by an individual resident in Brazil
- Any shareholder holding more than 75% of the shares has effective control of the entity.
- A member cannot sell shares without the authorization of the other shareholders
- The construction of a Sociedade de responsabilidade limitada allows the members to structure the allocation of profits any way they wish and the articles of associations can be drawn up to meet the intentions of the members.
- A Sociedade de responsabilidade limitada cannot be registered on the stock exchange nor can it sell shares on the stock exchange.
EIRELI (Empresa Individual de Responsabilidade Limitada)
EIRELI is characterized as a legal entity enjoying limitation of liability and requires minimum capital to be opened. An EIRELI is mostly used by individual entrepreneurs.
- The EIRELI can be incorporated by a single individual shareholder and the shareholder holds 100% of the shares.
- The EIRELI obeys the same rules as the Sociedade de responsabilidade limitada in terms of the obligation of the shareholder but only individuals can be the shareholder of such and the individual can only incorporate a single EIRELI.
- EIRELI allows the establishment of an autonomous entity for full activity, using less overwhelming taxation, with limited liability for debts of the company.
- EIRELI only accounts for its equity with debt and not the personal assets of its owner.
- The separation and restriction of liability reduce the risks for the entrepreneur.
EIRELI incorporation processes such as registration, amendment, and termination are done at the offices of the Brazilian state’s Boards of Trade.
Company’s name and objectives
When registering a Sociedade de responsabilidade limitada, its name has to include some words that reflect what the company’s purposes are. The names should be followed by the objectives and by the particular area of the market. The EIRELI doesn’t have to follow those requirements. Also, the company objectives and address must be encompassed in the Articles of Association.
Minimum Capital Requirements
Generally, there is no minimum share capital required for the incorporation of companies and corporations. In specific regulated business sectors, such as insurance, and commercialization of electric power, minimum amounts are imposed for the companies’ incorporation and operation, as provided for in particular regulations.
In contrast to the Sociedade de responsabilidade limitada, the formation of an Empresa Individual de Responsabilidade Limitada (EIRELI) requires a minimum capital stock of a minimum of 100 times the highest minimum wage in force.
Doing business in Brazil is accompanied by an assortment of benefits, allowing your business to flourish and succeed.
If you want to start your business in Brazil, contact your Damalion experts now.
