1- Decide the corporate type (usually Ltda. or S/A) for the BraCo  

There are different factors that would impact in the corporate type of choice, but the most common type for subsidiaries in Brazil is the Ltda.   

S/A is recommendable if the company is willing to issue bonds or securities in the local stock markets or have different groups as shareholders, needing more specific and complex governance regulations. Ltda. requires only one shareholder and S/A requires a minimum of two shareholders.  

2- Appoint a proxyholder to foreign shareholders  

Upon local regulations, a proxyholder needs to be appointed in Brazil to represent the foreign shareholders. Such individual needs to be a tax resident in Brazil and shall be granted a Power of Attorney (PoA) receive services of justice and take the necessary actions to incorporate the Brazilian company, which requires the individual in such position to be a lawyer enrolled before the local Bar Association.  

3- Appoint an administrator for the BraCo  

Upon local regulations, a BraCo needs to have at least one Administrator. Such individual can be either a tax resident in Brazil or not. If not a tax resident in the country Brazil, such individual needs to grant a Power of Attorney (PoOA) to a Brazilian resident to receive services of justice on behalf of the non-resident individual undertaking the administrator position.  

4- Choose company name   

Select a unique name for the BraCo that complies with the regulations of the Trade Board. Conduct a name search to ensure its availability.  

5- Open a bank account for BraCo  

When authorities accept your company’s registration, you can open a bank account. The legal representative may advise on which bank is best to choose based on your business’s activity in Brazil.  

6- Register the capital stock for BraCo in Central Bank  

After opening the corporate bank account, it will be possible to register the paid capital with the Central Bank and send funds to BraCo. It is also a possibility to fund BraCo by intercompany loans, case in which transfer pricing and thin capitalization rules may apply.  

7- Register with the Commercial Registry

It is necessary to register the company with the Commercial Registry of the state where it will be established. Forms must be filled out, the corporate act of incorporation presented, and registration fees paid. 

8- Obtain the CNPJ

Simultaneously with registration with the competent Commercial Registry, the business will be registered with the National Registry of Legal Entities (CNPJ) with the Federal Revenue Service. The CNPJ is the company’s tax registration and is required to conduct commercial transactions, issue invoices, hire employees, among other activities. 

9- Enroll with State and Municipal taxpayer registries

Depending on your company’s activities, it may be necessary to register with the state and municipal taxpayer registries for the payment of state and municipal taxes, such as ICMS and ISS. 

10- Obtain a permit from the Municipal Government

Every company needs to obtain a permit from the Municipal Government, whose rules are defined according to municipal licenses and ordinances so that the entrepreneur can establish the business regulated by urban zoning codes and municipal regulations. 

11- Obtain other regulatory licenses and environmental authorizations

Certain commercial activities may require specific operational licenses or authorizations. Research and obtain the necessary licenses from relevant municipal or state authorities, as well as specific regulatory agencies, professional bodies, and/or environmental licenses. 

12- Register the company with the Ministry of Labor and Employment

If the entrepreneur intends to hire employees, it will be necessary to register the company as an employer with the Ministry of Labor and Employment, as well as to comply with labor and social security obligations. 

13- Maintain routine compliance

It is necessary to comply with ongoing legal and regulatory requirements, such as the submission of annual tax declarations, maintenance of accounting records, and regular submission of reports to competent authorities. 

Any company with one or more partners must establish the articles of association, a mandatory and indispensable document. It contains the indication of the corporate name, description of the types of activities, legal structure, composition of the share capital, as well as some mandatory information about corporate events (mergers, dissolution, transfer of shares), management rules, dividend distribution, rights and responsibilities of shareholders, among others. 

 

It’s important to note that these are general steps in opening a new business in Brazil, and there may be variations and specific requirements depending on the activity and location of the company.

To learn more, contact our team of experts. 

Learn more: How does taxation work for entrepreneurs in Brazil?