The most common corporate form used by local and foreign companies to set up a legal entity are the Corporation (sociedade por acões) and the private limited-liability company, usually called a “limitada”.
All foreign investments must be registered at the Central Bank of Brazil; there are no legal minimum capital requirements except for financial institutions and certain legal entities with specific business purposes.
The numbers of quota holders for a “limitada” may not be less than two. Corporations may have just one shareholder as long as the sole shareholder is a Brazilian legal entity. In the event the corporation has more than one shareholder, they may be Brazilian or foreign. If foreign, a representative domiciled in Brazil must be appointed in order to receive notifications of their behalf. It is usually more complex to form and run a corporation than a “limitada”.
The following are the main corporate forms:
Commonly known as an S.A., it most closely resembles a corporation in the US and other countries, and a public limited company (PLC) in the UK. It is the only corporate form that can have its stocks publicly trade.
A private limited-liability company (limitada) resembles a closely held company in US and a private limitedliability company in UK.
The government as well as investors own this legal entity (sociedade de economia mista) from the private sector, with the government having the controlling interest; it takes the form of a corporation.
Due to extremely bureaucratic requirements associated with the creation and maintenance of a branch of a foreign company (they depend on Presidential Decree approvals), only a very limited number of multinationals operate in Brazil under this structure. However, once governmental authorization is granted, the Brazilian branch will be able to function as an extension of the parent company in the pursuit of its economic activities in Brazil.