Without a doubt, it’s ripe for innovation. Entrepreneurs looking to invest in Brazil, enter the Brazilian market and access the business opportunities and vast talent pool that comes with it should be well-informed and understand the process meticulously.
In this article, we provide a guide to the most common types of legal structures. It’s an excellent starting point for anyone looking to start a business in Brazil
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Invest in Brazil : Why ?
The largest country in Latin America and the fifth largest in the world in terms of surface area (8.5 million km²) and population (216 million inhabitants), Brazil is an economic giant.
Brazil’s attractiveness to international investors is due to several factors:
- A market of over 216 million inhabitants
- Raw materials access
- A diversified economy (agriculture, aeronautics, pharmaceutical sector, automobile, chemical industry…)
- A stable geographical area
- A strategic position facilitating access to other South American countries.
However, investing in Brazil also involves some risks due to the economy, politics and the inflation rate. We may also state the heavy and complex tax system, the bureaucy and rigid labor legislation.
Despite these elements, Brazil remains a country full of opportunities for foreign companies. Indeed, Brazil is one of the main global destinations for inward FDI flows with an amount of more than $45 billion in 2021.
The business structures
Limited Liability Company (sociedade limitada / SRL)
A sociedade limitada or limited liability partnership, called LTDA, is the most common type of company, consisting of one or more partners. The partners are included in a social contract, with liability limited to their contributions to the company.
There is no minimum capital requirement, the manager must be Brazilian or a foreigner with a permanent visa.
Limited Liability Corporation (Sociedade Anônima / SA)
The sociedade anonima (SA) is a social status that allows the opening of a company’s capital to shareholders. It is governed by multiple obligations, including the obligation to set up a Board of Directors as well as equity reserves up to 10% of the share capital.
Foreign investors must be legally represented by a Brazilian or a foreigner with a permanent visa.
Holding company (SCP)
Contractual company, without legal personality. Its constitution depends on the signature of a contract. The partners can freely decide on its object and its functioning.
The main advantage related to a Sociedade em Conta de Participação is its informality, which reduces considerably bureaucracy. In other words, it refers to the application made by a person who owns the capital and decides to invest in a company that he believes has potential in the market.
Contact Europartner to learn more !
How can Europortage benefits your business ?
We are an Employer of Record (EOR) company in Brazil. With our EOR and Payroll Services, we hire and onboard your candidates while managing compliance. Besides, we manage your payroll in Brazil. Do you have a project in Brazil ? Contact us now!
