The fastest way to have a Brazilian company

Incorporating a company in Brazil takes time. In average, 3 months (for details about incorporation ,please see this post).

I have tried to speed up this process, but without much success. It depends on several independent things: availability of a translator, public hollidays, courier delivery, etc. 

Indeed, this is one of the aspects of Brazilian bureacracy and lack of competitivity. Each step of the task is slightly inneficient. Combined, they slow down the rythm of business. 

When the project includes a Brazilian partner, this hindrance does not matter much, because he will be expecting it and the plans would already have counted for the delay. 

But when the project is totally controlled by foreign parties, this kind of time is essentially counted as a waste. 

I have been experimenting with a system that is less safe, legally speaking, but that can be used to conduct business at a faster pace. Here it is: 

a) I will incorporate a service company in Brazil, with two nominee partners and one nominee director. The company will have the same name desired by the investor;

b) the nominee partners and directors will enter into a quota/shares sales agreement with the future investor. This agreement will allow for a 60-day period in which the buyer (the investor) will be allowed to participate in the company`s management/

c) the investor will prepare the documents required to take possession of the quotas/shares;

d) meanwhile, the Brazilian company may enter into agreements with local partner. The company will refrain from issuing invoices, however. The invoices will be issued only after the foreign investors formally acquire the quotas. 


In short, the procedure is an acquisition of shelf-company. But with some additional agreements that ensure that the foreign investor will have control over the company even before they are formally the owners. 

This strategy is more expensive than a regular incorporation. There will be extra costs with the nominee partners, with additional agreements, etc.

The advantage is that it could allow the foreign investors to conduct business in Brazil within 03 weeks, instead of 12 weeks. 

Business will be limited, of course, and this strategy will work better with service company. Also, import/export operations will not be possible at first, because any Brazilian company that is to engage in international trade must first obtain a license (the "Radar").  

Even so, this strategy will allow investors to have a legal presence in Brazil much faster than usual. 

SEE ALSO:

Incorporating a Brazilian company, step by step

List of documents for setting up a company in Brazil

Practical guide - incorporating in Brazil

This guide has been compiled by the Chilean firm Harris Gomez, with whom I work often, usually advising international investments involving Australia, Chile and Brazil.

They have based it on several reports drafted by me over the last couple years.  The final result is excellent.

How to incorporate a Brazilian company through foreign direct investment

A more detailed procedure can be found at

Incorporating a Brazilian company, step by step

Other related posts:

Practical guide - Incorporating in Brazil

List of documents for setting up a company in Brazil

Power of Attorney for setting up a company in Brazil - new rules

- Brazilian Import License

According to Law 4.131, dated 09.03.1962,  foreign capitals are defined as:

 Art. 1 – FOREIGN CAPITALS are the goods, machines and  equipments introduced in Brazil without initial payment, designated to the production of goods and services; as well as the financial or  monetary resources introduced in the country for the use in economic activities; since, in both cases, they belong to companies or individuals with permanent residence or headquarters in foreign countries.

Foreign capitals are assured identical juridical treatment to that of national capitals, under the Constitutional principle of equality.

INCORPORATING A COMPANY IN BRAZIL

 Investors may choose, basically, between two kinds of legal entities: the Limited Liability Company, which resembles the Limited Liability company from the American law, and the Corporation (or Anonymous Society, or SA,, as per the Brazilian Law).

The basic difference among them is that only the SA is able to become listed in stock exchanges and sell stocks and bonds to the public. Nevertheless, the basic procedures for incorporation of both kinds of companies follow the same general lines.

TOTAL TIME: 90 DAYS.

 NO MINIMUM CAPITAL REQUIREMENT

 CAPITAL MAY BE DISTRIBUTED AMONG PARTNER AT ANY PROPORTION.

 A lawyer must sign the company’s articles of association. This is a legal requirement.          

 Every new company must hire an accountant from day one. Usually, accountants charge one minimum wage (about 350 USD) per month.

FOREIGN INVESTORS' REPRESENTATIVES

The individuals or legal entities that owns shares in a Brazilian company and have residence / head office abroad must maintain two legal representatives in Brazil:

The first one to represent the capital. His only duty is to serve as a legal representative in case court orders need to be delivered to the foreign investor.

The second one is the Director of the company. The Director must either be a Brazilian citizen or have a permanent visa. The Director is responsible for managing the company.

The individuals that own corporate shares in Brazil must register themselves under the CPF (Individual's Tax Registration Number). In case of foreign companies, the registration shall be made under CNPJ (Company's Tax Registration Number).

The articles of association of the incorporated company in Brazil must contain the following information:

• Headquarters of the foreign partner;
• Name of the legal representative of the foreign partner, resident inBraziland bearing powers of attorney;
• Enclose the legal representative's Power of Attorney;
• Indication of how is the capital going to be entered intoBrazil(currency, goods, rights, machines, etc.).
• Lawyer responsible for the drafting of the articles.

PERMANENT VISA

Only foreigners bearing a permanent visa are allowed to establish themselves in the country as businessmen or as directors of a local company. The permanent visa is granted after approval by the Ministry of Labor, Ministry of Foreign Relations and the Federal Police. The applicant shall present documents that demonstrate:

• That he is partner of Brazilian company; and/or
• Has been designated as the local Director of a Brazilian company, and depends on the visa to fulfill his duties.

Another determinant condition for the granting of the visa is the amount invested in Brazil:

The foreign investor as an individual, must invest BRL 500,000.00 (this value changes from time to time), or the equivalent in another currency, at least, in a local company. In addition, the investor must present a business plan that show how the investment will benefit local communities. 

Legal entities can also obtain a permanent visa for administrators, managers, directors or foreign executives.

FDI REGISTRATION

The Central Bank ofBrazil(Bacen) controls the foreign capital admission and registration, as well as financial operations with foreign countries.

The registration is the only formality imposed to the investors. There is no previous analysis of the investment. The Brazilian government also does not impose mandatory licensing procedures for foreign investments.

The registration is made through an online system called Electronic Registration of Foreign Direct Investment (RDE-IED), which is part of the Central Bank Information System (SISBACEN). This system can be accessed through Bacen's website, using a previously requested password and registration number.

The investor shall declare:

• The amount of capital entering the country;
• The source of the resources;
• If the capital is being entered as currency or as goods. In the last case, the value of the goods.
• The repatriation of capital or profits, as well as the payment of royalties, or reimbursement of technical expenses;
• The reinvestment of profits.

IMPORTANT NOTICE:

 The registration is of essential importance. Only after the registration the capital becomes legalized. Also, the registration warrants the investor the free disposal of the money/shares/stocks, allowing its immediate repatriation, liquidation or transference.

 The Lack of registration may also give cause to heavy monetary penalties.

See also:

- List of documents for setting up a company in Brazil