segunda-feira, 11 de fevereiro de 2013

Power of Attorney for setting up a company in Brazil



Incorporating a Brazilian company, step by step
How to incorporate a Brazilian company through foreign direct investment
List of documents for setting up a company in Brazil

Dear Mr. Adler 

I have read your blog "List of documents for setting up a company in Brazil" dated 19 November 2012 on the website
For an assignment at my university in the Netherlands (setting up a LDTA and I have chosen Brazil as country of corporation) I would much appreciate if you could forward me the "power of attorney to a Brazilian representative" referred to in your blog for information, and if possible, please advise which "powers" are mandatory according to Brasilian law.
To my understanding two power of attorney's (PoA's) need to be granted to a legal representative resident in Brazil:

·    one for corporate purposes; and
·    one for tax identification number purposes (CNPJ/MF). 

Is this correct?

If so, could you please provide both PoA's?

Looking forward to hearing from you.

Kind Regards,


Hello Lieke, 

Thank you for your contact. 

I don't usually provide models.

Regardin the PoAs, there are two contractual relationships that need attention. The first is the more general one, where the grantor gives the agent powers to incorporate a company. 

Since incorporation of a company involves several agencies in Brazil, this PoA will usually be explicit about powers to represent the grantor before many agencies, including the Brazilian Revenue Service (Receita Federal), where the CNPJ is granted. 

The second Power of Attorney (which is usually granted within the same document) may or may not be given to the same person that receives the first one.

It is mandatory, for the law states that any foreign investor in Brazil must have, permanently, a local representative with powers to receive court summoning. This is mainly to avoid delays in summoning should the foreign investor be actioned in any lawsuit here in Brazil. 

Please draft a template and I will review it for you. 

Good luck in your studies. 



Hello Adler,

Thank you for your responding to my email!

Your help is much appreciated, thank you for clarifying.

I hope you don't mind me asking you some more questions.

While searching the internet I came across another PoA - please refer to the following:

This other PoA seems to be more broadly written, e.g. to attend and vote for, in the name of Grantor, in all and any meetings + appoint officers + etc.

The differences between it and your mail are a bit confusing. 

Should I indeed assume many sorts of PoA templates are used in Brazil?

If so, how do I know which one should be used in practice?

More importantly; how many and which absolute powers should a legal representative be given (in accordance with Brazilian law)?

OR - do the differences between the two templates relate to:

a) there being PoA's which only relate to powers to incorporate a company; and
b) there being PoA's which relate to powers to incorporate a company AND to grant powers once the company has been incorporated?

If this is stretching your kindness too far, I will completely understand!

Kind Regards,



Dear Lieke, 

Basically, there is no standard template for a Power of Attorney. You will find hundreds of models, covering from very specific acts to virtually all possible powers.

(Actually, it is funny you ask. Only a foreigner would make such a question. In Brazil we are used to not having anything standardized. Not that this is good. In fact, it is very bad for business. But it is a reality.)

I'm forwarding this email to Mr. Nuno, my colleague, who will help you with your other doubts. 

I'd like to ask your permission to post those messages in my blog, since the discussion is getting interesting. 




Dear Adler,

Thank you for your response and for forwarding my message to Mr. Nuno.

I would certainly not mind if you post the messages in your blog.

Best Regards,


Dear Adler,

How can a blooming trade between China and Brazil be explained, given all the import barriers, and troublesome bureaucracy in Brazil?

Are there special agreements, or perhaps deregulations apply as far as imports from China are concerned?

It has been impossible for me to find information that confirms so. Perhaps you could help me.

Thank you in advance.

Best regards



Dear Konstantina, 

I'm flattered that you would ask me that. How did you find me? Through the blog?

The answer is, indeed, very simple: China is cheap. 

Actually, in my opinion Brazil should be importing a lot more from China, is spite of the import taxes and bureaucracy. I think the Brazilian entrepreneurs are still shy and not very prone to international trade, specially in states other than São Paulo and Rio. 

Few Brazilians participate in trade fairs in China (Canton fair, etc.). They usually wait until the foreign sellers comes to Brazil in order to present they products. 

In pure economic terms, it makes little sense to produce anything in Brazil at all. Everything should be imported. 

I'm hearing a lot of people talking about importing from Vietnam and Malaysia, too. 

I hope this helps. May I post this in my blog? It is a very interesting subject. 




Dear Adler,

Thank you very much for your prompt response.

Yes, I got to know you through your blog and was impressed by the responsible, qualified answers you give.

I work for a company in Denmark and we are currently evaluating how attractive the Brazilian market is for our machines. 

Part of my market analysis involves trade barriers and your blog resulted in my search. I then read plenty about the fast growing trade economy between the two countries and curiosity stepped in.

Now I understand that China is cheap, import taxes are cumulative so even though taxes might reach 100% on top of invoiced price it will still be cheaper than importing from a not so cheap country to begin with. 

It explains it very clearly.

Thank you again Adler.

I'm flattered that you found my question interesting, you may certainly post it on your blog :)



Dear Konstantina, 

Thank you very much for the compliments. 

You are the third Danish client I have helped this year. Maybe I should visit Denmark. 



quinta-feira, 7 de fevereiro de 2013

Latin America Tehcnology - Overview

New report from Alternative Latin Investor. Click here. 

Regulation of Hedging by Brazilian companies

This is an article I wrote to Alternative Latin Investor, and that was published December last year. 


After 2005, the scope of hedging operations allowed to Brazilian companies has been extended considerably.  

Resolution 3.312 from the Brazilian Central Bank has allowed any individual or company domiciled in Brazil to remit funds abroad in order to hedge its investments or its usual business transactions.

In fact, article 1 of such resolution reads:

Article 1 To establish that the financial transfers to and from abroad, derived from operations designed  for the protection (hedge) of rights or obligations of commercial or financial nature, subject to risks of variation in the international market, of interest rates, of parities between foreign currencies or commodity prices, can be performed with banks authorized to operate in the foreign exchange market  by individuals or  legal  entities resident, domiciled or headquartered in Brazil, subject to the provisions of this Resolution.

The transfers must also be made through a bank authorized to work in Brazil. Further detailing of Resolution 3.312/95, established by the Brazilian regulation of currency Exchange markets and foreign capitals (RMCCI), also states that the intervening Banks must collect enough evidence of the legitimacy of the operation, as well as detailed client’s identification. Those precautions are part of Brazilian efforts to curtail Money laundering and corruption.

The Money transferences may have a variety of purposes. A Brazilian company may set up a bank account at a foreign bank, obtain loans abroad, and establish collaterals or escrow accounts abroad, inter alia.

The payment of exports in advance is also allowed, as are, in general, any other forms of natural hedging against foreign currency appreciation.

In spite of Brazil’s large base of exporters, the use of hedging has been restricted to the larger companies.  This is due to many factors. One will often hear complaints about the high cost charged by the Banks to organize and execute hedging operations. It is often said, too, that the lack of information about the availability of such remedies is a major setback, since a considerable share of Brazilian exporters is composed of medium companies that may not have knowledge about hedging operations.

The Brasilia tax system is also to blame. Since 1999, a misguided bill has imposed withholding taxation on the gains of derivatives or swap operations, even when they have been used specifically to hedge companies from risk. (LEI Nº 9.779, from January 19, 1999). Needless to say, this taxation has nearly made it impossible to hedge 100% of the losses due to currency appreciation or otherwise, since the gains obtained with the derivatives used to cover the losses with the main operation are now subject to taxation.

This issue has been discussed many times before Brazilian courts. Unfortunately, the Brazilian Superior Court of Justice (STJ) has decided for the applicability of the withholding tax and this understanding has little chance of being reverted.

Please notice that this refers only to the swap operations made by companies in its own benefit. The taxation of hedge funds follows different rules.

Significant losses suffered by two big Brazilian companies with derivatives have also created a negative bias in the market, directed at swap, derivatives and hedging operations.

In spite of all that, the use of hedging by Brazilian companies is bound to increase. Many studies have been published in Brazil, especially by agro business associations and by the Brazilian Central Bank, detailing this phenomenon. If not by exporting companies, then by large companies interested in protecting its financial investments.

It is clear that the use of international mechanisms is allowed for hedging purposes, as demonstrated in this article. Therefore, a clear opportunity is presented for those who can make the use of these financial products more accessible to the average Brazilian company. 

Adler Martins has teamed up with Alternative Latin Investor (ALI) to contribute to their cutting edge coverage of Latin America . 
Click here to read Adler’s article.
About Alternative Latin Investor: ALI is the first digital and print publication to offer highly coveted information and actionable analysis regarding alternative investments in Latin America. Topics include Wealth Advisory, Commodities, Forex, Private Equity, Wine, Art, Regulation, Philanthropy, Hedge Funds, Agribusiness, Renewable Energy, Emerging Markets and Real Estate.

terça-feira, 5 de fevereiro de 2013

What is the quality of Brazilian legal services like in comparison to more developed countries?

I'm taking this post from Investment Services Brazil, a website specialized in Brazilian real estate. 

Their answer to the question at the title is: in general, not good (their original post may be read at the end of this one)

I'd love to criticize them and say that this is a superficial opinion, a biased remark from some condescending and patronizing yankee. 

But I understand their point of view. With the exception of some very professional law firms in major cities and of some very well educated professionals, most of Brazilian lawyers will not fulfill foreigner's expectations. 

That is not because they are bad professionals, but because most of them are not ready to adapt to European and American business culture.  

For example, most lawyers in Brazil (actually, most people in Brazil) will not answer their emails within two hours, keep a British punctuality or offer periodic and detailed reports. All of these are expected behaviors in  many developed countries, for all I know. But they simply aren't an essential part of Brazilian business culture (I feel I will be criticized for saying that out loud, but I have had enough foreign clients to know precisely what they complain about, and those 3 are on the top of the list).

Now, I'm not saying that you should trust your Brazilian lawyer blindfolded. My first order of business is "trust no one" (the second one is: "don't trust anyone, specially the Brazilian government"). 

I'm just saying that, among a lot of good Brazilian lawyers, you will be able to find only a few who speak, act and work like Europeans. If you can pick these one, good for you. If not, then you will have to adapt yourself. 

The original article:
Posted on November 6, 2012 by admin

This is a common question and most certainly a very valid one.  Many individuals buying real estate in Brazil focus solely on the merits of the real estate purchase and neglect carry out any due diligence process on the legal professional that will ultimately supervise the transaction.  Investment Services Brazil is often called upon to assist  foreigners to recover their capital from deals that have not been subject to correct due diligence by a less than thorough Brazilian lawyers.  With the increase in volume of foreign buyers within Brazil, legal  services are in demand and speaking from experience it is obvious that several local lawyers simply spend less time on each transaction in order to accommodate more clients.
Under Brazil law the due diligence process that a Brazilian lawyer must carry out on behalf of the client is regrettably subject.  This results in a lack of accountability in the event of incompetence or neglect.  Furthermore the Brazilian Courts are notoriously inefficient and corruption is not uncommon.  With this in mind it is essential when purchasing real estate in Brazil to have a high level of confidence in your Brazilian lawyer and to not use them simply because they speak English.  Your lawyer in Brazil should willingly share with you the exact steps and checks they will carry out in order to fulfill the due diligence on your property.
At Investment Services Brazil due diligence is carried out with the knowledge that the Brazilian legal system has numerous flaws and that due diligence, thorough due diligence is the only true protection for the real estate investor.  With this objective of the real estate investor or can proceed with confidence knowing that the investment is truly protected by a firm whose intention has been showering secure a real estate transaction and not to maximize billing hours.


Cease and desist letters in Brazil

I have just published an article at The Brazil Business. Please check it here, or follow the link. 


The use of cease-and-desist letters is a common practice in many English speaking countries, especially those that adopt common law.

Generally speaking (and keeping in mind that I’m a Brazilian lawyer, writing under a Civil Law perspective), a cease-and-desist letter is a letter demanding that the recipient refrain from initiating or stop performing a certain behavior, under the threat of legal action, civil or criminal.

In common law jurisdiction, notably in the Unites States, sometimes a cease-and-desist letter is a fundamental condition to ascertain a party’s legal standing, and, therefore, must be issued before any claim can possibly be brought before court.
Apart from that, cease-and-desist letters also have broad applications, which are widely known by business people. Its use in patent infringement is particularly popular.
In Germany, cease-and-desist letters (called Abmahnung) are also extensively used where there is a contractual breach by the other party.
What about Brazil? Do cease-and-desist letters exist here? Do they have any legal value?
This articles aims at explaining (however briefly) how these letters work in Brazil, from a business perspective.


Cease-and-desist letters would be considered a special kind of notification, according to the Brazilian Civil code and Brazilian Civil Procedure codes.
In Brazil, notifications may be used to ascertain a claim, and also to inform the other party of a perceive breach or wrongdoing that it has performed. They may also be used to request the fulfillment of an obligation, and in many other cases, basically whenever a cease-and-desist letter would be used.
On the plus side, notifications may be used to declare the other party to an agreement as being in breach, thus making a future win in a lawsuit more probable. In addition, the date of receipt of the notification may be used as the first day for the application of interests on overdue payments (in some cases).
But the use of cease-and-desist letters in Brazil is also largely symbolic, in the sense that it is not always mandatory for a party to notify the other before filing a lawsuit. That is, a cease-and-desist letter is not always required in order to determine legal standing.
For example: a specific clause of an agreement that is governed by the Brazilian law may request one party to notify the other before terminating the agreement. In this case, the notification is very important, and it is generally expected that one party will notify the other before pursuing any legal action.
However, where this clause is absent, the party wishing to terminate the agreement may go directly to court and ask for the termination, even without issuing any prior cease-and-desist letter to the party in breach.
In some other cases, notably in the assignment of credits to third parties, the assignor’s creditors would have to be notified of the operation, in order to oppose to it if they see fit. Notifications are mandatory, too, in a limited number of situations related to corporate law, such as the summoning to shareholder’s meetings.
On the other hand, in most intellectual property cases, the party that feels damaged will go to court immediately, without issuing any prior notification.
This is because, being a civil law country, Brazil defines the ability to pursue a lawsuit in different basis than the USA, as the concept of legal standing is not the same. In Brazil, it is more theoretical and related to the infringement of a generic written rule (the Civil Code, etc.). Brazil is closer to Germany in this sense. In the USA, the actual situation and the relationship between the parties are, generally speaking, more relevant.
I’m sure the differentiation above may seem useless for many readers, but they are important under a legal stand point and might have serious implications to your business.
Finally, please note that Brazilian public agencies do not usually issue cease-and-desist letters (as they do in the US). More often than not, Brazilian agencies will send you a penalty notification (an order to pay penalties), without previous warning.

Forms of Notification

In Brazil, there are three kinds of notifications.
Extrajudicial notification
The first one would be a simple correspondence mailed or personally delivered to the other party.
The second and most usual one would be a correspondence issue by a [public notary](, upon formal request.
It works similarly to summoning administered by public notaries in the USA. The one interested in making the notification must present himself to a public notary (/article/notary-public-authenticated-photocopy) to a “Cartório”, as we say in Brazil), pay a fee (usually about one hundred reais), and supply the other party’s address and the content of the notification.
A constable or other public notary representative will personally visit the party to be notified and hand him the notification.
The notification, in this case, is not like a subpoena, because the notified party is not obliged to accept the notification, nor is it obliged to declare anything.
However, if this is the case, the public notary (constable, etc.) shall attest that the notification has been presented and read it out loud to the notified party, and that such party refused to receive it or sign a receipt. This attestation has full public faith and credit, and can be used to prove that the party has been dully notified. This kind of notification is thoroughly used in lease disputes, for instance.
Judicial notification
Finally, the third and less usual kind of notification is a judicial notification (the two above are non-judicial notification, or extrajudicial notifications). In simple words, it is a notification that is issued by a judge, upon request of one of the parties.
It shall not be confounded with a court injunction, which communicates the court’s own decisions. In this scenario, the notification is presented before the judge, who merely forwards it to the recipient. It is not more authoritative than the other ones, only more formal, considerably more expensive, for it requires the payment of lawyer and court fees, which may easily amount to USD 2.000,00.
This notification works similarly to the notary public one, with the difference that it is managed by a magistrate (who can refuse forwarding it, if the claim contained in the notification is absurd). Also, it is conveyed to the hands of the notified party by a court clerk, not by the notary public or its representatives.
The court clerk has the same public faith and credit than a notary public, to the effect of attesting the refusal of the recipient to take the notification.
Apart from the increased level of formality, the judicial notification has another advantage: it can be used to notify a party that cannot be found, or whose address is unknown. This is made by the publishing of the notification in public and private newspapers, in a procedure similar to the American “service by publication and mailing."
Those are just general considerations on the subject. Keep in mind that this article describes the use of cease-and-desist letters, not cease-and-desist orders (also called injunctions) issued by courts.
One should always ask for the help of a Brazilian lawyer whenever he wants to make a notification to a Brazilian party.

About the author:
Adler Martins is a Brazilian lawyer specialized in advising foreigners doing business in Brazil. He can speak English, Spanish, German and some Chinese. Mr. Adler has lectured to audiences in Brazil, England and India about how to invest in and export to Brazil.