Brazil: Non-profit/For-profit Company Registry Requirements

For-Profit Company Registration

Brazil has been welcoming investors into the country since the early 1990s. This means that both private and public service providers are well aware of the requirements of an incoming operation. Prospective investors often make use of a service provider from the private sector capable of seeing to all their legal and logistical requirements from company registration, access to banking facilities to recruitment of staff.

Types of Organizations There are several types of organisation to choose between when forming a company in Brazil. Usually the options considered are either a Ltda or a S/A. In most cases, Ltda tends to be the preferred option. More on the pros and cons of both types can be found here.

Limited Liability Company/Wholly foreign owned entities

A Brazil LLC can be setup with a minimum of 2 shareholders and 1 director, who can be of any nationality. However, a Brazilian permanent resident must be appointed as a legal representative of the company. The minimum share capital required will be US$1 and the company can be set up within 20 weeks. Furthermore, a Brazilian LLC faces no restrictions on the type of business activities it can pursue;
Each Brazil entity must have at least one individual representative ordinarily resident in Brazil. The Brazilian public limited company (SA)
The Brazilian public limited company requires at formation at least 2 shareholders and 3 directors, who both can be of any nationality and do not need to be resident in Brazil. However, if no resident director is appointed, the company must have a resident company representative. Brazilian PLCs must also go through an annual audit and must appoint an audit board for that purpose;
Brazilian PLC does not need to be listed on a stock exchange. Branch and representative office
Opening a branch of a foreign company in Brazil is slightly more complicated. This requires a specific authorisation from the Brazilian Ministry of Development, Industry and Foreign Trade. A foreign company that wishes to install a local branch in Brazil will have to send a formal request to the Brazilian Ministry of Development, Industry and Foreign Trade, where the National Department of Trade Registration, known as DNRC, will evaluate the request. You can read more about the requirements of opening a branch in Opening a Foreign Branch in Brazil

Company Ownership in Brazil

In order to form a limited partnership in Brazil it is necessary to have at least two partners. The general rule is that both partners in the company can be foreign and they can either be individuals or legal entities.

Although the general rule is that foreigners can own companies in Brazil there are some economic sectors that companies owned by foreigners are restricted or prohibited from operating within. This includes sectors like:

Radio, TV and publishing
Cable television
Air transportation
Health care
Security services
Road transportation

For more information about the limitations for foreign ownership in these sectors we recommend that you read the article Limitation of Foreign Participation in Brazilian Companies.

Investment Requirements in Brazil

There are no requirements in terms of the minimum investment for a newly formed Brazilian company.

If the company that is formed in Brazil is going to be used to apply for a permanent Brazilian investor visa there are requirements to the minimum investment. The rules are not black and white regarding the size of the investment, but a direct foreign investment of BRL 150 000 or more will normally qualify for an investor visa.

There are also possibilities to obtain a visa with a lower direct investment if a plan for generating jobs in Brazil is submitted and approved by the Brazilian National Immigration Council. For more information about this topic we recommend that you read the article Investment Requirements to Obtain a Visa to Brazil.

All direct foreign investment to Brazil will have to be registered with the Central Bank, even though the intent is not to obtain an investor visa. For more information about the process of registering foreign investments in Brazil we recommend reading the article Registration of Foreign Capital in Brazil.

Fiscal address requirements in Brazil

All companies formed in Brazil need to have a unique registered fiscal address. If you are forming a trading company or a company that operates some type of manufacturing you will need to have a fiscal address that is regulated for this type of activity.

It is important to emphasise that all companies formed in Brazil need a unique address. A regular virtual address is not accepted as a fiscal address. For operations where there are several companies registered at the same office address it is common to specify which room each company is registered to, as this make each fiscal address unique.

Many virtual office providers in Brazil will also offer a fiscal office address option for a higher monthly rate.

Requirements for a Company Administrator in Brazil

Requirements to have a local Company Administrator are usually the most challenging for foreigners who intend to form a company in Brazil. The Company Administrator does not need to be an owner of the company but the company administrator must either be a Brazilian citizen or have a permanent Brazilian visa.

Extremely simplified, the Company Administrator is the person who will have to legally answer all actions that the company performs in Brazil. The appointed Company Administrator will also have the power to perform dispositions on behalf of the company. A lawyer will of course be able to draft a power of attorney to limit the Company Administrator’s power and responsibilities, but there will still have to be a level of trust between the Company Administrator and the owners of the company.

For companies formed with the intent of obtaining an investor visa, you are required to appoint an interim Company Administrator to complete the company formation process. The person that obtains the investor visa can be appointed as Company Administrator after the investor visa is granted.

Company Name in Brazil

There are highly detailed rules for what you can and cannot name your company in Brazil. All company names that are registered in Brazil must at least conform with the following rules:

Veracity: The activity indication incorporated into the name must also be real, and it must be explicit in the social objective of the company as specified in the Articles of Association
Novelty: a new name must be adopted, and it must be different from company names that already exist in the region and industry that the company operates
Identification of Company form: the type of company must be clearly identified, normally this is done in an abbreviation at the end of the name
Moral Protection: use of words or expressions that are immoral and go against good manners are forbidden

In most states the Board of Trade has a free online tool to research names and to verify the novelty of a company name before moving ahead with the formal paperwork to register the company. For states where the Board of Trade does not offer an online tool you will have to visit their office to verify the availability of a company name. When verifying the company name you can also order a certificate that confirms you have checked the availability, which is one of the documents that will later be required when submitting the paperwork to the Board of Trade.

For a detailed outline on the rules related to company names in Brazil we recommend reading our article Naming a Company in Brazil.

Trading Name in Brazil In the Articles of Association and governmental registries it is also possible to register a trading name for the company known in Portuguese as Nome Fantasia.

It is optional to register a trading name and there are very few rules for what you can use as a trading name. It is worth noting however, that registering a trading name does not give any trademark related protection to the name.

Search and registration of trademarks can be done online on the National Institute of Industrial Property’s website. For more information about trademarks in Brazil you can read the articles How To Search For Trademarks and Register a Trademark in Brazil.

The Process of Forming a Company in Brazil

Articles of Association: The Brazilian Articles of Association, known as Contrato Social in Portuguese, is the official document that is required for formalising a business partnership and is the very first step for legally registering a company. Similar to other countries, the Articles of Association must outline information about the company that is being formed, who the partners are, how much each partner owns and what type of activities the company is going to engage in. All minimum requirements regarding the information that needs to be included in the Articles of Association can be found in article Articles of Association in Brazil.
Registering with the Board of Trade: Registration with the Board of Trade will get you a Company Registration Identification Number known as NIRE which will be the base for further applications. In order to register with the Board of Trade you are required to present the following documents:

Consultation certificate of the company name
Confirmation of DARF payment regarding the company registration fees
Formal request for registration known in Portuguese as Capa de Processo
Company registration form known in Portuguese as Ficha de Cadastro Nacional
Articles of Association
Notarised copy of Identification Document and CPF of all the partners
Proof of residence for the Company Administrator or partners
Statement informing that the partners are not prevented by law or by conviction to own a company, this is known in Portuguese as - - Declaração de Desimpedimento dos Sócios

Registering for the Company Taxpayer Number: After obtaining the NIRE the next step is to register with the National Registry of Legal Entities known in Portuguese as Cadastro Nacional da Pessoa Jurídica. The CNPJ number is usually considered the most important reference number for any Brazilian company. Confusingly, the abbreviation CNPJ is used both for the National Registry of Legal Entities itself and the registration number that a company gets after registering with the National Registry of Legal Entities. By means of an agreement between the Federal Revenue Service and most states’ Board of Trade, the process of applying for or changing a registration at the National Registry of Legal Entities can be done entirely at the state’s Board of Trade, simplifying the process. In order to register with the National Registry of Legal Entities, two documents are needed: Basic Entry Form for the CNPJ known as DBE and Registration Form of Legal Entity known as FCPJ. A new network - REDESIM - the National Network for Simplification of Registration and Legalisation of Business - has been established to simplify the process. The Basic Entry Form can be generated by downloading free software from the Federal Revenue Service’s website. This form, together with the Registration Form of Legal Entity, can in most states be delivered to the Board of Trade using free software called ReceitaNet which is also available on the Federal Revenue Service’s website. There are many articles available at The Brazil Business about CNPJ and how it works. To learn more about this topic we recommend reading CNPJ for Dummies. After receiving the CNPJ number the company is technically recognised and several of the following processes can be started in parallel.
Registering for a Business License: The Business License known in Portuguese as Alvará de Funcionamento, allows the company to operate activity within a municipality. There are a few exceptions for companies that do not need a Business License, but in most cases involving regular businesses you will need a Business License. To apply for the Business License you are required to submit:
- A real estate clearance certificate
- A formal request for registration for Business License
- A statement of responsibility
- Articles of Association registered at the Board of Trade
- Confirmation of the CNPJ registration
- Notarised copy of the Identification Document for the Company Administrator
- Documento de Arrecadação Avulso or DAR, a document similar to the DARF, for the payment of the registration fee for the Business License application
Registering with Inscrição Estadual: When registered with the National Registry of Legal Entities, the newly formed company is able to pay Federal taxes. The Inscrição Estadual allows the company to pay state taxes within the state the company is operating. For most states, this is not as complicated as it sounds, since the software and process used is similar to the CNPJ registration with the National Registry of Legal Entities. The documents required for obtaining a Inscrição Estadual are:

Registration application known as Documento Único de Cadastro
Registration application known as Documento Complementar de Cadastro
Notarized copy of either the lease of the property or property deed proving the right of use of the property that the company is located
CPF number from the accountant
Registration Certificate from the Board of Trade
Articles of Association
Confirmation of the CNPJ registration
Business License confirmation
Identification Document, Proof of residence and CPF of all the partners

Authorisation for issuing Notas Fiscais: The newly formed company is, at this point, allowed to operate but still cannot legally issue invoices for any service or product. To be able to issue fiscal invoices you need an authorisation for issuing Notas Fiscais, which is known as AIDF. AIDF stands for Autorização de Impressão de Documentos Fiscais, and is the authorisation for printing taxable documents. This system controls the authorisation for printing tax documents, the use and manufacture of security forms and the provision of seals for the machines that issue fiscal documents, more specifically Notas Fiscais. The registration for AIDF is very simple. The registration happens online and the only requirement is the CNPJ and the password given by the Secretaria da Fazenda. All information about the company is completed automatically by the system and the applicant will only have to verify that the registered data is correct. For more information about Notas Fiscais we recommend reading Complete Guide to Issue a Nota Fiscal in Brazil.
Registration with Social Security: Registration with the Brazilian’s Social Security Institution known as INSS is obligatory within 30 days from when company starts to operate. The registration is obligatory even if the company has no employees. The company administrator will have to contact a Social Security Agency to request the registration of the company. This is also a simple procedure and no additional documentation is required beyond the CNPJ number of the newly formed company.

Non-Profit Organization Registration

There are 2 (two) basic institutional ways to organize a nonprofit organization under the Brazilian legislation: nonprofit association or private foundation. The foundation is originated from assets allocated by an individual or legal entity for social purposes, while the nonprofit association is originated from the will of a group of entities or individuals joined together by a common social purpose.

The general terms and conditions of an association are set forth in the Brazilian Constitution and the Civil Code. The Association is defined as an organization of people joined together with a lawful non-economic purpose. The Association does not require any kind of authorization to be organized and the State is not allowed to interfere in its operation.

The Association must register its Articles of Organization with the Civil Register of Legal Entities in order to become a private legal entity. The Articles of Organization will contain the main features of the Association, such as:

(i) the corporate name, purposes, and address of the Association;
(ii) the requirements for the admission, dismissal and exclusion of associates;
(iii) the rights and duties of the associates; the sources of the funds for its maintenance;
(iv) the means of constitution and functioning of its management and deliberative boards;
(v) the conditions to amend the Articles of Organization; and
(vi) the conditions for the dissolution of the Association.

The Foundation, defined as the total assets allocated for social purposes, is a nonprofit private legal entity governed by the Civil Code. In order to organize a Foundation the founding member(s) shall donate, by will or public deed, assets which shall be free and unencumbered. Such donation shall specify the Foundation’s purposes, which, in accordance with the law, must be of religious, moral, cultural or social assistance nature.

Differently from Associations, the Foundations are subject to the respective State Government Attorney’s Office, which will, among other tasks, monitor the functioning of the Foundation, assuring that the Foundation complies with its purposes, as defined in its Articles of Organization. The Foundation must register its Articles of Organization with the Civil Register of Legal Entities in order to be considered a legal entity.

The Association and Foundation, depending on their corporate purpose and characteristics, can fit within the requirements to be qualified as an OSCIP (Organization of a Civil Entity of Public Interest), or qualify themselves be certified as Philanthropic Purposes Entity, or be declared as For Public Utility.

OSCIP designation can only be granted to non-profit legal entities incorporated at least three years before the application (Federal Law No.13,019/2014, amending Law No. 9,790/1999).
CEBAS designation is granted exclusively to non-profit entities that develop activities related to social assistance, health and education. It is granted respectively by the Ministry of Social and Agrarian Development, the Ministry of Health or the Ministry of Education, depending on the main activities of the entity.

If certain legal conditions are met, the Associations and Foundations are exempt or immune from corporate income taxes (in Portuguese, Imposto de Renda da Pessoa Jurídica and Contribuição Social sobre o Lucro Líquido) applicable to Brazilian legal entities. Moreover, under some legal conditions, some other tax benefits are granted (e.g., exemption of some federal and municipal taxes due on gross revenue related to their proper activities, municipal tax on their real properties, among others). In addition, the value of the donations made to an Association or Foundation by persons may be deducted under certain circumstances and up to certain limits.

Sources

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