Brazil: Governing Laws/Bylaw Requirements

Articles of Association

The Brazilian Articles of Association, known as Contrato Social in Portuguese, is the official document that is required for formalizing a business partnership and one of the first steps for legally registering a company.

The registration of a business partnership is formalized through a Contrato Social, which defines the rules, rights and duties of the each of the partners in the company. The Contrato Social must contain a certain amount of mandatory information specified by DREI, short for Departamento de Registro Empresarial e Integração. This department is responsible for the coordination of all Boards of Trade, or Junta Comercial in Portuguese, in each state.

The following information is required on a Contrato Social:

  • Título, which is the heading
  • Preâmbulo, which is detailed information about the partners and representatives of the partnership
  • Corpo do contrato, which is content where the clauses of the articles of association are described
  • Fecho, or closing where the signatures are provided

More information on the Contrato Social can be found here.

More information on how to write a Contrato Social can be found on Endeavor’s website.

A template of a Contrato Social can be found here.

Business and Company Laws in Brazil

Extensive legal reforms consequently followed suit to help Brazil’s legal framework keep pace with rapidly changing economic realities, particularly enhanced foreign investment opportunities. A key legal reform was the 1995 Amendment to the 1988 Federal Constitution, which removed foreign investment restrictions in certain economic sectors, including petroleum, mining, domestic transportation and local gas service activities, by revoking provisions which distinguished between a Brazilian company (any company incorporated in Brazil) and a Brazilian company of national capital (a company incorporated in Brazil that was effectively controlled, directly or indirectly, by persons physically domiciled or resident in the country or by Brazilian public entities). Foreign investment restrictions remain in certain areas, however, such as nuclear energy, rural property ownership, border activities, mail
and telegraph, domestic aviation and aerospace. In addition, foreigners cannot hold more than 30 percent of Brazilian press and broadcasting companies. Foreign investors have responded favorably to Brazil’s market and legal reforms, establishing domestic market presence through a variety of investment structures. Distribution and sales representation agreements with Brazilian individuals and/or companies may be used as preliminary investment vehicles to survey the Brazilian market and often precede the establishment of
a direct local presence. Where market conditions support a local presence and associated investment costs, many foreign investors establish a Brazilian subsidiary. Alternatively, foreign investors may seek to conduct activities through a joint venture with, or acquisition of, all or part of, a knowledgeable, experienced and connected local company to complement their strengths. This paper will briefly review each of these investment alternatives and other key foreign investment considerations.[6]

The Brazilian judiciary is an independent system,ruled by law, with administrative and financial autonomy under the Federal Constitution. Its primary function is to resolve conflicts and enforce individual, collective and social rights. It is composed of several courts distributed among federal and state levels, with the Federal Supreme Court“Supremo Tribunal Federal” (STF), made up of 11 justices, being the country’s highest court. The Federal Supreme Court is the body ultimately responsible for the interpretation and enforcement of the Constitution. Under it is the Superior Court of Justice (STJ), which is responsible for the uniform interpretation of federal legislation, as well as the regional federal, state and specialized courts. Brazil’s judiciary has three specialized courts dealing with matters outside general jurisdiction: Labor, Electoral and Military, each of them with their own regional and superior courts. They are headed, respectively, by the Superior Labor Court (TST), the Superior Electoral Court (TSE) and the Superior Military Court (STM).

Foreign capital is defined under Brazilian law as being any assets, machinery or equipment entering Brazil from abroad, as well as financial or monetary resources, intended for the production of goods and services or to be used in economic activities in the country. In all cases, it must belong to individuals or legal entities residing, domiciled or headquartered outside Brazil.

Brazilian law allows for mergers and acquisitions(M&A) by foreign investors. No special rules apply, although FDI remains restricted in certain sensitive and strategic sectors listed below. Brazil’s official competition and antitrust regulator is the Brazilian Antitrust Authority (Cade), a federal body related to the Ministry of Justice and responsible for preventing, adjudicating and punishing acts of abuse of market power. Cade’s work is paired with the Economic Supervision Office (SEAE), which, under the Ministry of Finance, is responsible for developing policies regarding market regulation and competition. For M&A operations involving financial institutions, the main regulator is the Central Bank of Brazil. Since 2012, a new antitrust framework (Law 12,529/2011) has governed the competition protection system. It was designed to reformulate Cade’s workflow and accelerate decision-making on issues regarding competition. According to the watchdog institution, the average length of a merger analysis was lowered from 154 days in 2011, before the law came into force, to 31 days three years later. To further improve M&A regulations in Brazil, the Brazilian Mergers and Acquisitions Committee (CAF) was created in November 2012. The CAF brings together participants of the financial market and the São Paulo Stock Exchange (BM&F Bovespa) and is based on the United Kingdom’s Panel on Takeovers and Mergers. The Brazilian M&A Committee oversees a monitoring framework based almost entirely on self-regulation by publicly traded companies and has become a corporate governance quality seal for M&A transactions involving companies that have voluntarily adhered to its rules.


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