Options for Incorporation of a Business Entity in Brazil

Options for Incorporation of a Business Entity in Brazil

Introduction

Corporate forms for business entities, including those providing professional services (e.g. accountants and lawyers), are governed by the Civil Code. The only exemptions are corporations, incorporated companies, and mixed corporations which are governed by the Corporate Legislation.

The corporate forms in which business may be conducted are:

Corporations

This legal entity ("sociedade por acoes), commonly known as S.A., is similar to a corporation in the U.S., public limited company (PLC) in the UK and listed A/S in Denmark. It is the only corporate form that can have its stock publicly traded.

Limited Liability Company

A private limited liability company ("sociedade limitada"), commonly known as "limitada" or "Ltda.", is similar to a closely held company in the US, private limited company (Ltd.) in the UK and ApS in Denmark.

Mixed capital companies

This legal entity ("sociedade de economia mista") is owned by the government as well as investors from the private sector, with the government having the controlling interest. It has the form of a corporation.

General partnerships

This type of partnership ("sociedade em nome coletivo") and those referred below, except for regulated professional partnerships are formed for business purposes. All partners (individuals only) have unlimited liability and may take part in the management of the partnership. This form for business entity is equal to an I/S in Denmark.

Special partnerships

This type of partnership ("sociedade em conta de participacao") is formed to carry out one or more specific business ventures. The special partnership is an unincorporated entity and thus has no legal identity. It is in effect a participation account registered in the books on one of the partners (the partner who represents the partnership before third parties).

Limited partnerships

This type of partnership ("sociedade em comandita simples") comprises two or more partners of two types: (i) interest holders with unlimited (active) liability and (ii) interest holders with limited (passive) liability. The partners with unlimited liability may only be individuals.

Incorporated partnerships

This partnership ("sociedade em comanita por acoes") comprises at least one managing interest holder who has unlimited liability and limited interest holders