[ESTABLISHING A BUSINESS ENTITY IN BRAZIL] 64
COMPARISON BETWEEN BRAZILIAN LIMITADAS AND S.A. BUSINESS STRUCTURES A. General Aspects In general, the main differences between a Limitada (with one or more partners) and a S.A. are the following: LIMITADA S.A.
Holders of the Limitada are called partners/quotaholders (sócios/quotistas). The Limitada may have any name followed by the wording “Ltda.”
Holders
of
the
S.A.
are
called
Holders/Owners
shareholders/stockholders ( acionistas ).
The company may have any name followed by the wording “S.A.”.
Name
Minimum Holders Governing Documents
One or more partners/quotaholders.
Minimum of two shareholders/stockholders.
The Limitada is governed by the Articles of Association (“ Contrato Social” ). Capital is divided into quotas, as stipulated in the Articles of Association. All quotas must have voting rights and an indicated par value. There may be preferred quotas but there is a debate whether they can exclude voting rights, as by law all quotas must have voting rights 8 .
The S.A. is governed by the By-laws (“ Estatuto Social ”). Capital is divided into shares, which ownership is reflected in the company’s corporate books, and may also be represented by certificates (although no longer common). There may be preferred shares with no or limited voting rights, and there may be shares with or without a par value. A plural vote may be established in both publicly and closely held S.A., being a maximum of 10 votes per each share, with an initial term limited to 7 years. This initial term may be renewed for any time, provided that a minimum quorum is observed. Shareholders that do not agree with the deliberation for the adoption of plural vote are entitled to withdrawal from the company, upon receipt of the value of their shares. Transfers of shares are registered in the company’s corporate books. No need to amend the By-laws.
Capital Stock / Quotas/Shares
Not allowed.
Plural Vote
Articles of Association must be amended for the quotas to be transferred. Transfer of quotas to a third party may be opposed by partners representing more than ¼ of the capital stock, if not otherwise established in the Articles of Association. Limitada may not issue debentures, warrants, other securities or convertible bonds, but may issue commercial notes.
Transfer Interest
of
The S.A. may issue debentures, warrants and other convertible bonds (as may a closely held S.A., i.e., no need to be publicly held).
Securities
8 As of October 2021, pursuant to DREI’s Normative Ruling No. 81, Limitadas may issue preferred quotas without voting rights, although the Civil Code stipulates otherwise.
ILN Corporate Group – Establishing a Business Entity Series
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