[ESTABLISHING A BUSINESS ENTITY IN BRAZIL] 71
3. Necessary Information The formation documents of Brazilian entities must contain the following information: (a) Partners/Shareholders. Name and identification of the partners/shareholders. Foreign partners/shareholders need to obtain a taxpayer registration number in Brazil (a straightforward procedure). (b) Name of the Company . Although DREI’s Normative Instruction No. 81, issued on June 10 th , 2020, does not require that the company’s main activity be included in its name, in practice the application of this requirement is subject to the interpretation of the respective Boards of Commerce in each jurisdiction. (c) Purposes of the Company. Aspects relating to taxation should be considered when specifying the activities to be carried out by the company. (d) Complete Address. The full address of the head office and branches (if any) must be provided. (e) Term of Duration. May be either determinate or indeterminate. (f) Capital Stock. Amount of the capital stock in Brazilian currency, the equity interest of each partner/shareholder in the corporate capital. The capital stock may be paid-in in domestic currency, credits or assets (in case of the S.A., if payments are in assets, such assets must be subject of an evaluation report prepared by an expert or an accounting firm). (g) Quotas/Shares. Number of quotas (Limitada) or shares (S.A.) to be held by each partner/shareholder and how these quotas/shares will be paid in. Usually (but not mandatory), the quotas or shares have the par value of BRL 1.00. In the case of an
S.A., it is possible to stipulate that the shares have no par value. The shares of an S.A. may either be ordinary or preferred shares, the preference of which choice is related to either political or economic advantages. Preferred shares may or may not have voting rights, provided that the number of non-voting shares is limited to 50% of the total shares issued by the S.A. Pursuant to DREI’s Normative Ruling No. 81, a Limitada may also issue preferred quotas, even with no voting rights, although this is a subject of ongoing academic debate, as mentioned above. (h) Management. Appointment of the individuals who will act as ( i ) managers of the Limitada; or ( ii ) officers of the S.A.; and if applicable ( iii ) members of the board of directors (at least three). (i) Dividends. Provisions on allocation of dividends and losses among the partners/shareholders. 4. Formation. 3.1. Limitada: A Limitada is formed by filing its Articles of Association with the Board of Commerce of the State where the company’s headquarters will be based. After the Articles of Association are filed, the Limitada will be considered as operational. There is no need to publish the Articles of Association. 3.2. S.A.: A S.A. is formed by filing, with the Board of Commerce of the State where the company will have its headquarters, the Minutes of Shareholders Meeting approving the formation of the S.A. and its by-laws. After registration, the Minutes must be published in a newspaper with wide circulation in the city where the company’s headquarters are located or in electronic format on a digital platform maintained by the Federal Government and in its own website, in case of a closely held S.A.
ILN Corporate Group – Establishing a Business Entity Series
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