• I - POWER OF ATTORNEY
• II - INVESTOR REGISTRATION WITH THE SECRETARIAT OF INTERNAL REVENUE (SRF)
• III - ORGANIZING A COMPANY
• IV - FOREIGN CAPITAL
• V - BUSINESS INTELLECTUAL PROPERTY - TRADEMARKS / PATENTS
• VI - FOREIGN LABOR
• VII - TAX ASPECTS
• VIII - SOCIAL SECURITY AND LABOR ASPECTS
• IX - ANTITRUST

Important Basic Information on Investing in Brazil

III - ORGANIZING A COMPANY

3.1. Categories

• Business company (sociedade empresária): professionally engages in economic activity organized for the production or circulation of goods or services (the most common).
• Simple company (sociedade simples): engages in an intellectual profession of a scientific, literary or artistic nature (generally an association of professionals).

3.2. Corporate Types

The most common are: limited companies (may be a business company or a simple company) and stock corporations (always a business corporation).

3.3. Limited Company (business companies are the most common)

3.3.1. Overview

Organized according to the articles of association, which instrument evidences equity ownership and must state:

• the corporate name, which will contain the main purpose of the company;

• the name and identification of all the partners and their representatives;

• the corporate purpose, as specific as possible;

• the address of the head office, which must observe local zoning law;

• the amount of capital, number of quotas, par value, interest of the partners (at least two), no minimum required capital or payments (cash, credit or appraisable property);

• the form of management, whether some or all are partners or engaged third parties;

• rules for several or joint representation;

• management acts that require the prior, written consent of the partners;

• closing date of the fiscal year (generally coincides with calendar year);

• quorum for making corporate decisions;

• rules on dissolution, the exit of partners, including because of death, whether or not heirs will participate, etc.;

• dispute resolution (in court or by arbitration).

3.3.2. Legal Aspects

The rules for limited companies are defined in the Brazilian Civil Code, in force since 11 January 2003, most notably:

• The liability of each partner is restricted to the corresponding equity interest, but all partners are jointly and severally liable for paying the capital.

• The capital is divided into quotas of equal or unequal par value.

• Unless otherwise provided for in the articles of association, partners may assign all or part of their quotas to other partners without the need for consent from the others and to third parties in the absence of opposition from those holding 1/5 of the capital.

• Management is restricted to individuals, who may or may not be partners but must be domiciled in Brazil. The appointment of nonpartners requires partner unanimity until the capital is paid up; thereafter the quorum is 2/3 of the capital.

• The articles of association may provide for the institution of a Finance Committee composed of three or more standing and alternate members, who may or may not be partners but must reside in Brazil, elected annually.

• By law, a corporate decision is required:

• By those holding 3/4 of the capital:
- to amend the articles of association;
- to perform a merger, consolidation, dissolution or cessation of liquidation;

• By those holding the majority of the capital:
- to appoint and dismiss managers;
- to decide on their remuneration;
- to petition for reorganization;

• By a majority of those in attendance unless a higher quorum is required:
- to approve the accounts of the management;
- to appoint and dismiss a liquidator and evaluate the corresponding accounts;
- to perform other acts;

• By law, certain corporate journals are required;

• General and other partner meetings must be held as established in the Civil Code, etc.

3.4. Stock Corporations

3.4.1. Overview

Incorporated at an Incorporation Meeting to draw up the bylaws, which will define: the corporate name, purpose, head office address, capital, form of payment and equity interest held by the shareholders, types and classes of shares, management bodies, rules on dividend distribution, fiscal year, etc.

3.4.2. Legal Aspects

The rules on stock corporations are defined in Law 6404/76 and subsequent laws. The most important are:

• The liability of the shareholders is limited to the issue price of the subscribed or purchased shares.

• The corporation may have closed or open capital, depending on whether or not its securities are to be traded on the market.

• The capital is divided into shares and may be paid for in cash, credit or property appraised by three experts or by a specialized company, but at least 10% of the initial capital must be paid up front.

• Shares may or may not have a par value and may be common or preferred. Preferred shares may or may not carry voting rights, subject to the advantages and preferences attributed to them in the Corporations Act, and they may not exceed 50% of the total number of shares issued.

• Shares may be registered in the Registered Shares Book to evidence ownership.

• Certain corporate journals must be kept according to the Corporations Act.

• General meetings are held once a year within four months after the close of the fiscal year to discuss the matters defined by law, and special meetings are held to discuss other matters when necessary.

• The management bodies are: Board of Directors, all of whose members must be shareholders; and an Executive Board of officers who may or may not be shareholders.

• The corporation may institute a Finance Committee, whose members may or may not be shareholders.

3.5. Registration

To operate as a legal entity, the corporation must have its bylaws registered with the appropriate entity (for a business corporation, with the Trade Board; for a simple corporation, with the Civil Registry of Legal Entities).

After registration, the corporation must enroll with federal, state (except for service providers), and local authorities and with other entities, depending on the area of operation.