Foreign Company in Brazil and Legal Representation for foreign companies in Brazil
The operation of foreign companies in Brazil requires the observance of several legal requirements, one of the most important being the obligation to constitute a legal representative in the national territory. The incorporation of foreign companies in Brazil is mainly based on the Civil Code (Law 10.406/2002), the Brazilian Corporation Law (Law 6.404/1976) and the DREI Normative Instruction nº 77, of March 18, 2020, which aim to ensure that companies can comply with their tax, legal and commercial obligations in the country.
In this article we will explain the main requirements for the incorporation of a foreign company in Brazil and the need for legal representation in Brazilian territory.
1. Incorporation of a Foreign Company in Brazil
According to the Brazilian Civil Code, every foreign company that wants to operate in Brazil needs to be incorporated in the form of a foreign company with a branch or agency in Brazil.
Regarding the nomenclature, the foreign company will operate in the national territory with the name it has in its country of origin and may add the words “from Brazil” or “of Brazil” to its name.
The steps for the incorporation of the foreign company in Brazil begin with the authorization by the Brazilian Executive Government Branch for the company to operate in the country and the constitution of a legal representative in Brazil.
For the authorization of the incorporation of the foreign company in Brazil by the Executive Branch of the Government, it is necessary that the foreign company presents:
- proof that the company is incorporated in accordance with the law of its country of origin;
- the company’s bylaws or statute;
- a list of the members of all the company’s management bodies, with name, nationality, profession, domicile and, except for bearer shares, the value of each one’s interest in the company’s capital;
- a copy of the corporate act that authorized the operation in Brazil and fixed the capital destined to operations in the national territory;
- proof of appointment of the representative in Brazil, with express powers to accept the conditions required for authorization;
- last balance sheet.
Although it seems simple, the process of authorizing the incorporation of a foreign company in Brazil is complex and requires months to be completed.
Once the authorization is granted by the Executive Branch, it will be up to the company to comply with other legal determinations, first the publication of the authorization and inherent documents in the Official Gazette of the Union.
After the publication of the documents in the Official Gazette of the Union, the company may apply for registration in the commercial registry of the location in which it intends to establish itself in Brazil. This registration must be accompanied by a copy of the publication mentioned in the paragraph above, accompanied by a document proving the cash deposit, in an official Brazilian banking establishment, of the capital destined for operations in the national territory.
2. Appointment of legal representative in Brazil
Article 1.138 of the brazilian Civil Code establishes that the foreign company authorized to operate in Brazil is required to have, permanently, a legal representative in Brazil with powers to resolve any issues and receive judicial subpoenas on behalf of the company. This legal representative has the function of acting as an intermediary between the company, public agencies and third parties.
The legal representative does not necessarily need to be Brazilian but must have a permanent domicile in Brazil. This person needs to be traceable, as he or she will ultimately be in charge of transmitting the summons and notifications to the investor (partner), who remains ultimately responsible for the activities developed by the company in Brazil.
The legal representative is necessary for the foreign company to have a formal point of contact in Brazil, which facilitates conducting business, complying with tax obligations and resolving disputes.
Therefore, the figure of the legal representative is essential for foreign companies that wish to operate in Brazil, and their performance is crucial to ensure legal regularity, the proper functioning of commercial activities and even the minimization of risks and the optimization of business processes.
Choosing a lawyer as a legal representative offers several advantages for the foreign company, especially with regard to legal certainty, the management of regulatory and contractual issues, and ease of processing issues with government authorities.
Recently, in 2024, in a case that took on major proportions in Brazil, the social network X (formerly Twitter) had its operation suspended after Elon Musk decided that X would operate in Brazil without a legal representative. After this decision of the X, Minister Alexandre de Moraes, of the Federal Supreme Court (STF), determined the suspension of the X in Brazil for failure to comply with the requirement of legal representation in Brazilian territory. Subsequently, after almost 2 months of suspended operation in Brazil, X appointed a new legal representative and its operation in Brazil, one of the largest markets of the social network in the world, was again authorized.
Therefore, the legal representative is necessary for foreign companies that wish to operate in Brazil and opting for a lawyer as a legal representative brings a number of advantages to the foreign company.
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Philipe Cordeiro is a lawyer in Brazil and Portugal. He holds a Master’s degree in International and European Law from the University of Lisbon and the University of Rouen-Normandie, postgraduate degrees in Business Law, Digital Law and Environmental Law, in addition to holding several certifications. He speaks fluent English and Portuguese and has good notions of French and Spanish.