If you are doing business in the Brazilian market or planning to launch your business there, you are going to need to find a reliable local director in Brazil to oversee your operations. Your director should be someone with a strong commercial track record and good knowledge of the local business environment, because as well as working to maximize your profits, they will also need to guarantee your compliance with local regulations. By hiring a local director with experience managing complex corporate processes, such as transfer pricing in Brazil, you will also have a crucial source of knowledge in your team that could help you make major savings in the future.
Known as ‘the Giant of South America’, Brazil is Latin America’s largest — and the world’s eight-largest — economy by gross domestic product (GDP), which reached $1.84 trillion in 2019 (all figures in USD unless otherwise stated). The resource-rich country is also the fourth-largest destination for global foreign direct investment (FDI), with inflows hitting $73.5 billion that same year.
With over 211 million people, Brazil has the sixth-largest population in the world, and has experienced exponential growth over recent decades that has seen both GNP and gross national income (GNI) effectively triple since 2002 — even despite notable declines seen in each between 2013 and 2016 that have yet to be recovered.
That growth has seen the country emerge as an upper-middle-income nation based on its GNI, which reached $9,130 per capita in 2019. The country boasts a large and growing middle-class, including a highly-developed professional services sector.
The country is also part of the Southern Common Market (Mercosur), an economic and political integration that also includes Argentina, Paraguay, and Uruguay, with Bolivia currently awaiting acceptance. Brazil’s top export commodities are ores and slag, soybeans, timber, and coffee. The country’s main export destinations include Argentina, Chile, China, the Netherlands, and the United States.
If you are considering entering the Brazilian market or have already established a legal entity in the country, read on to understand the importane of working with a dependable local director in Brazil. Or go ahead and contact us now to discuss your business options.
What will a local director in Brazil do for you?
A local director in Brazil will be able to represent you and guarantee the good performance of your organization, while supervising all corporate processes adjusting budgets as necessary to meet business objectives.
A local director will also provide ongoing support with administrative and management responsibilities, and will guarantee that your company complies with all local statutory requirements to avoid possible legal inconveniences or fines that can be met by non-compliance. Additionally, a local director in Brazil will be able to help you recruit and hire qualified local personal, a task that can be a challenging for anyone unfamiliar with the market.
Note that, according to the Brazilian regulatory framework, the appointment of a local director can be done in two ways:
At the time of the creation of the company’s bylaws: In this case, the appointment of a local director in Brazil will be specified in the bylaws and their mandate will be indefinite.
By minutes of the shareholders ‘meeting: A local director can also be appointed during a shareholders meeting. Keep in mind that this appointment is temporary and is for a defined period of time.
Main responsibilities of a corporate director
A local director in Brazil must engaged in every aspect of your business in Brazil, in order to be able to make key decisions to protect your commercial strategy. As such, a local director can be expected to:
- Access up-to-date financial data in order to evaluate the performance of the company and adjust practices when necessary
- Engage in the planning and development of all corporate projects, with particular focus on their impact on the operations of the company
- Actively participate in meetings with shareholders, who they should keep in contact with
- Communicate with company personnel when necessary, regardless of the rank or specialty of the employee
A local director in Brazil has the following legal responsibilities:
- Be honest in dealings, acting in good faith and in the best interest of the organization
- Guarantee the confidentiality of the company’s internal information
- Be prudent with the management of the company’s budget
- Ensure the balance of all debts acquired by the company
- Keep the financial records of the organization up to date
Beyond their day-to-day and strategic responsibilities, a local director in Brazil also maintains personal liability in case of violation of the following laws:
• Labor Legislation (Federal Decree-Law n. 5,462/43)
• Civil Code (Federal Law. 10,406/02)
• Consumers Code (Federal Law n. 8,078/90)
• Antitrust Law (Federal Law n. 8,884/94)
Who can be a local director in Brazil
In Brazil, any individual over the age of 18 who has the legal right to work in the country can be the local director of a company, regardless of their nationality. Nevertheless, if the company wishes to appoint a foreigner who is not currently based in Brazil, that individual will have to relocate and live in the country as a basic prerequisite for their residence permit.
Note that Brazilian authorities may grant a residence permit to a foreign citizen who will be appointed as a local director, but only based on that individual making a sizeable investment as a shareholder. While the normal level investment to gain such a permit stands at 600,000 BRL (equivalent to $109,500 at time of publication), that minimum is reduced to 150,000 BRL (approximately $27,400) for a company that generates 10 new jobs within a period of 2 years of either the opening of the organization or the appointment of the foreign citizen as a local director.
Biz Latin Hub can support your operations in Brazil
At Biz Latin Hub, we guarantee excellence in the delivery of our comprehensive portfolio of corporate support services, which are available in Brazil and 15 other countries in Latin America and the Caribbean where we operate. With our full suite of back-office assistance, including accounting support and corporate legal services, we facilitate investment throughout the region, and everywhere we operate we have highly qualified and experienced staff available to occupy directorships in order to guarantee you a smooth overseas expansion. Alternatively, through our hiring & PEO service, we can help you find suitable local candidates via our established recruitment network.
Reach out to us now to discuss your market entry options.
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