Find out when you need a Legal Representative in Brazil for your expanding company. One of the biggest challenges for foreign business owners is there is no need for a physical presence in Brazil. However, they must also be concerned with measures and decisions that must be taken locally during the development of the new business in Brazil. It is important to mention that government authorities may require compliance with certain requirements regarding the legal representation of foreign investors.
In Brazil, every foreign company must comply with legal requirements regarding legal representation during the incorporation process. There are two main forms of legal representation: the legal representation of foreign shareholders and the legal representation of the legal entity incorporated in Brazil.
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Legal representation of foreign shareholders
Brazil allows any Brazilian company, except for a few, to be completely owned by a foreign shareholder. This way Brazil can attract more business. Since the foreign investor will not depend on a Brazilian partner, this could be an obstacle to the conclusion of the business.
However, in order for a company with foreign partners to be registered in Brazil, it is necessary that each foreign shareholder grants a power of attorney to a legal representative in Brazil. This legal representative will represent the foreign shareholder before the Brazilian tax authorities and before the Central Bank.
Who can be a Legal Representative in Brazil?
According to Brazilian law, the legal representative must be an individual, Brazilian or foreign, residing in Brazil and, if the individual is a foreigner, the person must have a permanent visa.
Such requirements are determined by the Brazilian Federal Revenue (Secretaria da Receita Federal) and the purpose is to protect the tax authorities. Thus, the legal representative of a foreign entity may be personally liable for non-compliance with legal obligations, notably tax obligations.
For this reason, for a power of attorney granted by a foreign national to be valid in Brazil, it is mandatory that the powers granted include receiving court summonses on behalf of the foreign shareholder. Once these requirements are met, you will avoid future surprises regarding your representation.
Legal Representation of the Brazilian Entity
Once a company is incorporated in Brazil, it comes into legal existence and, consequently, it becomes the holder of rights and obligations. However, the company needs to “materialize” its existence before government authorities and/or any third parties and this is done through its legal representation.
Therefore, for a company to be incorporated in Brazil, it needs a Legal Representative, also known as a local director.
Like that of the foreign shareholder, this Legal Representative must be an individual, Brazilian or foreign, residing in Brazil. If the individual is a foreign national, the person must have a permanent visa.
In addition, due to the nature of their role as a Legal Representative in Brazil, the responsibility has two aspects: the liability before the company itself and the liability before third parties.
As for the responsibility towards the company itself, the Legal Representative must comply with the provisions of the company’s articles of association and must act in the best interest of the company. If this does not happen, shareholders may remove the Legal Representative and, depending on the severity, may claim for indemnification.
Regarding liability to third parties, the Legal Representative may be personally held responsible for conduct that harms third parties. Notwithstanding, the Legal Representative in Brazil may be held responsible for any tax and labor non-compliance.
Know your corporate obligations in Brazil
It is very important that a foreign company owner knows all the requirements related to legal representation in Brazil. Furthermore, as it involves an extremely trusting relationship, company owners must seek ane experienced and trustworthy Legal Representative in Brazil. Therefore, we strongly recommend that you look for an experienced partner who can offer sound guidance and assistance with your legal and other corporate compliance requirements during the incorporation process.
Biz Latin Hub can help you find a legal representative in Brazil
At Biz Latin Hub, our team of professionals are specialized in legal representation in Brazil for you and for your company. With over 5 years operating in all key markets in Latin America, our comprehensive service delivery and expertise will ensure your business is set up for success and that all legal representation requirements are duly met.
Get in touch with us today to learn more about how we help you with the compliance requirements in Brazil.
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