Investors who choose to open a joint stock company in Brazil are required to follow a set of mandatory steps, as well as to register the business with the auhtorities. This business form is suitable for large corporations and, in most situations, it will be subject to more complex requirements, compared to other business forms.
Understanding the conditions for company creation is essential before starting a business. Our agents specializing in company formation in Brazil assist investors who wish to open a joint stock company or any other type of business entity.
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Joint stock company formation steps
Setting up a joint stock company in Brazil offers benefits such as limited liability and access to funding, however, investors should also be mindful of the complex tax regulations and mandatory registration and licensing processes.
To form a joint stock company in Brazil (the SA company), you must register with the Board of Trade and obtain a CNPJ number. You will also need to draft articles of incorporation and, once the company is registered, comply with the requirements for listing the business on the stock exchange, as well as with other provisions.
Our team summarizes the most important steps if you wish to open a joint stock company in Brazil:
- Choose the company name: you will need to find, and reserve a unique name; it cannot infringe on other existing company names;
- Determine the shareholding structure: the joint stock company needs to have at least two shareholders and the directors need to be Brazilian residents; our team can give you more details about these specific requirements;
- Prepare the documents: these are the company’s constitutive documents, its Articles of Association and Memorandum; our team can help you draw these up according to the joint stock’s particularities;
- Register the new business: register the company with the State Board of Trade, after which you will obtain a tax number.
In addition to the registration mentioned above, the joint stock will also need to be registered with the Ministry of Labor, and the social security system, in order to comply with the requirements for hiring employees in Brazil.
Drafting the company’s bylaws is an essential step for investors who open a joint stock company in Brazil. These are the legal entity’s constitutive documents, and its registration is not possible without them.
Below, our Brazilian company formation agents highlight the most important information included in the S.A. company’s Articles of Association:
- The company’s name, which is preapproved for use and observes the local rules for corporation names (in this case, including the abbreviation of the business form, such as S.A.);
- The address of the company, an address in Brazil (a physical address, not a P.O. box) that will be used for official correspondence as its registered office;
- The purpose of the S.A. company – this is linked to its object of activity;
- The capital of the company, its payment and how the shares are divided among the shareholders, the types of shares, as applicable;
- The management structure of the company, with its appointed directors. A section is also required for information about corporate governance matters;
- Information about how shareholder’s meeting are summoned, their frequency, extraordinary meetings, and how corporate matters are decided by the company’s shareholders.
An important distinction between a private limited company and a joint stock company in Brazil is that the latter can issue a single class of common shares. Unlike the LLC, the S.A. can also issue securities to investors.
Entrepreneurs who open a joint stock company in Brazil may increase or decrease the company’s capital. Decreases are possible when the company has a capital that is too large for its proposed operations or when the legal entity registers losses.
Our team which can help you draw up the documents for company formation in Brazil can also clarify any questions regarding the capital for this type of company. We invite you to watch a short video below:
Brazilian S.A. management and requirements
A joint stock company is subject to more complex management and control requirements, compared to a limited liability company. The following governing bodies are in place for a joint stock:
- Board of Directors: the decision-making body composed of at least three directors. When a foreign director is appointed, he will have an attorney-in-fact who is a Brazilian resident;
- Board of Officers: handles the company’s legal representation and is composed of at least two individuals who are Brazilian residents.
In addition to the two boards, the S.A. company in Brazil will also convene the General Shareholder’s Meeting. This body has the highest authority in the company and its resolutions are mandatory for passing amendments and important decisions concerning the company.
Foreign investors can reach out to our Brazil company formation agents as soon as they decide to set up a business. Not only can we assist throughout all the needed registration with the authorities, but we can also guide investors when first choosing a suitable business form.
Our team can also provide you with details, and answer your questions if you want to open a branch in Brazil. This can be a suitable option for companies operating in certain business fields, such as banking or other financial services, however, we recommend getting in touch with us in order to understand the set-up requirements.
Joint stock company taxation in Brazil
Apart from the registration and licensing requirements that are mandatory when opening a new joint stock company, investors should also be informed regarding the taxation regime applicable to these companies in Brazil. Our team lists the main taxes for joint stock companies below:
- 15% corporate income tax (effective rate of 34% including the surtax);
- State VAT between 4% and 25% depending on the types of goods and services offered;
- Federal excise tax with an average rate of 20%;
- Municipal tax with rates between 2% and 5%;
- Other federal social contributions and social security contributions (8% of the wage of each employee’s wage, and others).
Investors who open a joint stock company in Brazil have the advantage of entering a growing market presenting ample opportunities. Proper planning, as well as the assistance of a local team of experts, such as our own, is essential for foreign investors who are setting up a company in Brazil for the first time. If you are ready to open a company, we can also assist with trademark registration.
Contact our Brazil company formation specialists for complete assistance during the setup of the joint stock company. We offer tailored solutions and provide guidance throughout the pre- and post-registration steps.