Investment Policies

According to the Foreign Investment Act No. 4131 (Lei 4131) published in 1962, Brazil treats foreign capital on par with domestic capital and ensures the unrestricted corporate activities of foreign companies within Brazil
In sectors requiring limitations on foreign capital, the law defines the basis and extent of discriminatory treatment.

Brazil has maintained an open stance toward foreign investment for an extended period, and the Bolsonaro government, which began its term in January 2019, actively seeks to attract foreign capital from various countries.

Both foreign and domestic corporations operating in Brazil are subject to regulation by federal, state, and local government laws
Federal law governs investments, whether domestic or foreign, in Brazil, while states and the Brasília Special District enact and enforce their respective regulations
Most state governments offer financial incentives, technical support, and tax incentives to encourage investments
Although the contents of state laws exhibit similarities, they are not identical, and each state's laws apply exclusively to that state
Furthermore, individual cities and provinces enact their own laws and ordinances.

At present, the Brazilian government operates an investment export promotion website known as 'Invest & Export Brazil'. This platform serves as a conduit for attracting investments and promoting business opportunities both within and outside Brazil
It operates in collaboration with three organizations: the Ministry of Foreign Affairs (MRE), the Ministry of Trade, Industry, and Energy (MDIC), and the Ministry of Agriculture and Industry (MAPA).

*Invest & Export Brazil
http://www.investexportbrasil.gov.br

The Bureau of Trade and Industry (MDIC) is also building a Rede Nacional de Informacoesobreo Investimento (RENAI), an investment project information integration site attracted by Brazil.

*RENAI
https://www.gov.br/produtividade-e-comercio-exterior/pt-br/ambiente-de-negocios/competitividade-industrial/renai

The Brazilian government is also attracting foreign investment through APEX Brasil.

*APEX Brasil
https://portal.apexbrasil.com.br/

1)Main Contents of Foreign Investment Law

The Federal Constitution and the Foreign Investment Act stipulate equal treatment of foreign capital and domestic capital
In other words, there are no restrictions on foreign investment except for restrictions on foreign capital participation or specific demands in the law in accordance with the principle of equal treatment.

However, the Foreign Investment Act enacted in 1971 stipulates that foreigners who do not live in Brazil cannot acquire more than 50 MODULE of farmland, that foreigners cannot own more than 1/4 of the city's area, and that foreigners in the same country cannot own more than 10% of the total foreign-owned area
However, foreigners for the purpose of development can be traded after obtaining permission from the government, and there is no restriction if even non-resident foreigners have received inheritance
According to the Brazilian daily Valor, since 1993, foreigners have been able to own up to 100 Modules of farmland, which was only 50 Modules, and Brazilian companies with foreign investment capital have also begun to be sanctioned for land ownership.

Article 1 of the Act No. 4131 stipulates the introduction of three types of foreign capital, and if investment through the transfer of industrial ownership is included, there are actually four types of introduction of foreign capital recognized by the law.

• Direct investment through capital goods, machinery, and facilities

• Direct investment using financial and monetary funds

• Indirect investment using loans and other capital markets

• Investment through transfer of industrial ownership

Investment Incentives

1) Tax Cuts and Exemptions

The government incentive methods are mainly in the form of tax cuts & exemptions and financial loans (Subsidized-Rate Loan Financing) applying preferential interest rates, and the cash support method is provided only in very exceptional cases
The federal government's investment incentives take the form of indirect investment incentives such as increased exports and investment aid from domestic private companies
Due to the lack of financial resources, in principle, it is in the form of Subsidized-Rate Loan Financing or Tax Exemptions & Reduction rather than cash aid, and there are many support for factory construction or machinery purchase.

Income tax, social contribution tax (PIS/COFINS) early refund

• Refund of PIS/COFINS paid at the time of purchase of the machine in installments over 12 months (in the past, credit equivalent to tax payment was granted to induce use within 24 months from the date of payment), permanent action

Tax reduction when purchasing capital goods for exporters (RECAP)

• Social Contribution Tax (PIS/COFINS) exemption when exporters purchase new mechanical equipment in the domestic market or through imports

• Companies wishing to receive such benefits must obtain a beneficiary qualification (registered with the National Tax Service) and tax-free benefits for up to three years from the date of acquisition of the qualification

IT, Semiconductor Development Support Program (PADIS)

• Benefits of corporate income tax (IRPJ), industrial tax, social contribution tax, etc
  imposed when selling semiconductors and displays, or when purchasing capital goods, or transferring technology software overseas

Reduction of import tax on machinery and equipment without domestic production (*Ex-Tarifários items subject to joint tariffs in South America)

• Capital goods, computer information and communication products import tax reduction temporarily: 14% → 2%

• The beneficiary conditions shall be such that there shall be no domestic production of the item in Brazil and shall be in accordance with the national industrial development policy. - The validity period is up to 2 years from the date of application

Simplifying the tax system for small businesses (Simples Nacional)

• Simplified by integrating federal taxes (CSLL, PIS, COFINS, IPI, INSS), state taxes (ICMS), and market prices (ISS) for companies registered as ultra-small companies (ME) or small companies (EPP).

IT Incentives related to IT products (Lei do Bem)

• CSLL (social contribution tax) reduction imposed on expenditure expenses in the R&D industry, industrial tax reduction when purchasing mechanical equipment for R&D purposes, and income tax reduction related to technology transfer

2) Support for R&D business: INCENTIVOS à INOVAÇÃOTECNOLÓGICA

The Brazilian government provides various tax incentives for technological innovation
The technology innovation incentive system is led by the Ministry of Science and Technology and focuses on three areas
In other words, (1) industry-academic cooperation, (2) allowing science and technology researchers to participate more in the technological innovation process, and (3) inducing companies to participate more in technological innovation.

These technological innovation incentives encourage more focus on R&D through industry-academia cooperation, which is led by the Ministry of Science and Technology, but also overlaps with the policies of some development departments
The Technology Innovation Incentive System is operated in conjunction with the Technology Innovation Act (Leide Inovacção), the Research and Development Promotion Act (Leide Bens), and the Information Promotion Act (Leide Informatica.

Brazilian Government Incentive Payment Standards and Reasons

Incentive systems for corporate investment are primarily designed for export companies, special incentive industries, and investments in underdeveloped areas.

General investment incentives

For investments in high-tech and information and communication industries, companies that allocate more than 5% of their profits to research and development (R&D) are eligible for income tax exemption and exemption from the industrial goods tax (IPI) when acquiring equipment related to technology development.

The Brazilian government's priority industries for providing investment incentives include agriculture, heavy industry, steelmaking, shipbuilding, chemicals, paper, fishing, forestry, tourism, and the information and communication industries, all of which receive incentives under the Information Industry Promotion Act.

Regional Investment Incentives

Areas eligible for investment incentives encompass the northern Amazon region, the underdeveloped northeastern region, the Manaus Free Trade Zone, and the Export Processing Trade Zone (ZPE)
The ZPE grants a ten-year exemption from federal income taxes and partial relief from the state's distribution taxes (ICMS)
Companies investing in these regions can access medium- to long-term financing from regional development banks like the Northeast Bank of Brazil (BNB)
Companies investing in industrial sectors can also secure loans from the National Economic and Social Development Bank (BNDES)
However, these areas are predominantly underdeveloped and suffer from a shortage of skilled labor, making them primarily suitable for simple assembly industries.

Incentives

Companies located in the Export Processing Trade Zone (ZPE) enjoy exemptions from import tariffs, industrial product taxes, social security fund taxes, financial transaction taxes, and merchant maritime transport reform taxes
They are not required to obtain permission for importing raw materials
Detailed information on investment incentives is available through the Investment Information System RENAI, operated by the Ministry of Trade, Industry, and Energy in Brazil.

Investment Incentive Payment Procedures

The most common incentives offered to foreign investment companies are reductions or exemptions from taxes such as ICMS (distribution tax), ISS (service tax), and IPTU (land tax)
To avail of these tax reductions, companies must contact the municipal government in their investment area to coordinate the reduction rate, incentive payment procedures, and methods
The scope and method of payment for investment incentives are determined at the discretion of the city government
Therefore, it is crucial to identify a city government investment officer who can provide precise information regarding incentives.

For instance, in the case of Piracicaba, where Hyundai Motor's factory is situated, the practice is to offer incentives like free land, IPTU (land house tax) exemption, and ISS (service tax) exemption during the factory construction phase.

To obtain detailed information about investment incentives in a specific region, direct contact with the municipal government is essential
The city government can provide accurate information only when specific project details, such as the exact investment size and job creation impact, are available.

Investment Incentive Application

• Investment type: Single investment

• Investment Area: Delphiru District, Pirasikava City, Sao Paulo

• Business contents: Production of lysine (feed additive)

• Construction date: March 21, 2006 Currently in operation

• Investment details

  • INVESTMENTS: 213 MILLION REALS OF FACTORY BUILDING, TOTAL INVESTMENTS OF $500 MILLION BY 2015 (Capital: $60 MILLION)

  • Location: 8 minutes from Geraldo Bajos Highway (SP-304), in the district of Pirasikava, Sao Paulo

  • Factory construction period: approximately 18 months (1,400 people per year, completed in September 2007)

  • Employment size: 1st approximately 250 people, a total of 2,000 by 2015

  • Factory size: 980,000㎡ of land and 50,000㎡ of floor area of the building

  • Production: 57,700 tons of lisina, a type of essential amino acid, will be produced annually (from sugar cane) and sold as feed for birds and pigs
    Its first year sales target is $100 million, of which it plans to export 70% to the United States.

• The plant, along with CJ's Indonesian and Chinese factories, is one of the world's top three bio hubs in the world, with production volume of 170 cart per day (Carreta), similar to that of CJ's Chinese plant
  All produce is transported via Santos port.

Investment Incentives

The state has pledged its cooperation in investment incentives and sales strategies, investing approximately $1.75 million to upgrade a 3km stretch of road from the highway to the factory area, effectively converting it into a highway
Furthermore, in support of the factory's operations, the city gas supply company (Comgas) has allocated around 22 million reals for the construction of a 19km gas pipeline.

Restrictions and Prohibitions (Industry Specific)

In Brazil, foreign investment is generally not restricted unless it infringes upon public order, good customs, or national security
However, there are specific areas where foreign investment is limited or prohibited, akin to regulations in other countries
These areas include domestic telegraph and postal businesses, nuclear power, hydroelectric power generation, geothermal power generation, telecommunications, and defense industries.

The following sectors impose restrictions or prohibitions on foreign participation:

• Development and utilization of underground resources, mines, and other mineral resources, as well as hydroelectric energy:
  Prior authorization from the Ministry of Mines and Energy (Ministério das Minas e Energia) is required for investments.

• Exploration and development of oil resources and natural gas:
  This sector is under federal monopoly control.

• Aviation and space industries:
  Participation of foreign capital is prohibited by the Federal Constitution.

• Nuclear energy development:
  Exclusive rights are granted by the Federal Constitution (Article 21, Paragraph 23).

• Coastal water transportation business:
  Companies must own ships built in Brazil and acquire Brazilian nationality, with more than 75% of voting rights restricted to Brazilian citizens.

• Media-related businesses such as television, radio broadcasting, newspapers, magazines, and other publications:
  Ownership or management of such entities is subject to restrictions defined in the Federal Constitution (Article 222(1))
  At least 70% of capital and voting shares must belong to individuals who are either Brazilian by birth or naturalized for over 10 years.

• Cable TV:
  Foreign capital allows up to 49% of voting rights.

• Agriculture, forestry, and border areas:
  While foreign capital is not directly regulated, those engaged in these industries and owning related land may be subject to regulations related to foreign land ownership, governed by Act No. 5709 (October 7, 1971).

• Domestic air transportation business:
  Foreign capital participation in domestic airlines is limited to 25% of voting shares, with a requirement that at least two-thirds of officers must be Brazilian citizens.

• Road Cargo Transportation:
  Foreign capital participation in land freight forwarding companies is capped at one-fifth of the voting capital.

• The financial industry:
  Generally, prior approval from the central bank is necessary, although regulations for investment in the fintech sector were significantly relaxed in 2018.

• Postal and telecommunications services:
  These services are defined as federal monopolies in the Federal Constitution (Article 21X).

• Insurance:
  Foreign investment has been permitted since 1996, with prior approval from the Insurance Supervisory Service (SUSEPE) required.

• Health service field:
  While the Federal Constitution (Article 199(3)) initially prohibited foreign capital or foreign companies from direct or indirect participation, it has been approved since 2015.

1) Manaus Industrial Park

The western Amazon region, home to the Manaus Free Trade Zone, comprises four states: Amazonas, Acre, Rondonia, and Roraima
The state capitals are Manaus, Rio Branco, Porto Velho, and Boa Vista, with Manaus serving as the economic hub of the region
The free trade zone was established in Manaus City, Amazonas, through Statute No. 356/68 and Statute 8.387/91
It was once Brazil's largest industrial zone until the market opened in 1990
However, it faced stagnation for some time due to logistics costs and economic slowdown
Nevertheless, with the economic recovery in 2003, investment in the Manaus region began to gain momentum.

The Manaus Free Trade Zone (ZFM) comprises three major industrial complexes: industry, agriculture, and commerce
Within the industrial complexes, there are over 600 companies employing various high-tech technologies
These companies are primarily involved in sectors such as electricity, electronics, motorcycles, shipping, household goods, and information and communication products
They benefit from tax incentives, including import tariffs and industrial taxes.

Brazil's largest export free trade zone, the Manaus Free Trade Zone, recently had its tax preference system extended for an additional 50 years, from 2023 to 2073
This extension is significant because it allows for the continuation of long-term projects in the industry that require time to mature
Previously, the special law was set to expire in 2023, potentially hindering the introduction and diversification of these projects
As a result, we can anticipate a wider range of investment projects becoming active due to the extension of the special law.

For access to valuable information, including details about tenant companies, you can visit the website of Suframa, the Manaus Free Trade Zone Management Bureau.

• Phone: (55 92) 3321-7000

• Address: Av. Ministro Mario Andreazza, 1.424 - Distrito Industrial, CEP. 69075-830 - Manaus Amazonas

• www.suframa.gov.br

Key benefits: investment incentives are divided into federal incentives through SUFRAMA and SUDAM, and state incentives through the Manaus State Bureau of Commerce and Tourism (SIC) and Manaus City incentives
It is a tax reduction principle and is exceptionally tax-free
Federal incentives: Federal incentives consist of reductions in import duties (II), industrial goods taxes (IPI), income taxes (IR), social contribution taxes (PIS/PASEP), and social security taxes (CONFINS).

• Reduction and exemption of import tax (Impostosobre Importacao - I.I.)

  • When foreign goods, including capital goods, are introduced into ZFM for internal consumption

  • I.I. exemption for foreign products listed in Portaria International No. 300 (1996.12.20.) entering the Amazonian Occidental

  • 88% reduction in import tax on raw materials, intermediate materials, packaging materials, etc. required for industrial products produced by ZFM for domestic sales

  • Reduction or exemption of import duties in the production of information goods that meet certain requirements

  • Reduction or exemption of import duties in the case of automobile production that meets certain requirements

• (IPI- Imposto sobre Produtos Industrializados; Industrialised Product Tax)

  • IPI exemption for ZFM products

  • Exemption from I.P.I. for foreign products (including capital goods) consumed by ZFM

  • I.P.I. exemption for products consumed by Amazonia Occidental as foreign products listed in Portaria International n300 300/96

  • I.P.I. exemption for domestic products entering ZFM and other Amazonian Occidental

  • I.P.I. exemption for agricultural and wood raw materials and products produced from plant extracts in the Amazonian Occidental region

• Reduction and exemption of corporate income tax (IRPJ-Imposto de Renda de Pessoa Juridica; Income Tax)

  • Up to 75% reduction in corporate income tax. However, this does not include social contributions to gains. Companies must enter these tax breaks in their books as capital reserves and cannot use them as dividends.

• Social Contribution Tax (PIS/PASEP: SOCIAL INTEGRATION PROGRAM) and Social Security Tax (COFINS: SOCIAL SECURITY FINANCING CONTRIBUTION) Reduction and Exemption

  • In the case of internal transactions between imports and companies, PIS/COFINS is exempted. 3.65% (with exceptions) shall be applied to the sale of finished products in offshore areas.

• Exemption from the Export Tax (Impostosobre Exportacao-I.E.)

  • Exemption from export tax on exports of products produced by ZFM

State incentives: Tax incentives given by states use a 55-100% refund of state distribution taxes (ICMS State Service Tax) in some cases
In addition, a certain amount of education and tourism promotion funds must be paid in return for tax refunds

City incentives: Tax incentives given by states use a 55-100% refund of state distribution taxes (ICMS State Service Tax) in some cases
In addition, a certain amount of education and tourism promotion funds must be paid in return for tax refunds

Brazil's government signed a bill to expand the scope of tax incentives at Manaus Industrial Complex (No. 10,521)

SAO PAULO

• Area: 248,222 km²

• Population: 45,919,049 (2019)

• Provincial capital: Sao Paulo

• Investment Organization: Investe Sao Paulo, State Trade and Investment Administration, Sao Paulo (https://www.investe.sp.gov.br/)

• Major industries: auto industry, auto parts industry, finance industry, IT industry

• Note: Fundo Established de Incentivo Social (FIDES) Social Development Promotion Fund/ Fundo Established de Desenvolvemento Economico (FIDE) Economic Development Promotion Fund/ 12 years repayment in maximum 10 years, 5% annual finance

RIO DE JANEIRO

• Area: 43,780.172 km²

• Population: 17,264,943 (2019)

• Provincial capital: Rio de Janeiro

• Investment Organization: Rio Trade and Investment Agency AgeRio (https://www.agerio.com.br/institucional/)

• Major industries: agriculture, leather processing, electronics, petrochemicals, etc

• Note: Financial and tax incentives, other industry-specific incentives, tax incentives, State Decree No. 23012/97, State Decree No. 24937/98

Minas GERAIS County

• Area: 586,522.122 km²

• Population: 21,168,791 (2019)

• Provincial capital: Belo Horizonte

• Investment Organization: Minas Gerais Trade and Investment Agency Invest Minas (https://www.investminas.mg.gov.br/)

• Major industries: Mineral, steel, textiles, non-ferrous, agricultural and livestock industries, automotive industries, auto parts, chemicals, electronics, BT, precision machinery, semiconductor industries, etc

• Note: Fundo de Incentivo Á Industrializacão (FIND) Industry Promotion Fund, PRO-INDUSTRIA (Order No. 38106/96), PROIM (Order No. 38106/96), FUNDIEST (O Fundo de Desenvolimento Industrias Estrictional) (Order No. DISTRING) No. 48 (Order No. 48/ESTRINASTIAS)

A corporation is an entity composed of two or more shareholders and is obligated to manage the company in proportion to the stocks invested
A Co., Ltd. is governed by Act No. 6404 (December 12, 1976), the Incorporated Corporation Act, which was partially amended by Act No. 9457 (June 5, 1997), and Act No. 10303 (October 31, 2001).

A Co., Ltd. faces a significant drawback as it is required to disclose its accounting settlement and the minutes of the general shareholders' meeting every year
Additionally, the corporation must set aside 5% of the company's profits as legal reserves, a requirement not imposed on a limited liability company
Generally, converting between a limited liability company and a corporation is a straightforward process and does not entail significant costs.

To establish a stock company, at least two promoters (who can be individuals or corporations with foreign or domestic addresses) are required, and these promoters are only responsible for the contributed capital as founding shareholders
A limited liability company (LTDA) is the most common corporate form in Brazil, alongside the S.A. form of a corporation, consisting of two or more investors who are responsible in proportion to their invested shares
In the past, limited liability companies could only be established with two or more investors
However, under the revised bill in 2019, it became possible to establish them with a single shareholder
Additionally, since 100% foreign investment is permissible, foreign companies can make entirely independent investments without the need for joint ventures with local entities
In such cases, it is possible to form a holding company with (1) two or more corporations, (2) one or more corporations, or (3) one or more individual investors.

There are no regulations regarding the legal minimum capital required for establishing a limited liability company
However, if a foreign company wishes to send employees from its headquarters to operate a local subsidiary, they must obtain permanent residency
According to the revision announced by the Brazilian Immigration Council (CNIg) under the Ministry of Labor (MTE) on October 21, 2015, two methods are available: an individual investment of 500,000 reais or a corporate investment of 600,000 reais per person in Brazil
In the case of corporate investment, there is no obligation to create employment, but in the case of individual investment, creating employment for at least 10 people within two years is mandatory
Permanent visas can be granted for personal investments of up to 150,000 reais if they are directed toward R&D activities such as innovation, basic and applied research, and science and technology investments.

Company managers must be designated at the time of establishing a limited liability company and must be Brazilian residents
When a holding manager oversees a company on behalf of the corporation, it is advisable to include provisions in the articles of incorporation to appoint a proxy manager through a separate power of attorney.

Procedure for establishing a local subsidiary in Brazil:

• Confirm the availability of a local corporate name in Brazil and verify existing registration with the Commercial Registry.

• Prepare the articles of incorporation for the local subsidiary in Brazil.

• Confirm the shareholders who will invest in the local subsidiary in Brazil (corporate name, address, name of representative).

• Select a representative (directors or officers) to manage the local subsidiary in Brazil. Brazilian law requires a temporary representative until a representative dispatched from the headquarters obtains permanent residency, as the management of the subsidiary must be by a permanent resident or citizen.

• Designate Brazilian agents for founding shareholders: If the founding shareholder of a local subsidiary in Brazil is a foreign company or an individual living abroad, an agent must be designated in Brazil. These agents sign the articles of incorporation on behalf of absent shareholders and often act as local representatives for shareholders, typically coordinating with lawyers or accountants to establish the corporation.

Documents that foreign investment corporations should prepare in their home countries:

• Powers of attorney ('procuração'): If the founding shareholder is an absentee shareholder (corporate or individual) located overseas, a power of attorney must be granted to the Brazilian agent (lawyer) responsible for establishing the company
  The power of attorney should specify sufficient authority to represent the founding shareholders at relevant agencies, such as the registry office, the Federal National Tax Service, and the central bank
  The power of attorney prepared overseas must be notarized by a Notary Public and then authenticated by the Brazilian Consulate at the nearest Brazilian consulate
  The notary office confirms the signature of the individual or corporate representative who signed the power of attorney, and the consulate verifies the notary's signature
  It is important to note that the corporate representative signing the power of attorney must be the same as the corporate representative listed in the corporate register, and the company's articles of incorporation must grant the authority to represent the company
  The notary must explicitly confirm that the person signing the power of attorney is the corporate representative.

• Articles of Association of the Quotaholder: If the shareholder of a local Brazilian corporation is a corporation, it is relatively easy to translate and obtain a copy of the corporate register registered at the place of establishment or a 'Certificate of Good Standing' provided by a lawyer in Brazil at a later stage.

Registration procedures and required documents at the Junta Comercial:

• Conducting a preliminary name search (Formulário Pedido de Busca) before formal registration.

• Payment of the preferred inspection fee (Ficha de Cadastro Nacional): Fill out the form on 'Cadastro Web' and download the necessary form.

• One copy of the Request for Registration of the Commercial Registry (Requerimento/Capado Processo).

• One copy of the Ficha de Cadastro Nacional Forms 1 and 2, respectively.

Cost of establishing a corporation:

The cost of establishing a corporation can vary widely depending on the size and industry of the company
It may range from as low as $5,000 to tens of thousands of dollars
In addition to legal and accounting fees, these costs encompass expenses such as communication, translation, copying, and transportation
Consulting expenses related to the establishment of corporations, in addition to translation and registration fees, usually constitute the largest portion.

A branch does not entail the establishment of a local Brazilian company by a foreign entity as an investor
Instead, it operates in Brazil under the name of the foreign company
The establishment of a branch office is governed by Emergency Act No. 2627/40 (Decreto-lei nº 2.627, September 26, 1940, Articles 64-73) and the National Commercial Registration Office (DNRC) Directive No. 81 (Instrução Normativa da DNRC nº 81, January 5, 1999).

To establish a branch office of a foreign corporation, it is necessary to obtain authorization from the federal government (Ministry of Commerce and Industry)
This involves designating a Brazilian resident as an agent and ensuring that the branch has sufficient capital
Typically, these permits take three to six months and are finally issued by a Federal Presidential Decree
The Presidential Decree and related documents are published in the Federal Register, and a copy must be registered with the Junta Comercial to confer legal eligibility to act as a governor.

Establishing a branch in Brazil requires caution and is generally not recommended due to the challenging permit conditions, lengthy procedures, and higher operational costs compared to establishing a local subsidiary
Few foreign companies choose to enter Brazil in the form of branches, except for those that require specific branch installations such as airlines or the approval and management of pharmaceuticals.

In Brazil, there is no legally recognized form of investment entry in the form of a liaison office
Companies can operate from offices equipped with communication facilities for purposes such as market research and identifying potential buyers.

It is a corporation composed of two or more shareholders and is obligated to manage the company as it has been invested
"Corporation" or "S.A." is Portuguese for "Sociedade Anônima" (S.A.), a form similar to "Corporation (Co.)" in the United States and "Public Limited Company (PLC)" in the United Kingdom
A corporation shall disclose annual accounts and minutes of shareholders' meetings every year
In addition, a corporation must reserve 5% of the company's profits as a legal reserve
On the other hand, a limited liability company has no obligation to accumulate
In general, the conversion of a corporate form between a limited liability company and a corporation is simple and inexpensive.

Brazil's limited liability company (LTDA) can be understood as an intermediate form between a general partnership company and a limited company
In the past, it was possible to establish a limited liability company only when there were two or more investors, but under the revised bill in 2019, it became possible to establish it with a single shareholder
The main procedures for establishing limited liability companies (LTDA), which are mainly preferred by foreign companies, are as follows:

• Registration of incorporation and issuance of incorporation number to the local commercial registry office (Junta Commercial)

• Registration of corporate taxpayers and issuance of corporate business registration numbers through the Federal Tax Service (Receita Federal)

• opening a corporate account

• Registering Foreign Capital with the Central Bank

• Registration with the State Tax Office (Secretaria da Fazenda)

• Register for Prefeitura Military

• Go through the process of applying for visas for expatriates to the Ministry of Labor a private business operator

In the case of MEI-Microempreferredor Individual, the establishment process is simple and can be established with small capital, but unlike limited liability companies, individual operators are unlimitedly responsible for the company's debt
In addition, it is not suitable for foreign-invested companies that want to expand their business due to lack of financial liquidity such as bond issuance or listing.