THE MUST -DO ON FOREIGN BUSINESS EXPANSION IN BRAZIL

During the last decades, Brazil has risen to become one of the biggest economies of the world, being considered a member of the BRICS (Brazil-Russia-India-China-SouthAfrica), former developing countries nowadays taking shape of a state with a fully grown and strong economy. This process has been mainly due to domestic development efforts and business boosting as well as high foreign investment rates during many years.

This foreign investment (majorly being Foreign Direct Investment) is consequence of many foreign companies putting their foot in Brazil, as it provides a very large market and many opportunities for the expansion of the company. The most common way for foreign companies of doing it is investing in Brazil as shareholder of a Brazilian subsidiary. However, in order to so and making a foreign company a partner/investor of a Brazilian subsidiary, they must be legally represented by a permanent resident in Brazil. According to Brazilian law, it will have to take express powers to respond by the company and receive citations in actions filed against it on its behalf.

The former explained position is called a legal representative, which can also be known as a corporate attorney. It will receive the attributions of the partner or foreign shareholder in Brazil, with the duty to carry out various acts in his name before federal, state and municipal public entities and authorities, so that the foreign company exercises rights to the Brazilian company.

In addition, the Brazilian Civil Code provides that the mandate is exercised when someone receives from another person the powers to perform acts or administer interests on their behalf. Therefore, a foreign company wishing to be a partner in a company in Brazil will need to appoint a Brazilian or foreign individual resident in the country with a permanent visa. The person then will exercise the corporate acts of representation of the company before entities and public bodies, especially in cases to receive judicial notifications on behalf of the company.

For this reason, some courts consider that the legal representative is responsible for civil and criminal liability for any non-compliance with the rules defined by law, contract or bylaws, in order to compensate for damages and losses incurred by foreign partners. On the other hand, the legal representative of the foreign company may also be liable for legal proceedings against the legal entity, such as labour and criminal matter, including the attachment of its personal property, and must therefore be fully aware of any liabilities and debts, is responsible for the default of the foreign company in Brazil.

Hiring and choosing a legal representative supposes a high responsibility and needs a profile of a skilled, highly educated and engaged professional, so it is both difficult to find really suitable candidates for the position and at the same time ready to take up the responsibility. In consequence, the key issue relies on making a very good selection process and having a good network of contacts in the Brazilian Business sector.

In adminex Brazil we provide the needed know how of the country and previous knowledge of the labour pool in the business sector to help the willing foreign investor making the best outcome from this key process in the endeavour of expanding to Brazil. If you require further information, please do not hesitate to contact Mr Gabriel Jacintho -General Manager of adminex Brazil (gabriel.jacintho@adminex.com).