There are two main kinds of companies in Brazil, the limited liability companies (“sociedades limitadas”) – a type of company in which equity interests are quotas issued by the company – and the joint-stock corporations (“sociedades anônimas”) – a type of company in which equity interests are shares issued by the company. In general, limited liability companies are less bureaucratic than joint-stock corporations, because there are specific publication costs for the joint-stock corporations that do not exist for limited liability companies. Furthermore, limited liability companies do not have the duty to publish their financial statements.
On the other hand, joint-stock corporations may be more flexible than limited liability companies relative to the kinds of agreements that may be executed by and among the shareholders. Indeed, joint-stock corporations may, for instance, participate in the Brazilian capital market, that is, issue securities that may be traded on the Brazilian capital market. It is true that limited liability companies may issue securities on certain very specific cases. However, they do not usually do this.
There may be only one quotaholder or only one shareholder on limited liability companies and on joint-stock corporations. However, in order for the joint-stock corporation with a single shareholder to be operating legally, the sole shareholder must be a Brazilian company. Therefore, it is usually easier for a foreign entity or individual to incorporate a limited liability company in Brazil: frequently, there are no restrictions relative to the nationality of the foreign entity or individual and the limited liability company may have a sole quotaholder. The exceptions to this rule depend on the business area of the company to be incorporated. For instance, newspapers may only be owned by a Brazilian entity or individual (therefore, in this case, a foreign entity or individual would need to incorporate a company in Brazil that would then own the company that would operate the newspaper business).
