Guidance by Jurisdiction – PRIVATE
Antônio Fernando Guimarães Pinheiro
Renata Mangualde Felizardo
Patrícia Maria Costa de Vilhena
Lawyers of PINHEIRO, MOURÃO, RASO E ARAÚJO FILHO ADVOGADOS
3. Foreign Investment Restrictions (eg CFIUS or similar)
In general, there are no restrictions. However, there are certain prohibitions and limitations
imposed on foreign capital in the Brazilian economy. Prohibitions: nuclear energy; health
services, post office and telegraph services and the aerospace industry. Limitations:
ownership of rural lands; business in frontier areas; public air services, media companies
(newspaper, magazines and other periodicals, radio and television); financial institutions;
securities market; mining; and concessions.
4. Exchange Control or Currency Regulations
Almost every kind of transfer from/to Brazil is permitted and is contemplated in the applicable
regulations. Foreign capital must be registered with the Central Bank, upon entry of the funds in
Brazil. The remittance of profits abroad, capital repatriation, and profit reinvestment are subject
to control by the Central Bank of Brazil. There are also regulations to avoid money laundering.
5. Grants or Incentives
There are government incentives for specific projects in Brazil. In general, a foreign has equal
access to such incentives as a local investor. Usually incentives take the form of subsidized
financings and tax exemptions or reductions rather than cash grants. The Federal government
has incentive programs to promote domestic growth such as job creation, investment in
underdeveloped regions, investments in technology and innovation, etc. In addition, until 2023,
companies located in the Northeast region and the Amazon region may benefit from certain tax
incentives. Eligibility for such incentives depends on government approval of the project. There
is also a tax incentive applicable to Brazilian companies engaged in manufacture of goods and
provision of IT and automation services.
BNDES, the National Bank for Economic and Social Development, provides long-term low cost
financings to Brazilian companies.
Since the beginning of the year the Federal Government decided to support the Investments
Partnership Program (PPI) created by Law No. 13.334 of 2016. Such program aims to expand and
accelerate investments in infrastructure and other areas with the participation of the private
sector. The Ministry of Infrastructure is responsible for the program together with BNDES.
The main objects of the program are:
• Expand investment and employment opportunities and stimulate technological and industrial
development, in harmony with the country's social and economic development goals;• Ensure the expansion with quality of the public infrastructure, with tariffs appropriate to the
• Promote fair and fair competition in the celebration of partnerships and the provision of
• Ensure legal stability and security of contracts, with the guarantee of minimal intervention in
business and investment;
• Strengthen the regulatory role of the State and the autonomy of state regulatory entities.
The Federal Government expects to attract in the coming years an average investment of R$208
billion in infrastructure, especially in airports, ports, railroads and highways.
6. Management Representation and/or Consultation in relation to Corporate Transactions
Generally employees are not entitled to management representation and/or to be consulted in
relation to corporate transactions (such as redundancies and disposals).
Some former state-owned companies that were privatized in the 1990’s had to include
employee’s representatives in their management.
7. Individual Employment Contracts – Termination Regulation
Pursuant to the Labor Law both the employer and the employee can terminate an individual
employment contract. The compensation payable to the employee due to contract termination
may vary depending on the initiative for termination as well as the term of the employment
previously agreed upon by the parties. All employees will have the right to receive the sums
deposited in the Guarantee Fund for Length of Service (“FGTS”) plus a fine of 40% in the case of
termination of the labor contract without cause. It is important to note that pregnant women,
members elected for the labor commission to prevent labor accidents and the employees who
have suffered labor accidents or acquired labor illnesses are protect from dismissal from a
certain period of time. Both employer and employee can terminate an individual employment
contract. The compensation payable to employee due to contract termination may vary
depending on the party’s initiative for termination and the term of the employment agreement.
For employees working in the same company for more than one year, the ratification of the
termination-related compensation shall be obtained before a representative of the
correspondent employees’ union.
8. Redundancies/Layoffs Regulation
Historically, redundancies/layoffs were not expressly regulated by the Labor law. Precedents
based on international conventions set forth some requirements for redundancies such as the
existence of an objective reason (for example, an economic reason) and part of the doctrine was
in favor of the need of prior negotiation with the unions. The Labor Reform implemented
through Law No. 13.467 of 2017 foresees the possibility of redundancies and lay off in certain
conditions without the need of participation of the labor union in the process. However, it is
worth mentioning that the effect of such provision was not yet finally confirmed by court
decisions and, therefore, may be subject to review because the main purpose of the Labor Law
is to protect employment.
9. Tax Charges – Sales of Shares/Assets and Issues of Shares
(i) for sales of shares: income tax on the capital gain, if any;
(ii) the sale of real estate implies the Inter-Vivos Transfer Tax (“ITBI”), a tax assessed by the
municipalities. The rate is established by each Municipality. For instance, the rate of the
Municipality of São Paulo is generally 2%, applied on the property’s value;
(iii) generally, there is no tax over issuance of shares.
10. Antitrust Jurisdiction triggering events/thresholds
In accordance with Law No. 8.884/94, altered by Law No. 12.529/11, and the Inter-ministerial
Ordinance No. 994/12, the previous notification and review of economic concentration acts by
CADE is mandatory if, cumulatively, one of the parties has recorded, in the last balance sheet,
annual gross sales or volume of transactions in the country in the year before the transaction,
equivalent or superior to R$750.000.000,00 (seven hundred and fifty million Reais) and one of
the other parties has recorded, in the last balance sheet, annual gross sales or, within the same
period, volume of transactions in the country, equivalent or superior to R$75.000.000,00
(seventy five million Reais).
11. Signing/Closing Meetings Documents – Private Company Share Sales
The documents to be produced depend on the transaction and the type of legal entity involved.
In case of a Limited Liability Company (“Sociedade Limitada”) and one member companies
(“Sociedades Unipessoais” e “EIRELI”), the documents commonly produced are: (i) Quota Purchase
Agreement; (ii) Amendment to the Articles of Association (which must be registered with the
Registry of Commerce); (iii) board resolutions; (iv) resignation letters for current directors; (v) new
service agreements for strategic officers.
In case of a corporation (“Sociedade Anônima”), the documents commonly produced are: (i) Share
Purchase Agreement (with the concomitant registration of the acquisition in the Share Transfer
Book and in the Share Register Book); (ii) board resolutions; (iii) resignation letters for current
directors; (v) new service agreements for strategic directors; (vi) Shareholders Agreement.
12. Acquisitions – Jurisdiction Restrictions (signing/closing) & Advantages
Yes, it can take place in a foreign jurisdiction, but there is no potential advantage in doing so.
Documents signed abroad need to be notarized and subsequently legalized with the appostile
stamp set forth in the Hague Convention, and shall comply with the Brazilian laws (including
public sworn translation into Portuguese and registration formalities) in order to be valid in
13. Gap Requirement between Signing and Closing
No specific requirement: negotiation issue.
14. Regulatory Requirements – Deposit Monies & Third-Party Intermediary
15. Proof of Identity and Authority to Sign
Yes. Corporate parties will usually be required to produce a certified board resolution approving
the transaction and authorizing an individual director (or directors) to execute the documents
on behalf of the legal entity.
16. Different Execution Formalities for Document Types
Yes. Execution of private agreements is different from the execution of deeds which must be
made before a notary public. A deed is required for property acquisition and certain contracts.
17. Document Execution Formalities for Incorporated Companies
The company is to be represented by its legal representative(s). Depending on the Bylaws or
Articles of Association a representative can either sign individually or jointly with another
representative or an authorized representative (attorney-in-fact).
18. Formalities for Execution of Documents – Individuals
Simple contracts can be entered into orally. If in writing the signature is required. To be valid as
executive instruments the contracts must be signed in the presence of two witnesses. Deeds
need to be signed in the presence of a Notary Public.
19. Formalities for Execution of Documents – Foreign Companies
Documents must be executed by the company’s representative duly empowered to do so. Such
documents must be notarized and legalized with the Apostille stamp set forth in the Hague
Convention. The translation into Portuguese may be required for certain purposes.
20. Notaries – Share and Asset Purchases Role / Types of Documents / Director Appointments
A notarial deed is required solely for the purchase and transfer of real estate and the creation of
liens and mortgages. Notaries are not involved in the purchase of shares.
21. Notary Power & Deal Terms
22. Notaries Fee – Level / Negotiable?
The notarial fees are fixed by law and, therefore, are not negotiable.
23. Notary Impact on Transaction Timetable
24. Appointment process for changing stockholders (any tax payable) officers and directors
Change of stockholders is done through the respective registration in the Stock Transfer Book.
Appointment of officers is done through stockholders resolutions and the appointment of
directors can be made, depending on the bylaws of the company, through stockholders or
25. Private Limited Company – Transfer Title to Shares
In case of a limited liability company (“Sociedade Limitada”) or a single member limited liablity
company (“Sociedade Unipessoal” e “EIRELI”) the following documents are executed: (i) Quota
Purchase Agreement; and (ii) Amendment to the Articles of Association of the company (which
must be registered with the Register of Commerce).
26. Appointment to execute documents at signing/closing meeting & requirements
This can be done through a power of attorney with specific powers. In some cases the certified
signature is required. The form of the power of attorney (private or public) must be consistent
with the form of the contract (private or public, deed, for example) for which the same power of
attorney is granted. The appointment of an attorney-in-fact must be in compliance with the
Articles of Association or bylaws of the legal entity.
27. Powers of the Attorney Restrictions
Certain acts, as a testimony of an individual, for example, cannot be delegated.
28. Evidence of Due Execution – Faxed/emailed Documents Admissible in Court?
Yes. Faxed or e-mailed documents could be admissible in court as evidence of due execution,
but could be challenged by the other party if no other evidence is provided.
29. Digital signatures admitted as evidence of execution?
No specific legislation has been enacted regarding digital signatures. However, the digital
signature of an agreement is admissible as evidence of its execution pursuant to the Civil Code
and the Civil Procedure Code. For the filing of corporate acts some Registers of Commerce
already use digital signatures.
30. Execute Documents in Counterpart?
This procedure is permitted and the counterparts will be taken together as evidence of the
agreement. The conclusion of the agreement will be evidenced by the signature of both parties.
To be deemed as an extrajudicial executive instrument it must be executed in the presence of
31. Strictly Enforced “Undertakings”?
This is permitted for an individual (e.g. depositary) but not in the condition of a lawyer.
However, it is not common practice for lawyers to give “undertakings” that are strictly enforced
32. Closing mechanism (subject to fulfill of outstanding formality)?
No specific rule exists regarding how a closing takes place. Therefore, parties can agree upon the
conditions for closing (whether precedent or subsequent). Usually, closing is subject to
fulfilment of conditions precedent. If closing is subject to fulfilment of conditions subsequent,
the transaction will be null and void in case the conditions are not fulfilled.
33. Share Sale closing formalities?
In case of a limited liability company (“Sociedade Limitada”) or a single member limited liablity
company (“Sociedade Unipessoal” e “EIRELI”), the sale of shares must be formalized through an
Amendment to the Articles of Association. Such document must be registered with the State’s
Register of Commerce. In case of a corporation (“Sociedade Anônima”) the purchase/sale of
shares must be recorded in the corporation’s Share Transfer Book and Share Register Book.
34. Required due execution legal opinions, requirements, rules concerning the giving of opinions?
There is no such a requirement for local transactions. However, legal opinions will usually be
requested whenever a foreign entity is involved.
35. Share & Asset Sales Timetable
In transactions involving a simple structure, share or asset sales can be closed within 2 or 3
months. For more complex structures, such as those involving approvals of regulatory bodies or
public held corporations, the transaction may extend for up to 8 (eight) months or more.
36. Non-compete enforceable? If so, how long for?
Yes, such clauses are enforceable provided that some conditions are fulfilled (i.e. payment for
the non-compete and term delimitation). Usually, non-compete clauses are agreed upon for a