Enter the brazilian market

How to enter the Brazilian market:

The main ways to enter the Brazilian market are through:

  • Sales representation or a distribution network,
  • setting up a business, subsidiary or branch
  • acquire a company
Entering the Brazilian market

Entering the Brazilian market

Setting up sales representation and distribution networks is challenging even though it saves costs when compared to the incorporation of a subsidiary. The challenges are mostly related to finding the right person or company and the potential lack of control over the way third parties distribute your products and deal with your trademarks.

In starting up a company, most likely you will have to decide if you start a microcompany, a Ltda or a S/A. There are some key differences with the type of Limited’s and corporations you have in the rest of the world. Another way to set up an off-shore company.

Acquiring a company presents its own challenges as well. M&A activity in Brazil increased sharply during the last few years. Most transactions in Brazil are in the range of US$10-US$50 million. Some of the issues in company acquisition are:

  • informal practices (income not recorded)
  • unregistered employees
  • aggressive tax planning
  • low quality of financial information and controls
  • high number of tax lawsuits
  • succession risks

Thus, a high quality due diligence is a must in the pre-acquisition phase.

 

Agents/Distributors

Differences sales representation (agents) and the distribution contract The sales representation and the distribution contract are NOT identical. It is important to understand the differences. Sales representation is FEE-based, they do buy your product Distributors purchase your products and resell them Both concern the contracting of mediators engaged in the distribution of your products. In the …

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Micro Empresa

A “micro company” (“micro empresa”, “ME”). This company type is chosen by many professionals like independent consultants or university lectors but also small businesses like carpenters or plumbers. Consultants or speakers choose it because their clients often need to issue a fiscal document for the services paid, which obliges the service provider to have a …

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Ltda

The limited partnership (“Limitada”, “Ltda”). This is the standard choice for most business partners joining forces here, and Ltdas are also found among affiliates of large multinational companies. Traditionally, it is assumed that a partner (“sócio”) works in the company, in which case he is often assigned as a managing partner (“sócio-administrador”) in the charter of …

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Setting up a business in Brazil

Setting up a Business in Brazil An introduction to, and explanation of the necessary steps to setting a business in Brazil. Includes information on the different types of business structure and the legal process involved in setting up a Brazilian business or as a self-employed worker. Incorporating a company in Brazil will take a minimum …

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Eireli

Eireli (Single-holder limited-liability firm)

Single-holder limited-liability firm (Empresa Individual de Responsabilidade Limitada) Since January 2012 it is possible to set up a single-holder limited-liability company in Brazil, the so-called Eireli. The capital requirements are hundred minimum salaries fully paid (R$ 62.200; January 2012). The liability of the company director is ‘limited’ in that the company’s finances are separate from personal finances …

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M&A

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Sociedade Anonima

A joint-stock company (“sociedade anonima”, “S.A”). The beauty of the SA is that it has clear structures governed by the civil law: there are shareholders, there is a board of elected representatives of shareholders (“conselho administrativo”), and then there are managers, supposedly executing the general strategy deliberated and decided by the board. But the SA …

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Offshore company

Offshore company The use of an offshore company is perfectly legal in Brazil. And if you think that this is stuff for “big guys” only, let me clarify that it is simpler and less expensive than you may think to set up a structure like this, which is especially interesting when you have foreign investors clearly interested …

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