The Limitada

Founding a subsidiary in Brazil – the Limitada (Ltda.)


The Brazilian equivalent to the German GmbH is the Limitada (Ltda.). She is both a legal entity with limited liability as well as a partnership. In contrast to its alternatives, the incorporated branch of a foreign company or the one-man limited liability company “EIRELI”, the Limitada distinguishes itself through granting more flexibility, causing less bureaucratic effort and requiring no capital contribution.



The Limitada can be founded by a minimum of two shareholders who can be either Brazilian or foreign born, legal or natural entities residing either in Brazil or abroad. In order to form a Limitada, no shareholder has to be Brazilian. However, foreign shareholders must register in Brazil with the tax authorities to retain a CNPJ as a legal entitie or respectively a CPF number as a natural entity.

Additionally, an authorized recipient residing in Brazil has to be appointed to receive potential legal claims and act as the company`s representative vis-à-vis the tax and fiscal authorities. His power of representation has to be notarially certified and legalized by the Brazilian Consulate in Germany.

Furthermore, a managing director needs to be appointed who is a natural entity either residing in Brazil or possessing a permanent resident permit. This enables foreigners who fulfill this premise to become managing directors in Brazil as well. The name of the managing director has to be noted while registering the Limitada with the trade register. There can be more than one managing director, too.


Organs of the Limitada

There are only two obligatory organs of the Limitada: the shareholder meeting and the managing director(s). The former has authority and approval rights over the latter. The shareholder meeting has to take place at least once a year within the first four months in order to approve the annual accounts and exonerate the managing director(s).

The managing director(s) have to be registered within 10 days of their appointment. With view to their rights and responsibilities the Brazilian law is similar to the German provisions.

Note: In Brazil, the managing director is personally responsible and liable for paid social contributions (FGTS and INSS) as well as labor law violations. Therefore, many managing directors request a D&O insurance or the exemption from the liability through the shareholders.

Furthermore, a control council, an administrative council and an advisory board can be put in place.



The Limitada`s principal office has to be in Brazil but further branches abroad are possible. Companies that do not have an address at the time of formation can use external service providers offering them “virtual offices” – that is an address to be used for registration – until they have found a permanent address.

The corporate purpose of the Limitada can theoretically be anything legal and not violating moral principles. The purpose has to be outlined in detail in the partnership agreement in order to both describe and limit the power of representation of the managing director(s).

In contrast to the one-man limited liability company “EIRELI” there is no minimum capital requirement except for import-export businesses.

In contrast to Germany, the purpose of the company has to be visible through the company`s name. A registration in the trade register to protect the name is carried out automatically only in the federal state of registration. Registrations in other federal states have to be implemented individually. Additionally, companies can use fantasy names for brands or products which have to be registered with the trademarks and patent office.

Note: If the abbreviation “Ltda.” Is not used for communication or transactions the Limitada can lose their limitation of liability which makes the shareholders personally liable!

The shareholder agreement has to be put in writing but does not need to be notarially certified. It needs to include the following elements:

  • Name, nationality, civil status, occupation and place of residence of the shareholders who are natural entities
  • Designation, nationality and location of the shareholders that are legal entities
  • Designation of the partnership, the corporate purpose, the company`s location and the potential limitation of its existence
  • Volume of capital consisting of contributable assets in national currency
  • Percentage of capital of each shareholder and how it has to be raised
  • Potential efforts shareholders are responsible for
  • Persons in charge of administrative tasks within the partnership including their responsibilities
  • Participation of wins and losses of the shareholders

Furthermore, the German-Brazilian Chamber of Commerce recommends to include the following aspects:

  • Type and due date of initial contributions
  • Fiscal year and balance sheet
  • Usage of profits
  • Share transfer
  • Planned exclusion of shareholders
  • Place of jurisdiction


Founding Process

In General, the Limitada has to be registered with the federal government, the municipality and usually the respective state as well. The registration process with the federal state takes approximately two weeks, with the municipality it depends on the respective fiscal authority and with view to the state the process can take between two and four weeks. Altogether, the registration process takes a minimum of four to six weeks.

  1. The partnership agreement as well as the power of attorney for the authorized recipient have to be created in Portuguese and need to be signed from the shareholders, two witnesses and a Brazilian attorney.
  2. If a shareholder is a foreign legal entity its registration in the trade register as well as the legitimization of a representative and authorized recipient residing in Brazil have to be proven.
  3. After signing the partnership agreement the Limitada has 30 days to register with and turn in the needed documents to the trade register (Registro Público de Empresas Mercantis) and the respective trade authority (Junta Comercial).

Note: In São Paulo the registration process begins with the fiscal authority (Receita Federal) where the Limitada applies for the tax number CNPJ. The application will be automatically forwarded to the state tax authority.  If the state tax authority does not impose any conditions the inscription into the trade register can be applied for which results in the issuance of the inscription number NIRE. Only with this inscription the Limitada gains her own legal personality.

  1. Further registrations can become necessary. For example with the central bank in case of foreign investments, with the municipality (Cadastro do Contribuinte Municipal) for a business license or for service providers for the municipality tax ISS. Additionally, employees have to be registered with the statutory social insurance INSS. Intellectual property can be registered with and thus protected by the Brazilian trademarks and patent office INPI.


There are two alternatives to the Limitada: the incorporated branch of a foreign company and the one-man limited liability company “EIRELI”.

The incorporated branch of a foreign company is seldomly used in Brazil because it takes longer to be established, it is bureaucratically more complex and economically more risky than the Limitada. This is based on the premise to receive the permission of the Brazilian executive authorities prior to founding it as well as their permission for any changes to the partnership agreement or the bylaws. In contrast, in order to make changes to the Limitada a majority of shares voting respectively is sufficient. Furthermore, the incorporated branch has to publish the activities of their managing director(s) and the partnership is liable with their entire capital for the branch, not just the capital allocated to the branch itself.

The one-man limited liability company “EIRELI” is an individual company with limited liability that can only be founded by natural entities. The individual shareholder has to provide the entire capital, which currently is 100 times of the highest minimum wage, approximately 21.000 Euro. Due to the shareholder restriction to natural entities only, most companies choose the Limitada over the EIRELI.

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