Brazil looks to reduce bureaucracy and stimulate foreign investments with new Eireli rules

Over the last few years, the Brazilian government has been working to reduce bureaucracy, speed up processes and facilitate the injection of foreign investments in the local economy. Now the country takes another important step in this direction.

In early March, the Department of Business Registration and Integration (DREI) – a body subordinated to the Special Office for Micro and Small Companies, announced changes to the rules for establishing a Single Member Limited Liability Company (LLC). Among them, an important change allows the opening of a company with a single foreign partner, either as an individual or legal entity.

Single Member Limited Liability Company (Eireli) – single-partner company

Created in 2013, the single-member LLC emerged to allow that the company be established with only one partner. Although it was an important breakthrough towards debureaucratization when it was created, the norm did not contemplate the possibility of a foreign partner creating a company, leaving a gap relative to foreign investors.

As a result, the foreigner interested in opening a company in Brazil still needed at least one other partner. This practice made processes costlier, entailed in costs with the remittance of foreign currency and dividends, which needed to be closed separately and more importantly, could make strategic decisions difficult for a business. Being dependent on a minority partner could sometimes be risky for the business. Given this scenario, the efforts required to open a company in Brazil weren’t always worthwhile for the investor.

Investing in Brazil has become easier

Reflecting the demands of the market and of foreign investors, and the interest of such investors in establishing themselves in Brazil, DREI published normative instruction 38 on March 6, 2017. The instruction goes into effect on May 2, 2017 and determines that the Eireli (LLC) can be constituted by a natural person as well as a legal entity, either national or foreign.

More than facilitating, reducing costs and reducing the bureaucracy of foreign investments in Brazil, the decision guarantees autonomy for the partner and more security for the investor.

As Brazil prepares to resume growth, such a decision is the stimulus that foreign investors sought. The scenario is improving and Brazil is becoming less bureaucratic. This might be the time to invest in Brazil.

If you need any further information about Eireli, please talk directly to one of our experts by clicking here.

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Vanessa  Mello
Opinion

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