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Breaking Borders: Non-Resident Executives in Brazil
This regulation stems from the conversion of Provisional Measure No. 1.040/2021 into law, with the objective of elevating Brazil's standing in the World Bank's "Doing Business" ranking.
This regulation permits non-resident foreigners to hold management positions in limited liability companies and corporations in Brazil.
Before the enactment of such Law, only residents in Brazil were eligible to occupy these management roles, with the exception of board non-resident members, who already needed to appoint a legal representative domiciled in Brazil. The updated legislation now expands this authorization to encompass officers in corporations and/or directors in limited liability companies.
The Business Environment Law brought the amendment to Article 146, paragraph 2 of Corporate Law (Law No 6404/76) to eliminate the residency requirement for corporation’s officers in Brazil. Instead, the aforementioned article sets forth that a foreign officer must appoint a local legal representative in Brazil empowered to receive legal summons and notification for three years following the conclusion of their management term. This initiative seeks to streamline the inflow of foreign capital and enhance the involvement of international companies in the Brazilian market by reducing bureaucratic processes.
Concerning to limited liability companies, the regulation came into effect under Normative Ruling No. 112/2022 of the Business Registration Manual (issued by National Department of Business Registration and Integration - DREI). This regulation, aligned with the recent legislative amendments, implemented a modification to DREI Normative Ruling No. 81. DREI revised the provisions concerning the foreign residency of the director in the limited company, converting the previous legal restriction into a clear regulatory endorsement.
Therefore, in order to the appointment of a non-resident officer/director be deemed valid, it is essential to address the practical challenges faced by companies, embracing the innovation introduced by the Business Environment Law:
- Issue of the Brazilian Individual Taxpayer’s Registry (CPF)
- Power of Attorney