The Two Primary Entity Structures
Foreign investors and entrepreneurs establishing business operations in Brazil must choose between the LTDA and the S/A entity structures.
The LTDA (Sociedade Limitada)
The LTDA is the most common form of business entity in Brazil and is preferred by small and medium-sized enterprises.
Capital Requirements
There is no statutory minimum capital requirement for establishing an LTDA in Brazil.
Ownership and Management
An LTDA may have one or more members, including individuals and legal entities, with no restrictions on foreign ownership.
Limited Liability and Piercing the Veil
Members of an LTDA have limited liability, with protection limited to their committed capital contributions.
The S/A (Sociedade Anônima)
The S/A is Brazil's corporate structure, historically used by larger companies and entities seeking to raise capital from multiple investors.
Capital Requirements
An S/A must have a minimum capital of R$1,000, with capital divided into tradeable shares.
Ownership and Governance
An S/A is owned by shareholders with voting rights in general assemblies that elect the board of directors.
Comparison: LTDA vs. S/A
| Feature | LTDA | S/A |
|---|---|---|
| Minimum Capital | None | R$1,000 |
| Members/Shareholders | 1 or more members | 1 or more shareholders |
| Foreign Ownership | Permitted | Permitted |
| Governance | Flexible, member or manager-run | Formal: Assembly, Board, Directors |
| Transferability of Ownership | Restricted by operating agreement | Shares freely transferable (unless restricted) |
| Accounting & Reporting | Simpler requirements | Stricter requirements, annual financial statements |
| Transferability to Public Markets | Not possible | Possible with regulatory approval |
Foreign Ownership and Investment Registration
Both LTDA and S/A structures are open to foreign ownership, and foreign investment must be registered with the Central Bank's RDE-IED.
Tax Considerations
Both LTDA and S/A entities are subject to corporate income tax, with the specific treatment depending on the chosen tax regime.
Foreign Branches vs. Subsidiaries
A foreign company can operate in Brazil through a subsidiary (LTDA or S/A) or a branch, with subsidiaries offering better liability protection.
EIRELI: The Single-Member Entity Option
Brazil permits the EIRELI (single-member limited liability entity), suitable for foreign individuals operating independently in Brazil.
Closing Thoughts: Which Structure to Choose
Choosing between LTDA and S/A depends on your specific operational, governance, and investment needs.
ZS Advogados Associados advises on this topic — feel free to reach out if you have questions about Brazilian entity formation or corporate structure selection.
Contact ZS Advogados at wa.me/5518920018773 or contato@zsassociados.com for consultation.
About the Author
Zachariah (Zac) Zagol is a Brazilian attorney (OAB-licensed), practicing at ZS Advogados Associados. He advises international clients on Brazilian immigration, real estate, corporate, and family law, with over a decade of experience since 2012.