Brazil has stood out as a market with growing attraction for foreign investment, driven by several opportunities in its vast territory. For companies and individuals from other countries seeking to operate or invest in Brazil, understanding the legal and regulatory obligations is paramount. A central aspect of this process is understanding how the legal representation of a foreign company in Brazil works.

The recent discussion involving the Federal Supreme Court (STF) on the need for legal representation for social media platforms demonstrates the current relevance of this topic. And anyone who is not prepared to establish adequate legal representation could find themselves in serious trouble.

Representation is a legal relationship through which powers are conferred by law or power of attorney to a certain individual who directly covenants with a third party, through an act carried out on behalf of the principal. In the context of foreign companies in Brazil, legal representation refers to the designation of an individual residing in Brazil to act on behalf of that entity before third parties, including government and judicial bodies.

For foreign companies operating or planning to operate in Brazil, legal representation is more than a formality; it is a necessity. Failure to have adequate legal representation can result in serious consequences, as exemplified by the temporary suspension of X (formerly Twitter), including fines, operating restrictions and suspension of activities in the country.

Legal representation of a foreign company is mandatory in Brazil in the following situations, according to the legislation:

• Foreign companies wishing to establish themselves in Brazil through a branch, subsidiary, agency or establishment must maintain a representative in Brazil with full powers to represent the company, especially before the competent public authorities and receive legal summons — a requirement provided for in article 1,138 of the Civil Code and detailed in Normative Instruction DREI No. 77/20202;
• Foreign investors, whether individuals or legal entities, who wish to invest in Brazil and operate in Brazilian companies as partners, shareholders, administrators, or directors residing abroad are required to appoint a representative residing in Brazil to receive legal summons and represent them before public agencies; and
• In order to invest in fixed and variable income markets, foreign investors must appoint a representative in Brazil, responsible for registering transactions and obtaining registration with the Securities and Exchange Commission (CVM).

The legal representative is the central and obligatory figure for foreign companies wishing to operate in Brazil. The legal representative is designated in the company’s articles of incorporation (in the case of opening a subsidiary or branch) or by means of a power of attorney, and has the power to represent the legal entity in all its acts before the Brazilian authorities. This includes bodies such as the Internal Revenue Service, the Board of Trade and the Central Bank, among others.

The legal guardian, on the other hand, has more limited powers and responsibilities compared to the legal representative, and can, for example, act as the person responsible for the CNPJ before the Brazilian Federal Revenue Service.

It is important to note that, in the context of foreign investors in Brazil, the roles of legal representative and legal guardian often merge. This is because, in many cases, the legal representative takes on the duties and needs of a legal guardian, which results in more centralized control for the company on Brazilian soil.

The legal representative of a foreign company in Brazil must be a natural person who meets the essential requirements set forth by law. Currently, Brazilian law requires that this representative be domiciled and reside in Brazilian territory. Furthermore, it is essential that the legal representative be vested with powers to represent the company before the competent public authorities and resolve matters definitively on behalf of the foreign company, including the ability to receive court summonses.

Given the complexity and importance of foreign companies establishing legal representation in Brazil, PLBrasil Legal Representation presents itself as a strategic partner to assist throughout the process. With an experienced, bilingual and multidisciplinary Legal Representation team, we offer services that include corporate legal representation for individuals and legal entities, board members, non-resident directors, among many others.

The PLBrasil Group also stands out for its integration with other areas of activity, assisting with the legalization essential for starting and maintaining the business, accounting and financial aspects and sworn translation of all necessary documents. Our clients also have access to their own Digital Platform, where all corporate documents and history are concentrated and permanently accessible, with monitoring of deadlines and obligations.