Brazil
Brazilian Civil Code amended to allow LLCs (Limitadas) to be incorporated with a single shareholder
Effective from September 20, 2019, the Brazilian Civil Code allows limited liability companies (“LLCs or Limitadas”) to be incorporated with 1 member or shareholder. Following points to be noted –
- It is applicable to both new and existing LLCs;
- Foreign legal entities are also allowed to incorporate LLCs with a single shareholder;
- The existing LLCs can convert into LLCs with 1 shareholder by updating their Articles of Incorporation. The LLC will still retain the same company registration number, Cadastro Nacional da Pessoa Jurídica (“CNPJ”);
- Sole shareholder LLC is different from individual Limited Liability Company i.e. Empresa Individual de Responsabilidade Limitada (“ EIRELI”).
Implications
- Single shareholder LLC will reduce the process of setting up an entity in Brazil.
- Existing LLCs with 1 or more shareholders can also consider converting into sole shareholders LLCs.
- LLC will be treated as a pass-through entity for US tax purposes.
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