Does a Brazilian company need a resident director? The rules for foreign groups

“Do we need a director living in Brazil?” is one of the first questions a foreign group asks when it plans a subsidiary. For years the practical answer was yes. Since 2021 and 2022, the law and the commercial registry rules have changed, and the answer is now more nuanced: the administrator can live abroad, but someone in Brazil must always be able to receive legal notices. This short guide explains what the rules require, who those local representatives are, and what to consider beyond the minimum the law asks for.

The short answer

• Limited liability company (Ltda): the administrator may reside abroad, provided he or she grants a power of attorney to a representative in Brazil.
• Corporation (S.A.): a director or board member resident abroad can be elected, but can only take office after appointing a representative resident in Brazil.
• In both cases, the foreign parent company that holds the equity also needs its own representative in Brazil.

Ltda: what the registry requires

The Ltda is the format most foreign groups use for their Brazilian subsidiary. Its registration rules are set by the National Department of Business Registration and Integration (DREI) in the Limited Company Registration Manual, an annex to Normative Instruction DREI 81/2020. Since the 2022 amendment (Normative Instruction DREI 112/2022), the manual expressly states that the administrator of a limited company may reside abroad.

The condition is a power of attorney granted to a representative in Brazil, filed with the registry together with the appointment or in a separate filing. The representative must have powers to receive service of process and notices in judicial and administrative proceedings, for at least three years after the end of the administrator’s term.

S.A.: the rule in the Corporations Law

For corporations, the rule is in the law itself. Law 14,195/2021 rewrote article 146 of the Corporations Law (Law 6,404/1976). Only individuals can be elected to management bodies. A director or board member resident or domiciled abroad can only take office after appointing a representative resident in Brazil, with powers, for at least three years after the end of the term, to receive:

• service of process in lawsuits based on corporate law; and
• service and notices in administrative proceedings brought by the Brazilian Securities Commission (CVM), in the case of publicly held companies.

In other words, the election can happen, but the director cannot exercise the role until the representative is in place.

The foreign parent needs a representative too

This is a separate requirement from the one about the administrator, and it is easy to confuse the two.

The foreign company that holds the quotas or shares must be enrolled in Brazil’s corporate taxpayer registry (CNPJ). Under the Federal Revenue’s CNPJ rules (Normative Instruction RFB 2,119/2022, article 6), the representative of a foreign entity must be its attorney-in-fact or legal representative domiciled in Brazil, with powers to manage its assets in the country and to represent it before the Federal Revenue. If the foreign entity does not keep a reachable representative, its CNPJ can be declared unfit (inapta), which blocks practically everything else (article 38).

The commercial registry has an equivalent rule. Under Normative Instruction DREI 81/2020, article 12, as amended in 2022, a quotaholder or administrator resident abroad must file a power of attorney to a representative in Brazil, and a foreign company that holds equity in a Brazilian company is subject to the same rule. In a corporation, the Corporations Law also requires a shareholder resident or domiciled abroad to keep a representative in Brazil with powers to receive service of process in actions based on that law (article 119).

The same person or firm can hold several of these roles, as long as each power of attorney gives the specific powers required.

Who can be the representative

The rules require a person resident or domiciled in Brazil with the specific powers listed above. In practice, groups usually choose one of three options:

• A local executive of the subsidiary, when there is one;
• A law firm or an accounting and advisory firm, which offers continuity and is used to receiving official notices; or
• A trusted individual, an option that tends to create problems when that person changes jobs or leaves the country.

Whatever the choice, the power of attorney issued abroad must be legalized (by apostille, for countries that are party to the Hague Convention) and translated by a sworn translator before it is filed.

Legal minimum versus what works day to day

Being allowed to run a Brazilian company from abroad is not the same as it being practical. Much of the routine still depends on someone with authority in the country:

• Banks run their own know-your-customer reviews and usually want to identify the people who sign for the company.
• Digital certificates (ICP-Brasil) are needed to sign tax filings and access government portals, and issuing them requires identity validation of the holder.
• Tax notices and court summons often have short deadlines. A representative who only forwards documents abroad, without authority to act, wastes days.
• Contracts, leases and employment move faster when someone in Brazil can sign.

That is why many groups combine an administrator at headquarters with a local co-administrator or a broad power of attorney to a trusted local professional, defining clearly in the articles of association which acts need joint signatures.

A checklist before you appoint

1. Decide whether the administrator will be at headquarters, in Brazil, or both.
2. Map each representation required: foreign quotaholder (registry and CNPJ), administrator resident abroad, and any S.A. shareholder or director abroad.
3. Draft each power of attorney with the specific powers and minimum term the rules require.
4. Plan the legalization and sworn translation of documents issued abroad.
5. Set an internal routine to renew powers of attorney before they expire and to replace representatives who leave.

For the full process of opening the company, see our guide on how to set up a subsidiary in Brazil.

How Solidy can help

Solidy already serves subsidiaries of multinational companies in Brazil. Our consultants help foreign groups design the management and representation structure, keep registrations and powers of attorney current, and handle the accounting, tax and reporting routine of the subsidiary. Talk to our consultants.