Corporate Law in Brazil

Introduction

Corporate law in Brazil (Direito Societário or Direito Empresarial) is primarily governed by Law 6.404/1976 (the Corporations Law or Lei das S.A.), which regulates publicly traded corporations (sociedades anônimas or S.A.) and, by subsidiary application, closely held corporations. The Brazilian Civil Code of 2002 (Articles 981-1,152) governs other business entities, including limited liability companies (sociedades limitadas), general partnerships (sociedades em nome coletivo), and limited partnerships (sociedades em comandita). The Securities and Exchange Commission of Brazil (CVM) oversees the capital markets and regulates publicly held companies.

Types of Business Entities

Sociedade Anônima (S.A.)

The sociedade anônima (corporation) is the most significant business entity for large enterprises and capital markets. It is governed by Law 6.404/1976, which distinguishes between publicly held corporations (companhias abertas) — registered with the CVM and authorized to issue securities to the public — and closely held corporations (companhias fechadas), whose securities are not publicly traded.

The S.A. may issue common shares (ações ordinárias), each carrying voting rights, and preferred shares (ações preferenciais), which may have limited or no voting rights but typically enjoy priority in dividend distribution and capital repayment. The Corporations Law limits non-voting shares to 50% of total capital.

Sociedade Limitada (Ltda.)

The sociedade limitada is the most common business form for small and medium enterprises. Governed primarily by the Civil Code (Articles 1,052-1,087), the Ltda. combines elements of the corporation and the partnership. Members (quotistas) have limited liability up to the amount of their capital contributions, though all members are jointly liable for the full capitalization of the company (Article 1,052).

The Ltda. is managed by one or more managers (administradores), who may or may not be members. The operating agreement (contrato social) governs internal organization, voting rights, and profit distribution.

Other Entities

Brazilian law also provides for: general partnerships (sociedade em nome coletivo) with unlimited member liability; limited partnerships (sociedade em comandita simples) with two classes of partners; sole proprietorships (empresário individual); and the individual limited liability company (EIRELI), created by Law 12.441/2011, which allows a single individual to establish a limited liability entity without partners.

Corporate Governance

Board Structure

The S.A. has a mandatory two-tier structure: the board of directors (conselho de administração), required for publicly held corporations and some private corporations, and the executive board (diretoria). The board of directors is a collegiate body responsible for strategic direction, while the executive board handles day-to-day management.

Shareholders’ Meetings

The general shareholders’ meeting (assembleia geral) is the supreme corporate body, with powers to elect directors, approve financial statements, decide on capital increases, and amend the bylaws. Meetings follow a strict procedure under the Corporations Law.

Shareholder Rights

Key shareholder rights include: (i) right to vote (direito de voto); (ii) right to dividends (direito ao dividendo); (iii) preemptive rights (direito de preferência) in capital increases; (iv) right to withdraw (direito de retirada) in certain fundamental changes; (v) right to information and inspection; and (vi) minority protection rights, including the right to elect a member of the board of directors and audit committee.

Novo Mercado

The Novo Mercado is a listing segment of B3 (Brazil’s stock exchange) that requires stricter corporate governance standards than minimum legal requirements, including: (i) 100% tag-along rights for minority shareholders; (ii) unified share classes (voting shares only); (iii) mandatory arbitration for dispute resolution; (iv) compliance with listing rules on transparency and disclosure.

Securities Regulation

CVM

The Securities and Exchange Commission of Brazil (CVM) is an autarchy linked to the Ministry of Finance, responsible for regulating the securities market. Its powers include: (i) registration of publicly held corporations; (ii) registration of securities offerings; (iii) supervision of market intermediaries; (iv) enforcement of securities laws; and (v) issuance of regulatory standards.

Public Offerings

Public offerings of securities require registration with the CVM and compliance with the Public Offering Regulation (CVM Instruction 400/2003, replaced by CVM Resolution 160/2022). The regulation establishes mandatory disclosure requirements, including a prospectus, and imposes liability for material misstatements or omissions.

Merger Control

Corporate reorganizations — mergers (fusão), acquisitions (incorporação), and spin-offs (cisão) — are governed by the Corporations Law and, for publicly held corporations, by CVM regulations. Transactions must comply with the antitrust review requirements of Law 12.529/2011 (see Antitrust Law in Brazil).

Conclusion

Brazilian corporate law provides a comprehensive and modern framework for business organization and capital markets. The Corporations Law, as amended, has facilitated the development of deep capital markets while protecting minority investors. The growing influence of the CVM’s regulatory framework and the Novo Mercado’s governance standards have improved corporate governance practices and attracted international investment.