If you are planning to set up a sole shareholder subsidiary in Brazil, the most recommendable corporate form is the Limited Liability Company, as this kind of company may have one or more owners. The Ltda. has a few advantages, as fewer disclosure requirements, a simpler and cheaper organization, registration of corporate documents is quicker, and, most importantly, allows for a faster decision-making process.
On taxation aspects, the chosen corporate form will only impact small companies that may opt to a tax assessment based on the “Simples” taxation system, which, among other restrictions, is not applicable to corporations. Otherwise, the corporate form chosen does not impact taxation of the subsidiary.
The liability of a shareholder of a Ltda. (the “Partner”) is limited to its respective participation in the company’s capital, except when the company’s capital is not fully paid-up. In such case, the Partner is liable, with its own assets, for the total amount of the company’s capital.
In certain cases of disregard of the corporate veil, activities against the law and acts performed without proper authority, the Partner may be unlimitedly liable, especially in tax, labour, and environment areas.