M&A – Main differences between Share Deals and Asset Deals in Brazil

Practical Guide

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What are the main features of a share transfer agreement in Brazil?


The transfer of shares or quotas results in a transfer of not only the target’s business, assets, rights, contracts, and employees, but also of all existing liabilities and contingencies.


  • Transfer of the whole target company (corporate reorganization procedures may be necessary as a preparatory measure in order to segregate assets in a newco to be sold by means of a drop-down or a spin-off, for example);
  • Any prior shareholder or board approvals to be obtained for share transfers by seller;
  • Prior governmental and/or regulatory authorizations may need to be obtained,
  • Prior Antitrust authorities (CADE) approval may be required.

Due Diligence

In a share deal the recommendation is for a broad detailed legal due diligence. In general, main aspects to be verified are licences and permits; labour and social security aspects; tax aspects; inventory; contracts; corporate aspects; real estate; insurance; IP rights; antitrust; compliance; environmental; affiliated transactions.

In Brazil, it is of utmost importance to obtain certificates from all Courts with jurisdiction over the seller’s and target’s head offices, branches, domicile to verify the existence of any legal claims that may impact the transaction. There are also several administrative certificates that should be obtained.

Moreover, depending on the industry of the target, specific issues must be verified.

Specificities linked to the share transfer agreement

  • The SPA needs to be carefully tailored to include appropriate representations, warranties, indemnities (in particular regarding labour, tax and environmental liabilities, among others), and collaterals,
  • No mandatory content required by law,
  • Foreign ownership of shares must be registered at the Central Bank of Brazil, through its electronic registration system, Sisbacen.

What are the main features of an asset transfer agreement in Brazil?

How to transfer the shares of a company in Brazil?

Process varies depending on the corporate form of the company.

For limited liability companies: the transfer is formalized by signing an Amendment to the Articles of Association (simply stating the transfer and that conditions were agreed upon in a separate document), to be registered at the competent Commercial Registrar.

In a Closely Held Corporation (S/A) the share transfer is formalized by signing the Share Transfer Book and Share Registration Book.

The purchase of an Individual Limited Liability (Eireli) is formalized by an Amendment to the Act of Incorporation to be registered at the competent Commercial Registrar.

Furthermore, specific issues should be dealt with when transferring the shares:

  • Executive Board members must be residents in Brazil, while Board of Directors members do not, but must appoint an attorney-in-fact resident in Brazil;
  • Buyer, when not domiciled or headquartered in Brazil, must appoint an attorney-in-fact resident in Brazil with powers to receive service of process (the “PoA”). When Buyer is a legal entity it must obtain a Brazilian taxpayer number (CNPJ, for control purposes only (no payment of taxes by foreign shareholders in Brazil) and include related powers in the PoA. When Buyer is an individual, he/she must also obtain a taxpayer number (CPF) for the same purposes and there are no related powers to be included in the PoA;
  • Articles of Association or Bylaws to be adapted to comply with Buyer’s corporate governance policies, among others.

How to transfer the assets/business of a company in Brazil?

  • In case of real estate property, the Public Deed must be registered at the Real Estate Public Registrar;
  • In case of IP rights, separate agreements should be signed to be registered at the Brazilian PTO for formalizing transfer of ownership, avoiding disclosing all conditions of the deal;
  • The title transfer of most assets and inventory is formalised through the issuance of invoices in accordance with Brazilian accounting rules and tax law.

What are the transfer taxes for a share deal in Brazil?

In Brazil there is no taxation on Buyer, but Seller will pay tax on capital gains, even if Seller and Buyer are domiciled abroad. Rates and/or calculation methods may vary according to whether seller is an entity or an individual and whether domiciled in Brazil or abroad.

Generally, equity investment funds (FIPs) are exempt from corporate taxes (income and social contribution taxes on profits) and gross revenue taxes (PIS, COFINS), provided some requirements are met, as they are not corporate entities under Brazilian legislation, but condominiums. Investors resident abroad are not subject to Brazilian taxation on the redemption of FIPs’ quotas.

What are transfer taxes for an asset deal in Brazil?

The seller of the assets will pay income tax and social contribution at a rate of approximately 34% on the capital gains, whether operational or non-operational.

Moreover, taxation will vary according to the nature of the assets: sales tax (ICMS) applies to the transfer of inventory (recoverable under certain conditions); PIS and Cofins may apply on the sale of most assets other than real estate and fixed assets; industrialization tax may apply on sale of fixed assets and inventory; real estate transfer municipal tax applies on real estate purchase.

The acquisition cost of fixed assets is subject to future depreciation as a deductible expense according to their economic useful life.

Rates may vary depending on the city and state where assets are located, and for the federal taxes, rates may vary according to the chosen tax assessment regime.

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