What would be a social contract and why is it important to have one?

For anyone deciding to open a business in Brazil, formalizing the company is an essential step. The first essential document is the social contract, which serve as the birth certificate of any business. It defines the partners, how the company will operate, and its operating rules. But what exactly is a social contract? Why are they important? What information do they need to contain? And how do you register them?

In this article, you’ll learn in detail about the concept, structure, and procedure for preparing and registering this fundamental document.

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What is a company’s social contract?

The social contract is the legal document that formalizes the constitution of a company and establishes the rules governing its activities. They define the partners, their stakes, decision-making powers, profit sharing, and the company’s management rules.

It’s a contractual instrument entered into between two or more individuals (individuals or legal entities) who wish to engage in organized economic activity, establishing a business corporation.

This document also determines the company’s corporate purpose (business activity), the headquarters address, the share capital, and the criteria for partner entry or exit.

What is a company’s social contract?

A company’social contract is the constitutive document that gives legal origin to the legal entity. They have legal value before third parties, financial institutions, public agencies, and regulatory bodies, and are essential for opening a bank account, issuing invoices, and obtaining licenses.

In the case of limited liability companies (LTDA), for example, the articles of association specify:

• The partners and their shares;
• The rules for profit distribution;
• The powers of management;
• The initial share capital and future changes.
• Without this document, the company lacks legal personality and is restricted to informality.

How important is a social contract?

This document is essential for defining the company’s legal foundations and ensuring security for partners and operations. It serves as a charter of rules that prevents internal conflicts and organizes the corporate structure.

Main functions:

• Formalize the company’s constitution;
• Define the rights and duties of partners;
• Establish management and administrative rules;
• Regulate the entry and exit of partners;
• Define the division of profits and capital;
• Protect the company against legal risks.

Without a clear and well-drafted articles of association, disagreements between partners can lead to complex litigation and financial losses.

Is the social contract mandatory?

They are required for registering business corporations with the Commercial Boards of Brazilian states. Without them, the company cannot obtain formal registration and, consequently, cannot apply for a CNPJ (National Registry of Legal Entities) with the Federal Revenue Service or operate legally.

Companies operating without articles of incorporation are considered irregular, making them unable to issue invoices, open business bank accounts, or obtain financing.

What are the types of social contracts?

There are different models of this type of document, depending on the company’s corporate structure and the rules established by the partners.

Most common types:

• Articles of Association of Limited Liability Companies (LTDA): the most commonly used in Brazil, where the partners’ liability is limited to the value of their shares;
  Articles of Association of Public Limited Liability Companies (S/A): a document governing companies whose capital is divided into shares, not quotas;
• Articles of Association of Limited Liability Companies (EIRELI): a document discontinued in 2021, but still applicable to companies established before that date;
• Individual Business Owner Application: a simple instrument of association used by individual business owners.

Each type has specific rules and formalities for registration, administration, and share capital.

What’s the difference between the social contract and the CNPJ card?

Although they are related documents, they are not the same thing:

• Social contract: define the company’s structure, partners, activities, and rules;
• CNPJ Card: is the company’s tax registration with the Federal Revenue Service, containing information such as corporate name, CNPJ number, address, and registration status.

In other words, the articles of incorporation establish the company, and the CNPJ card allows for its tax activities.

How do I register a social contract of incorporation?

For a company to be considered legally existing, it is necessary to register the document with the Board of Trade of the state where the company will be headquartered.

Steps for registration:

• Prepare the document with all required information;
• Have the contract signed by all partners and witnesses;
• File the registration with the Board of Trade;
• Pay the registration fees;
• Wait for approval and approval of the registration;
• After approval, apply for CNPJ registration with the Federal Revenue Service.

What information should a social contract of association contain?

To be accepted by the Board of Trade, the document must contain mandatory information, such as:

• Business name (corporate name);
• Full address of headquarters;
• Corporate purpose (principal and secondary activities);
• Share capital and its division among partners;
• Full information about the partners (name, CPF/CNPJ, address);
• Form of management and powers of the directors;
• Rules for the entry and exit of partners;
• Rules for the dissolution and liquidation of the company;
• Forum clause (venue for dispute resolution).

Sample Social Contract

Below is a simplified model:

LIMITED  LIABILITY COMPANY ARTICLES OF ASSOCIATION

Business Name: ABC Comércio de Alimentos LTDA
Address: Rua das Palmeiras, 100, Centro, Belo Horizonte, Minas Gerais
Business Purpose: Retail trade of food and beverages.
Share Capital: R$100,000.00 (one hundred thousand reais)
Share Division:

• João Silva: 60%;
• Maria Souza: 40%.

Management Clause: João Silva will manage the company.
Profit Distribution Clause: Proportional to the shareholding.

And in agreement, they hereby execute this instrument in two copies of equal content.

How can I check the social contract using the CNPJ (Brazilian Taxpayer Registry) number?

A company’s articles of incorporation are public and can be consulted at the Commercial Registry of the state where the company is registered. To do so:

• Access the Commercial Registry website;
• Search for the search option or simplified certificate;
• Enter the CNPJ number or company name;
• Request the certificate or copy of the articles of incorporation.

At the Federal Revenue Service, you can check the company’s registration data, but not directly access it.

How to obtain a copy of a company’s social contract?

If you need to obtain a copy of this document from a company, there are several ways:

Tip 1: Request it from the Commercial Registry

Go to or visit the website of the Commercial Registry where the company is registered and request a copy. There may be a fee and authentication required.

Tip 2: Request it from the accountant or legal representative

For active companies, the articles of incorporation are usually kept by the accountant or administrator. Request it directly from the person responsible for managing the company.

Tip 3: Consult the business owner or partner

If you are a partner or have authorization, request it directly from the person managing the company.

Conclusion

The social contract is the most important document in formalizing a company. They establish who the partners are, what the business will be, how management and profit sharing will be handled, and they also ensure legal certainty and prevent future conflicts.

This is a mandatory document for limited liability companies and must be registered with the Board of Trade. Once registered, the company can obtain its CNPJ (National Registry of Legal Entities), open a bank account, issue invoices, and operate legally.

Understanding the content and formalities of this document is essential for any entrepreneur who wants to start a business with security, transparency, and professionalism.

If you are opening a company, seeking guidance from a specialized lawyer or accountant can avoid problems and ensure that the articles of association are complete, up-to-date, and in compliance with legal requirements.

If you require legal assistance from our team, please send us a message on WhatsApp.