Activities that require a Brazilian partner to be carried out in Brazil

In this text, you will read about activities that require a Brazilian partner to be carried out in Brazil. Therefore, understand the main requirements and rules established by the Brazilian Government. Check it out!

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Which are the activities that require a Brazilian partner in Brazil?

In Brazil, activities that require a Brazilian partner:

• Mining;
• Journalism, sound, images, or broadcasting;
• Cabotage and Navigation;
• Healthcare assistance;
• Exploration of oil and natural gas;
• Cable TV;
• Road cargo transportation;
• Nuclear energy;
• Postal and Telegraph services;
• Aerospace industry;
• Exploration of water, forest, fishery, energy, and geological resources;
• Tourism;
• Education, leisure, and culture;
• Sanitation and water services;
• Among others.

Some mandatory percentages of Brazilians in corporate structures:

• Cabotage and Navigation company: foreign participation must be less than 50%;
• Cable TV company: participation of native-born or naturalized Brazilians (for more than 10 years) must be 50%;
• Road cargo transportation company: 80% of the company must be composed of Brazilians;
  Mining company: Brazilian participation needs to be 51%.

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Why does this restriction exist in some activities?

This restriction exists because according to the Federal Constitution, certain types of activities need to remain in Brazilian hands due to national strategy and sovereignty. I.e, they are activities that require a Brazilian partner.

Can a naturalized foreigner be a partner in these activities that require a Brazilian partner?

It depends! They can be a partner because they are no longer a foreigner, but they need to meet a time criterion. In other words, a naturalized Brazilian is on equal footing with a native-born Brazilian under Brazilian law in most situations. However, to qualify as a partner in companies in strategic areas, they need to have a minimum of 10 years of naturalization in certain areas. These areas include:

• Journalism, sound, images, or broadcasting;
• Cable TV.

However, nothing prevents them from working on activities that require a Brazilian partner mentioned earlier during the period before completing the 10 years.

What alternatives are available for foreigners interested in these areas but do not have Brazilian partners?

In summary, the alternatives for a foreigner interested in these areas but lacking Brazilian partners are to invest in existing companies in Brazil.

By doing so, the foreigner maintains their interest in these respective activities and can rely on Brazilian presence.

Another alternative is to invest in areas that allow foreign presence. In other words, they require a minimum percentage of Brazilian partners on their board but do not have restrictions on foreign investment possibilities.

How can a lawyer assist in cases of activities that require a Brazilian partner?

Initially, a foreigner can rely on a lawyer to assist in activities that require a Brazilian partner because:

• A better understanding of Brazilian norms and laws;
• Comprehension of documents and procedures;
• Reduction of bureaucracy;
• Development of a more appropriate strategy for their case;
• Support in decision making and foreigner’s choice.

What other restrictions may exist for creating or operating a company in Brazil with foreign partners?

Foreigners should be aware when creating or operating a company in Brazil to comply with the Brazilian Government’s legislation. Thus, the major restriction is the percentage of partners that the aforementioned companies must have. In other words, the presence of Brazilian partners in the company maintains Brazil’s sovereignty.

However, it is important to note that other activities allow foreigners to operate in Brazil without restrictions on the corporate structure.

Considerations when operating in Brazilian companies

Therefore, we can highlight some of the main considerations when operating in Brazilian companies:

• Determine which areas you can operate in;
• Understand the restrictions in your area of interest;
• If you wish to operate in a company with Brazilian partners, look for an established company with a mostly Brazilian corporate structure or seek a partner to open a new company;
• If you find it complex, seek the assistance of a lawyer specialized in international law to help develop the best strategy for your case.