New Brazilian Law Allows for Single-Person Formations of Limited...

A new law recently published in Brazil will facilitate the making of new investments with limited liability. Federal Law No. 12,441, enacted on July 11, 2011 (Law 12,441), amended certain provisions of the Brazilian Civil Code (Federal Law No. 10,406/2002) to allow the creation by a single person, either an individual or a legal entity, of companies with limited liability (EIRELI).  The law previously required that a company with limited liability be formed by at least two persons.  By allowing a single person to form a limited liability company, Law 12,441 can be expected to promote the formation of these entities, and facilitate economic activity.

Among other requirements for forming a limited liability entity, the share capital of an EIRELI may not be less than 100 times the Brazilian minimum wage, which corresponds to approximately R$ 54,000.00 (roughly U.S.$ 33,600). This requirement is new and does not apply to limited liability companies with two or more partners. Law 12,441 was published on July 12, 2011, and will come into force 180 days from that date, on Jan. 8, 2012.