10 articles Articles posted in Legal

Legal risks of starting a limitada company in Brazil

In theory, limitadas are equivalent to limited liability companies in the US. However, in practice, this is not the case. Judges can “pierce the corporate vail” and go directly after the partners of the limitada for liabilities in two cases: 1) If there has been fraud (known as the “teoria maior”) 2) If the company is insolvent (known as the “teoria minor”) Unfortunately, judges use the second case very loosely and tax and labour liabilities …

Continue reading →

Registering a brand in Brazil

Registering a brand and logo with the INPI takes on average 3 years. Interestingly 35% of applications for brands never get finished.  A short post for a long process.

Continue reading →

Software patents in Brazil

If you are looking to patent your software in Brazil, I have some bad news for you. You can’t patent software in Brazil. Under Brazilian law, an invention which is not ultimately manufactured or produced is held to be unpatentable. This includes the following areas in the the “mental” context: Mathematical models Abstract concepts Computer programs Rules of a game Presentation of information You can register your source code with NPI which protects the source …

Continue reading →

Finding a lawyer for your startup in Brazil

Finding lawyers in Brazil that have experience with startups is both incredibly difficult and critical to your success. Your local embassy will likely recommend expensive lawyers with international experience and not startup experience. Firstly, some general advice: 1) Remember, you are selecting the lawyer, not the law firm. Lousy lawyers can end up working for great firms. 2) Look for glowing recommendations in your network. Half-hearted recommendations do not count. 3) Look for experience with …

Continue reading →

Standard legal contracts for Brazil

Brazilian Law is complex and I always recommend seeking professional legal advice for all contract needs from good lawyer in Brazil. However, to be helpful, I have attached a sanitised version NDA which I use at my startups.  Its generic but its enough to protect my idea to the extent possible in Brazil, and gain some credibility. Of course, there are some sites such as this one where you can find hundreds of standard contracts such as: Rental contracts Staff …

Continue reading →

Import taxes in Brazil

Brazil has strict anti-dumping laws in place to protect Brazil’s local production.  Import taxes in Brazil vary widely depending on the product but its not uncommon to be as high as 100% on consumer electronics and clothing.  This one of the reasons why Brazil is so expensive. For a great resource in finding the import tax for products you are looking to import, see the import tax tool on TheBrazilBusiness.

Continue reading →

Is it legal to hire my entire staff as PJ in Brazil?

In terms of taxes and benefits, hiring PJ aka outsourcing is cheaper than hiring as an employee (CLT). However, my Brazilian accountant once told me: its only illegal if you get caught. I did fire the accountant but its a sad truth that many startups do this when there aren’t supposed to and pass under the radar. From hours of conversations with lawyers, I have gathered that it is illegal in Brazil to: (i) outsource the …

Continue reading →

How stock options work in Brazil

Stock options are less commonly used in Brazil than the US for two reason.  Firstly, there are few local examples of people who got rich through stock options to educate the potential value of an option.  Secondly, having a stake in a company implies risks for the entrepreneur. As long as the entrepreneur has stock, they are personally liable for tax and labour disputes. The most common stock options in Brazil are reverse stock options. In …

Continue reading →

Why people ask their employers to fire them in Brazil

When I arrived in Brazil, I was surprised at how common this practice was.  So I found out why it happens. If you are working CLT (work contract) in Brazil, your company is obliged to pay 8% of your salary into a severance fund called FGTS. As an employee, you can only access this fund if you are fired (or terminally ill or buying a property). If an employee quits they can’t access this fund …

Continue reading →

3 laws every marketer should know in Brazil

Marketing in Brazil is not without its peculiarities.  Online marketing is still self regulated in Brazil, e.g. unregulated.  However, there are important laws to bear in mind when marketing in Brazil. Here are 3 laws that you should know when marketing your product or service in Brazil. 1) Any type of promotion in which there is an element of luck involves e.g. make a purchase and compete for a prize, needs permission from the Caixa …

Continue reading →