LEGAL ASPECTS OF
DOING BUSINESS IN
BRAZIL
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
LEGAL ASPECTS OF DOING
BUSINESS IN BRAZIL
1. -
INTRODUCTION;
2.HISTORICAL, POLITICAL AND
GEOGRAPHIC CONSIDERATIONS;
3. -
THE BRAZILIAN CONSTITUTIONAL
FRAMEWORK:
3.1. The Executive;
3.2. The Legislative; and
3.3.
The Judiciary.
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
Legal Aspects of Doing Business
in Brazil
4.-
COMPANY AND INVESTMENT
LAW;
4.1.
4.2.
The Corporation (S.A.)
The Limited Liability
Company; and
4.3.- Forms of Investment,
Exchange Controls and
International Flow of
Domestic Currency.
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
Legal Aspects of Doing
Business in Brazil
5.-
TAXATION
5.1.
5.2.
5.3.
5.4.
and
5.5.
6.-
Income Tax;
Sales Tax (ICMS , IPI);
Service Tax;
Tariffs and the Common
External Tariff (TEC);
Double Taxation Treaties.
THE FINANCIAL SECTOR
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
Legal Aspects of Doing
Business in Brazil
6.1
the
6.2
6.3
7.-
The Stock Exchanges and
Capital Markets;
Banking; and
Insurance.
THE LEGAL STRUCTURE OF
MERCOSUL
7.1 Considerations about the
FTAA;
Negotiations under a
Brazilian Perspectives .
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
B R A Z I L
HISTORICAL, POLITICAL AND GEOGRAPHIC
CONSIDERATIONS
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
THE BRAZILIAN
CONSTITUTIONAL
FRAMEWORK
 The
Executive;
 The Legislative; and
 The Judiciary.
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
EXECUTIVE POWER
Palácio do Planalto
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
Mr. Fernando Henrique Cardoso
President of Brazil
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
EXECUTIVE POWER
(Federal Level)
STRUCTURE
PRESIDENCY
PRESIDENCY
Mandate
Mandate of
of four
four years
years
President
President Mr.
Mr. Fernando
Fernando Henrique
Henrique
Cardoso
Cardoso
1995
1995 -- 1998
1998
MINISTRIES - 20
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
EXECUTIVE POWER
Esplanada dos Ministérios
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
EXECUTIVE POWER
(Federal Level)
STRUCTURE
Some Ministries:
1. Ministry of External
Relations
Itamaraty
Minister Luiz Felipe
Lampreia
phone (061) 211.6161
fax
(061) 223.7362
2. Ministry of Finance
Minister Pedro Malan
phone (061) 314.2000
fax
(061) 223.5239
(continuation)
3. Ministry of Industry, Trade ,
and Tourism
Minster Francisco Dornelles
phone (061) 325.2000
fax
(061) 325.2209
4. Ministry of Justice
Minister Iris Rezende
phone (061) 218.3000
fax
(061) 322.6817
5. Ministry of Mines & Energy
Minister Raimundo Brito
phone (061) 218.5041
fax
(061) 226.1860
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
EXECUTIVE POWER
(State Level)
STRUCTURE
Governor (mandate of 4 years)
Governor of São Paulo
- Mr. Mario Covas 1995 - 1998
SECRETARIES
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
National Congress
Legislative Power
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
LEGISLATIVE POWER
(Federal Level)
National Congress
(Composition)
SENATE
SENATE
(81
(81 Senators)
Senators)
3 Senators per state and Federal
District with a mandate of 8 years.
CHAMBER OF DEPUTIES
( 513 Deputies)
 Each legislature has the duration of four years.
 Every four years, the Senate is renewed by one and tw
thirds, alternatively.
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
LEGISLATIVE POWER
(Federal Level)
National Congress
1. Non-exclusive Competence
1.11.21.31.41.51.61.7-
Taxation
Budget;
Armed Forces;
Territory;
Political Subdivision;
Organization of the Judiciary;
Others.
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
LEGISLATIVE POWER
(Federal Level)
National Congress
2. Exclusive Competence
2.1- International Treaties;
2.2- Control of the Executive;
2.3- Approve the accounts of the
Presidency; and
2.4- Others
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
LEGISLATIVE POWER
(State Level)
ASSEMBLY OF DEPUTIES
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
JUDICIARY POWER
Supremo Tribunal Federal
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
BRAZILIAN JUDICIARY
Higher Courts - Federal Supreme Court
and
Superior Court of Justice
O R D IN A R Y J U S T IC E S Y S T E M
C IV IL
STATE
C R IM IN A L
FEDERAL
J u s t ic e T r ib u n a l
C iv il C o u r t o f
A p p e a ls
R e g io n a l F e d .
C o u r t o f A p p e a ls
O r d in a r y
C o u rts
S p e c ia liz e d
C o u r ts
F e d e r a l C o u r ts
S ta te
J u s t ic e
T r ib u n a l
O r d in a r y
C o u r ts
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
F e d e ra l
C r im in a l C o u r t
o f A p p e a ls
S p e c ia liz e d
C o u r ts
R e g io n a l F e d e r a l
C o u r t o f A p p e a ls
F e d e r a l C o u r ts
BRAZILIAN JUDICIARY
Others:
Small Claims Courts
Marriage Magistrate: Reponsible only for the performance
of the marriage ceremony itself
S p e c ia liz e d
J u s t ic e S y s t e m
Labor
T y p e t it le h e r e
M ilit a r y
T y p e t it le h e r e
E le c t o r a l
T y p e t it le h e r e
S u p e r io r L a b o r
C o u rt
S u p e r io r M ilit a r y
C o u rt
S u p e r io r E le c t o r a l
C o u rt
R e g io n a l L a b o r
C o u rt
M ilit a r y C o u r t s *
R e g io n a l
E le c t o r ia l C o u r t
L a b o r C o u rts
M ilit a r y J u s t ic e s
E le c t io n J u s t ic e s
E le c t o r a l D is t r ic t s * *
* In s o m e s ta te s th e J u s tic e T r ib u n a l a c ts a s th e M ilita r y C o u r t.
* * W h e r e t h e r e i s n o s p e c ia l i z e d e l e c t o r a l c o u r t t h e S t a t e
J u d g e h a s ju r is d ic tio n .
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
COMPANY AND
INVESTMENT LAW
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
BASIC COMPANY TYPES:


More complex:
Sociedade Anônima (S.A)
“Corporation”
Simpler:
 Sociedade por Quotas de
Responsabilidade Limitada (LTDA.)

“Limited Liability Company”
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
FORMS OF
INVESTMENTS
AND FLOW OF FUNDS
Foreign Currency
 International flow of
Domestic Currency ( REAL )

Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
TAXATION
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
CORPORATE INCOME TAX
IN BRAZIL FOR 1997
GROSS INCOME
R$ 1.000.000,00
Social Contribution ( tax 8%)
R$
Taxable Income
R$ 1.000.000,00
Federal Income (tax 15%)
R$
150.000,00
Surcharge over R$ 20.000,00 R$
(10%)
80.000,00
80.000,00
Total Taxes
R$
310.000,00
NET INCOME
R$
690.000,00
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
SALES TAX
ICMS
IPI
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
SERVICE TAX
 ISS
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
TARIFFS AND THE
COMMON EXTERNAL
TARIFF ( TEC)
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
BRAZIL’S DOUBLE
TAXATION TREATIES
In force: Argentina, Canada,
Czechoslovakia, Denmark, Ecuador,
Finland, France, Germany, Holland,
Hungary, India, Italy, Japan, Korea,
Luxembourg, Norway, Philippines,
Portugal, Spain and Sweden.
In negotiations: South Africa, United
Kingdom, United States of America.
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
THE FINANCIAL SECTOR
Central Bank
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
NATIONAL FINANCIAL
SYSTEM
N a tio n a l M o n e ta r y
C o u n c il
B ank of
B r a z il
C e n tr a l
B ank
BNDES
F in a n c ia l
I n s titu tio n s
D e v e lo p m e n t
B anks
C o m m e r c ia l
B anks
In v e s tm e n t
B anks
B r a z ilia n S e c u r itie s
C o m m is s io n
S to c k E x c h a n g e s
M u ltip le
B anks
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
P r iv a te F in a n c ia l
I n s titu tio n s
D is tr ib u to r s
C o m p a n ie s
S to c k b r o k e r a g e
H ouses
THE BRAZILIAN FINANCIAL
SYSTEM
The National Monetary Council;
 The Central Bank of Brazil;
 The National Bank of Economic
and Social Development; and
 Other public and private
financial institutions.

Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
THE STOCK EXCHANGES
AND THE CAPITAL
MARKETS
REG ULATORY AG ENC Y
S e c u r ity C o m m is s io n
" C o m is s ã o d e V a lo r e s M o b iliá r io s "
C V M - b a s e d in R io d e J a n e ir o
S ã o P a u lo S to c k E x c h a n g e
"B O V E S P A "
9 0 % o f m a r k e t d a ily v o lu m e
5 4 5 L is te d c o m p a n ie s
R io d e J a n e ir o S to c k E x c h a n g e
"B V R J "
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
7 o th e r
s m a ll e x c h a n g e s
COMMODITIES AND FUTURES
EXCHANGE
"B O L S A M E R C A N T IL E
D E FU TU R O S"
(B M F )
F in a n c ia l C o n t r a c t s
In te re s t ra te
E x c h a n g e r a te
n o s h a r e o p tio n s
C o m m o d it ie s C o n t r a c ts
g o ld , c o f f e e , liv e c a t t le
s o y a , s u g a r , o th e r s
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
TYPES OF PRIVATE
FINANCIAL INSTITUTIONS












Commercial Banks
Investment Banks
Credit and Financing Companies
Real Estate Credit Cooperatives
Leasing Companies
Stock Brokerage Companies
Exchange Brokerage Companies
Securities Distribution Companies
Mortgage Companies
Factoring Companies
Foreign Banks
Multiple Banks
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997
The Legal Structure
of Mercosul
Considerations about the
FTAA
Negotiations under a Brazilian
Perspective
Durval de Noronha Goyos Jr. - Noronha Advogados - September 8, 1997