BRAZIL Law and Practice Contributed by: Mariana Cobra, Janaína Vargas, Mayara Zanini and Marcela Freire, Mattos Filho
5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets There are several types of entities through which investors can hold real estate assets. Traditional real estate investment vehicles include corpo - rate entities, among which the most common are limited liability companies (LLCs) and cor - porations. Real Estate Funds (FIIs) are popular due to their investor-friendly features, including limited liabil - ity rules, ring-fencing, governance, tax benefits and regulatory framework. Real Estate Agricultural Funds (FIAGRO) are now an emerging structure for investment in rural land. Foreign investors often invest in Private Equity Funds (FIPs) that invest in shares or debentures (among other securities) of corporations that hold real estate. Foreign investments made in any type of vehi - cle must be registered with the Brazilian Central Bank for exchange control purposes. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity LLCs and corporations are subject to corporate taxation, and are incorporated through the exe - cution of their constating documents, which are filed with the Commercial Registry of the State in which the head office of the company is to be located. LLCs and corporations have similar maintenance and accounting costs, but for companies with an annual revenue lower than BRL300 million the LLC is a preferred choice from a cost perspec -
their interests or the community. The Public Prosecutor and neighbourhood associations can seek to protect diffuse or collective interests and hold liable any person responsible for damages to protected property. 4.5 Right of Appeal Against an Authority’s Decision An administrative appeal is available against the approval of a construction project or issuance of an operating licence authorising activities in a property. It is also possible to apply for injunc - tive relief in court. 4.6 Agreements With Local or Governmental Authorities To obtain permits and approvals, it may be pos - sible or necessary to enter into agreements with local or other governmental authorities, agen - cies or utility suppliers. Some projects invariably depend on the municipality to guarantee some compensation from the developer, to contrib - ute to society, and mitigate as many impacts of the project as possible. These agreements are entered into by and between the developer, the municipality and related parties to cover infra - structure impacts, development guidelines, planned urbanisation and other obligations. 4.7 Enforcement of Restrictions on Development and Designated Use Enforcement of restrictions on development and designated use by the municipality involves refusal to issue licences, inspections, shut - downs, charge of penalties and legal action. Additionally, the Public Prosecutor or neigh - bourhood associations may participate by filing judicial measures against the developer or the municipality that has permitted the project with - out observing legal restrictions.
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