BRAZIL Law and Practice Contributed by: Alberto Malta, Davi Ory, Ana Vogado and Maria Eduarda Amaral, Malta Advogados
5.4 Minimum Capital Requirement There is no legal minimum capital requirement for the incorporation of the main entities used in real estate investments. An S.A. requires at least 10% of the subscribed capital to be paid in cash. FIIs and FIAGROs operate as invest - ment condominiums and do not have mandatory share capital. 5.5 Applicable Governance Requirements Governance requirements for real estate invest - ment vehicles in Brazil vary by legal structure. LTDAs, under the Civil Code, offer flexible man - agement defined in the articles of association, with decisions typically made by simple majority. S.A.s are governed by Statute No 6,404/1976, which requires formal structures with collegiate bodies (general meeting, board of directors and, if provided for, board of directors and fiscal council), mandatory publications and, if publicly traded, independent auditing and compliance with CVM rules. FIIs and FIAGROs structured as closed-end con - dominiums under CVM Resolution No 175/2022 must have a trustee, manager, independent auditor and fund regulations, with governance via shareholders’ meetings and CVM oversight. They must distribute 95% of profits and disclose regular financial information. RFB Normative Instruction No 2,119/2022 requires the identification of final beneficiaries with significant control in both domestic and foreign entities. Non-compliance may result in National Registry of Legal Entities (CNPJ) sus - pension and make financial operations unfeasi - ble. The rule aligns with international standards, such as the US Corporate Transparency Act, which mandates similar disclosures to Financial
Crimes Enforcement Network (FinCEN), includ - ing for structures with assets in Brazil. 5.6 Annual Entity Maintenance and Accounting Compliance Annual accounting and compliance costs in Bra - zil vary depending on the structure and transac - tion volume. Simplified entities like LTDAs and SCPs have lower costs, covering bookkeeping, tax filings and basic obligations. S.A.s, especial - ly listed ones, incur higher costs due to required publications, independent audits and formal governance. FIIs and FIAGROs, which are regulated by the CVM require a more complex structure of fiduci - ary administrator, professional manager, auditor and regular filings, which significantly increases costs. Despite this, higher expenses are often offset by strategic advantages such as capi - tal market access, enhanced governance and greater tax efficiency. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The applicable use structure depends on the nature of the property. In urban areas, leasing is governed by Statute No 8,245/1991 and in rural areas, by the Civil Code and agrarian laws. Other valid instruments include lending (free loan), usufruct (temporary right in rem for use and enjoyment) and surface rights (construction on another’s land under the City Statute). For public property, mechanisms include; • concession of use; • CDRU;
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