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| Executive Travel: São Paulo |
Business Essentials
Daniel DelRe
03/01/2006
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Foreign Direct Investment
In all but a few so-called strategic industries,
foreign investors are free to purchase companies or establish subsidiaries in
Brazil. All subsidiaries must have a manager based in Brazil and two additional
shareholders other than the primary investor. However, those shareholders can
hold a nominal number of shares and are not required to have voting rights. They
can also be foreigners or even employees or affiliates of the primary investor.
These rules apply to Brazil’s largest and most lucrative domestic markets such
as lumber, energy, automobiles and manufacturing. According to the WTO, Brazil’s
automobile industry currently enjoys the largest amount of foreign direct
investment.
In the strategic industries, restrictions on foreign ownership
remain. Brazil’s domestic airlines are limited to 20 percent foreign ownership.
Media companies may not exceed 30 percent foreign investment. There are also
constraints on foreign ownership of nuclear facilities and financial
institutions.Repatriation of Profits
There are no restrictions on repatriating profits
earned by subsidiaries operating in Brazil. These transactions must be reported
to the Central Bank, but are processed by commercial banks. Most commercial
banks are entitled to convert currency and remit payments to foreign parent or
holding companies. Capital Requirements
The minimum investment in Brazilian subsidiaries
depends on the nationality of the manager and the size of the workforce
employed. If the manager is a Brazilian citizen, there are no capital
requirements to establish a subsidiary. To obtain a visa for a manager of
foreign citizenship, the company must invest up to $200,000 in a local workforce
larger than 50 employees. The investment can be made in the form of cash,
capital goods, technology transfers or payroll increases.
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