Acquiring a company in Brazil: a guide for foreign investors

Equity interests and operating assets

Buying shares or ownership interests leaves the acquired company holding its rights and obligations. Buying assets does not, by definition, mean buying free of liabilities. The Tax Code provides for liability when a business or establishment is acquired and its operations continue, on conditions including whether the seller continues or ceases trading. In an employment succession, obligations may fall on the successor. A standalone machine and an operating business should not automatically receive the same treatment simply because both are described as assets.

Tax Code, Article 133; CLT, Articles 10, 448 and 448-A.

Due diligence and the risk perimeter

Clearance certificates are a starting point, not a guarantee that liabilities do not exist. The investigation should connect tax documents, employment records, disputes, licences, ownership and material contracts with actual operations. Its purpose is to identify matters affecting price, structure or closing conditions. Tax and employment succession explain why an asset transaction may also require diligence. Environmental, regulatory or data issues should be added where the activity justifies them, rather than applying a sector-blind checklist to every target.

Tax Code, Article 133; CLT, Article 448-A; diligence organisation is a recommendation.

CADE merger control

The general turnover criteria consider economic groups and the preceding year: at least one group with BRL 750 million in Brazil and another with BRL 75 million. These figures are not a complete test without assessing the transaction’s nature and group rules. Where notification is mandatory, review is prior: closing and integration cannot anticipate the required clearance. The target company’s turnover alone is not enough to organise the assessment. Collecting group information early avoids designing a timetable around the wrong company perimeter.

Law 12,529/2011, Articles 88 and 90; Interministerial Ordinance 994/2012; CADE guidance.

Contractual allocation of liability

Representations, warranties, indemnities, retained consideration and price adjustments should correspond to the risks identified. Drafting should establish who pays, what triggers a payment claim, applicable limits and supporting documents. An indemnity between buyer and seller does not, by itself, remove statutory liability towards employees or tax authorities. Contractual protection and the ability to recover are therefore distinct questions. A group template can be a starting point but does not automatically address succession, ownership transfers or the local instruments needed to implement the transaction.

Tax Code, Article 123; CLT, Article 448-A.

Consents and effectiveness of transfer

The buyer should map change-of-control provisions, shareholder rights and applicable sector authorisations. For ownership interests in a limitada, effectiveness towards the company and third parties involves registration of the relevant instrument; signing an international agreement alone does not complete every Brazilian formality. Contractual consent, a shareholder decision and regulatory clearance have different foundations. The timetable should specify who obtains each document and whether its absence prevents closing or has another consequence. These questions should be settled before finalising the closing checklist.

Civil Code, Article 1,057; articles, material contracts and applicable sector rules.

Closing and operational continuity

Signing, closing and integration should have separate deliverables. Closing confirms satisfaction of conditions and documents the transfer, payment and signing authority. Afterwards, directors, powers of attorney, banks, registrations and foreign-investment information should be reviewed according to applicable facts and criteria. There is no universal thirty-day update for all these items. Successor employment liability reinforces the need to plan operational continuity rather than assume that a new owner resets obligations. Responsibility for implementing each post-closing step should be assigned before the parties leave the closing process.

Civil Code, Article 1,057; CLT, Articles 448 and 448-A; BCB Resolution 278/2022.

Internal decisions before appointing advisers

• Define whether the objective is control, a minority interest or an operating business.
• Collect Brazilian group turnover and identify the transaction perimeter.
• Set acceptable liability exposure and retained-price arrangements.
• Choose who will manage the company and transition after closing.