Following a forty-day suspension of operations, X Corporation (formerly Twitter, Inc.) resumed its business activities within the Brazilian jurisdiction. The recent platform suspensions ordered by the Supreme Court have highlighted the importance of a duly appointed legal representative in Brazil. The lack of such a representative was a key factor in the court’s decision for maintaining the suspension of operations or cessation of business activities for this extended period, emphasizing that complying with this obligation is crucial for foreign companies operating in the country. During the suspension period, the Supreme Federal Court ruled that the appointment of a legal representative in Brazil constitutes a fundamental statutory requirement for foreign entities conducting business operations within Brazilian jurisdiction, a requirement that X had failed to meet.
Under the current legislation, a company’s legal representative could be a Brazilian or a foreign individual. If this individual is a non-resident, the company must appoint a local representative with broad powers of representation for at least three years after the end of its term (Article 146, §2 of the Law No. 6,404/1976 - “Lei das Sociedades Anônimas”). The appointment of this representative is essential for a foreign company to obtain the necessary authorization from the Executive Branch to operate in Brazil and to be properly registered with the competent body, as required by Article 1,134 of the Brazilian Civil Code.
Even after authorization and registration, the law requires the continuous presence of this representative, who must have the authority to address all matters pertaining to the company's operations and receive legal summonses on behalf of the company,” according to Article 1,138 of the Civil Code. Similar provisions are outlined in Article 119 of the Corporations Law and Article 12 of DREI Normative Instruction No. 81/2020. The broad scope of these regulations demonstrates the legislator’s intent to ensure that all matters concerning the foreign company can be addressed by and for this representative.
Beyond legal issues, the legal representative plays a crucial role in ensuring tax compliance. Article 6, §1 of Brazilian Federal Revenue Service Normative Instruction No. 2,119/2022 establishes that the representative must have the authority to manage the company's assets and rights. This ensures that foreign companies meet their tax obligations, subject to the same scrutiny and penalties as domestic companies.
The appointment of a legal representative is also explicitly required by the General Data Protection Law (LGPD). The LGPD mandates that communications with the National Data Protection Authority (ANPD) and other procedural matters must be conducted through this representative. This requirement also appears in regulations governing the financial market (such as BACEN and CVM rules) and actions related to Industrial Property Law.
In addition to the legal provisions specific to foreign companies, it can be inferred that any requirement for the appointment of legal representatives applicable to domestic companies should also apply to foreign companies. This ensures equal obligations in the marketplace and avoids potential imbalances in the treatment of foreign and domestic businesses, while also safeguarding interactions with both government institutions and third parties.
The appointment of a legal representative in Brazil goes beyond merely fulfilling a formal obligation. It demonstrates the foreign company’s commitment to local business practices, providing transparency and accountability in its operations. Without such a figure, the company risks serious operational restrictions, as seen in the recent case of X, which had its activities suspended due to the absence of a representative in the country. Therefore, foreign companies wishing to operate legitimately and securely in Brazil must prioritize the appointment of a legal representative, ensuring not only compliance with local regulations but also the protection of their interests and the continuity of their operations.
