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THE LEGAL ENTITY AS OWNER OF AN INDIVIDUAL LIMITED LIABILITY COMPANY (Empresa Individual de Responsabilidade Limitada)
With the enactment of Law no. 12,441, of July 11, 2011, which inserted article 980-A into the Brazilian Civil Code (Law no. 10,406, of January 10, 2002), a new type of legal entity was introduced: the individual limited liability company (Empresa Individual de Responsabilidade Limitada, “EIRELI”), composed of only one individual, holder of the entire capital. The wording of said article, however, brought an interpretative controversy regarding the possibility of forming an EIRELI by legal entities.
In order to clarify this controversy, the Business Registration and Integration Department (Departamento de Registro Empresarial e Integração, “DREI”) has originally published DREI Normative Ruling no. 10, dated December 5, 2013, which restricted EIRELIs’ ownership to individuals only.
This understanding was recently modified by DREI through the publication of the new Manual of Registration of Individual Limited Liability Company – EIRELI, approved by DREI Normative Ruling no. 38, dated March 2, 2017, which expressly provides that either individuals or legal entities are equally capable of being owners of an EIRELI. Thus, any individual of legal age, Brazilian citizen or foreigner, who is in full enjoyment of his/her civil capacity; or an emancipated minor; or a national or foreign legal entity, can be holder of an EIRELI, provided that there is no other legal impediment for such.
Lastly, the recent modification benefits the business activity, including foreign investors, to the extent that it allows an EIRELI to be used as an alternative to already known corporate entities (limited liability companies or corporations), eliminating the requirement for minority partners, as well as certain costs, that were only incurred to attend legal requirements (plurality of partners).
This communication is merely informative; it is not a legal opinion.
