Do You Need a Brazilian National as Director? Guide for Mid-Market Companies

When expanding into Brazil, one question keeps surfacing in boardrooms across Europe: do we actually need a Brazilian national as a company director? It's a reasonable concern. After all, getting this wrong can mean compliance headaches, banking delays, and unexpected costs that derail your expansion timeline.

The short answer might surprise you. Brazilian law generally doesn't require directors to be Brazilian nationals, but there are residency and legal representative requirements that can trip up even experienced international teams. For mid-market companies with 200 to 2,000 employees, understanding these nuances early can mean the difference between smooth expansion and costly restructuring down the road.

Key Takeaways for Mid Market Companies Considering a Brazilian Director

Here's what European and UK mid-market leaders need to know about Brazilian director requirements:

• Clarity: Brazilian law typically doesn't require directors to be Brazilian nationals. The key distinction is between nationality (citizenship) and residency requirements.

• Eligibility: Non-resident foreign directors are generally permitted, but expect additional formalities including tax registration (CPF) and appointing a Brazilian-resident legal representative.

• Risk and Control: Director choices affect banking access, contract execution speed, liability exposure, and operational control. This goes far beyond a simple compliance checkbox.

• Scalability: For companies with 200-2,000 employees, choose a director structure that can grow with your multi-country governance framework and headcount expansion.

• Strategy: Decide early whether an Employer of Record (EOR) or local entity better serves your governance needs, client expectations, and cost structure.

• Support: Teamed can coordinate local Brazilian legal expertise for European headquartered companies, ensuring your director decisions align with broader global employment strategies.

Do Brazilian Companies Need a Brazilian National or Resident as Director

The core question has a straightforward answer: Brazilian companies generally do not need a Brazilian national as director. Law No. 14,195/2021 permits non-resident foreigners to serve as directors in both corporations and limited liability companies. The confusion often stems from mixing up nationality requirements with residency rules.

A "statutory director" refers to a formally registered officer with defined powers in the company's bylaws or constitutive documents. This is distinct from informal leadership roles or advisory positions.

Nationality vs. Residency:

• Nationality: No general requirement that directors be Brazilian citizens

• Residency: Some entity types and regulatory frameworks require a resident director or resident legal representative

The distinction matters because residency relates to tax domicile and physical presence, not citizenship. A British executive living in São Paulo could serve as a resident director, while a Brazilian national living in London would be considered non-resident for these purposes.

Entity Type Variations: Rules can differ between Limitada (Ltda/LLC structures) and Sociedade Anônima (S.A./corporation structures), though the general principle of nationality flexibility remains consistent. For S.A. corporations, boards must have at least three members, while Ltda companies have more flexible requirements.

Consider this example: A 300-employee European tech company initially assumed they needed a Brazilian national as director. After consulting local counsel, they learned that appointing their UK-based CFO as a non-resident director was perfectly acceptable, provided they appointed a Brazilian-resident legal representative and completed the required formalities.

For regulated sectors like financial services or defense, additional requirements may apply. Mid-market leaders should obtain sector-specific legal guidance rather than relying on general rules.

Who Can Be a Non Resident or Foreign Director of a Brazilian Company

Brazilian corporate law generally allows both Brazilian citizens living abroad and foreign nationals to serve as company directors or officers. The key legal distinction is resident versus non-resident status for tax and legal purposes.

Eligibility Categories:

• Brazilian resident (living in-country)

• Brazilian non-resident (Brazilian citizen living abroad)

• Foreign resident in Brazil (foreign national with Brazilian tax residency)

• Foreign non-resident (foreign national living abroad)

Non-Executive vs. Executive Roles: Non-executive directors, who primarily provide oversight rather than day-to-day management, often have more flexibility regarding location requirements. Executive director roles may face stricter expectations around availability and local presence.

Physical Presence Considerations: If a director plans to work physically in Brazil on a regular basis, separate visa and immigration requirements apply. This is distinct from the corporate appointment itself. A UK-based CFO serving as a non-resident director wouldn't need a Brazilian visa unless they planned extended stays for business purposes.

Prerequisites for Non-Residents: Foreign non-resident directors typically must obtain a CPF (Individual Taxpayer Registry) and appoint a Brazilian-resident attorney-in-fact or legal representative. The CPF requirement is reinforced by Normative Orders RFB No. 2,119/2022 and 2,172/2024, making it mandatory for all directors. These requirements ensure local accountability and facilitate regulatory communication.

The process may feel administratively heavy for first-time appointments, but it's designed to balance foreign investment flexibility with local regulatory oversight.

Legal Requirements for Non Resident Directors and Officers in Brazil

Appointing a non-resident director involves several sequential steps, each with specific documentation and registration requirements.

Step-by-Step Process:

1. Obtain CPF Registration: The director must register for an Individual Taxpayer Registry (CPF), Brazil's primary tax identification number.

2. Appoint Legal Representative: Select and formally appoint a Brazilian-resident legal representative or attorney-in-fact. This person acts as the local point of contact for regulatory and legal matters.

3. Prepare Power of Attorney: Draft and execute a power of attorney defining the legal representative's scope of authority. This document requires careful attention to avoid overly broad delegations.

4. Document Preparation: Gather identification documents, director acceptance letters, and corporate resolutions. Foreign documents typically require notarization and apostille certification.

5. Commercial Registry Filing: Register the appointment with the relevant state Board of Trade (Junta Comercial). Filings must be in Portuguese and follow state-specific procedures.

6. Banking and KYC Updates: Update bank signature cards, Know Your Customer documentation, and any sector-specific registrations or approvals.

7. Visa Considerations: If the director will live or work in Brazil, pursue appropriate visa status. This is separate from corporate filings but may be required for extended business activities.

The process typically takes several weeks due to document collection, certification requirements, and registry processing times. European companies often benefit from coordinating these steps through experienced local counsel who understand both Brazilian requirements and international documentation standards.

Governance, Liability and Tax Risks for Foreign Directors in Brazil

Serving as a director of a Brazilian company carries real responsibilities and potential liabilities, regardless of whether you're resident or non-resident.

Governance Responsibilities: Directors must act in the company's best interests, maintain proper corporate records, and ensure compliance with applicable laws. These duties apply equally to resident and non-resident directors.

Personal Liability Exposure: Directors can face personal liability for negligence, willful misconduct, or fraud. Brazilian courts can pursue non-resident directors through local legal representatives or international cooperation agreements. Never treat a directorship as merely nominal.

Tax Implications:

• Directors may need Brazilian tax registration and reporting obligations

• Remuneration from director roles can trigger both Brazilian and home-country tax consequences

• Professional tax advice is essential for both the company and individual director

Enforcement Reality: Brazilian authorities have mechanisms to reach non-resident directors, including through appointed legal representatives and mutual legal assistance treaties. The geographic distance doesn't provide liability protection.

Documentation Standards: Maintain robust corporate minutes, clear delegations of authority, and alignment with parent company governance frameworks. Poor documentation can increase liability exposure and complicate regulatory interactions.

For European parent companies, Brazilian director duties often align with familiar UK or EU concepts, but local legal nuances require specific guidance rather than assumptions based on home-country experience.

How Director Rules Impact Mid Market Companies With 200 to 2,000 Employees

Director requirements take on different complexity when you're managing hundreds of employees across multiple countries rather than a single greenfield project.

Centralization vs. Local Agility: European headquarters naturally want control and oversight, but Brazilian banking, audit, and regulatory expectations often require local decision-making authority. The director structure must balance these competing needs.

Regulated Sector Considerations: Financial services, healthcare, and defense companies often face higher local governance expectations than the legal minimum. Regulators may expect more substantial local presence and expertise than a basic compliance approach provides.

Operational Impact Scale: With significant headcount and revenue, director designation affects banking mandates, contract execution speed, and audit responsiveness. What works for a 10-person team can become a bottleneck at 200 employees.

Continuity Planning: Frequent director changes become costly and slow as you scale. Design a model that isn't dependent on a single individual and can accommodate natural turnover without operational disruption.

Common Mid-Market Scenarios:

• Rapid Brazil headcount growth outpacing governance structure

• Board pressure to tighten oversight after compliance concerns

• Conflicting advice from multiple local vendors

• Banking delays due to missing local signatories

• Audit requests requiring immediate director action

The key is building a director model that scales with your business rather than requiring frequent restructuring as you grow.

Director Options for Mid Market Companies Choosing Between Local and Foreign Directors

Mid-market companies typically have three main options for Brazilian directors, each with distinct trade-offs around control, local knowledge, and complexity.

Foreign Executive Director (Non-Resident):

• Pros: Strong alignment with group strategy, tight central control, consistent reporting to parent board

• Cons: Distance from local regulators and operations, additional compliance requirements for non-resident status

• Best for: Companies prioritizing central control with robust legal operations support

Local Employee Director (Resident):

• Pros: Proximity to banks and regulators, faster operational decisions, better local market understanding

• Cons: Potential to overburden key employees, personal liability exposure, requires training on governance responsibilities

• Best for: Growing Brazil operations needing rapid local decisions and regular bank interactions

External Local Director Service (Nominee):

• Pros: Speed for incorporation and transition periods, continuity during leadership changes

• Cons: Governance and reputational risks if used long-term, requires tight oversight and clearly defined scope

• Best for: Short-term bridge during setup or leadership transitions

Evolution Example: A European SaaS company used a nominee director service to launch quickly, then transitioned to their resident country manager as director once the team scaled to 50+ employees. This approach balanced speed with long-term governance quality.

The best choice often depends on your timeline, local team maturity, and risk tolerance rather than a one-size-fits-all approach.

Director Options for European Mid Market Companies Expanding Into Brazil

European companies can often adapt their existing governance models to accommodate Brazilian requirements without creating parallel systems.

Structural Alignment: The common European model of a single parent board with local subsidiary directors translates well to Brazil. Brazilian statutory director requirements can slot into this framework with appropriate formalities.

Policy Overlay Considerations: European financial services, healthcare, and defense firms often impose stricter internal governance requirements than Brazilian law requires. For instance, requiring resident directors even when non-resident options are legally available.

Practical Coordination: Language, time zones, and meeting cadence influence whether directors should be local or European-based. A director who can't effectively participate in urgent decisions may create operational bottlenecks.

Reserved Matters Alignment: Ensure Brazilian director authority aligns with European board charters and reserved matters policies. Avoid creating situations where local directors have authority that conflicts with parent company governance requirements.

Integration Approach: Rather than building separate Brazilian governance systems, adapt existing European frameworks to meet local requirements. This reduces complexity and maintains consistency across your international operations.

Common Pitfalls European Parent Companies Face With Brazilian Director Requirements

Even experienced international companies can stumble on Brazilian director requirements. Here are the most frequent mistakes and how to avoid them.

Assuming Nationality is Mandatory: Pitfall: Rushing to find Brazilian nationals without understanding actual requirements Better Practice: Verify specific residency versus nationality rules for your entity type and sector before making appointments

Underestimating Legal Representative Requirements: Pitfall: Granting overly broad powers of attorney or selecting representatives without proper due diligence Better Practice: Define clear scope of authority and establish monitoring procedures for legal representative activities

Relying on Nominal Nominees Long-Term: Pitfall: Using nominee director services without adequate oversight or accountability measures Better Practice: Treat nominees as short-term bridges with rigorous oversight, transitioning to employees or executives when feasible

Appointing Without Succession Planning: Pitfall: Making mid-level employees directors without considering turnover implications Better Practice: Build scalable director models with clear succession plans and documented transition procedures

Skipping Documentation Standards: Pitfall: Missing appointment letters, unclear authority delegations, and absent corporate minutes Better Practice: Maintain disciplined records and conduct periodic governance reviews

These pitfalls often stem from treating director appointments as purely administrative rather than strategic decisions with long-term implications.

When Brazilian Director Requirements Influence EOR Versus Local Entity Decisions

Director obligations can significantly impact the EOR versus entity decision for mid-market companies evaluating their Brazil strategy.

EOR Simplicity: Using an Employer of Record means hiring in Brazil without forming a local entity or appointing your own directors. The EOR handles all local employment obligations, including any director requirements for their own corporate structure.

Entity Complexity Trade-offs: Local entities require directors, legal representatives, corporate filings, and banking setup. This creates higher fixed costs and ongoing oversight obligations but provides greater control and local credibility.

Common Tipping Points:

• Headcount growth making EOR fees comparable to entity costs

• Client or regulatory expectations for local corporate presence

• Banking and contract execution requirements favoring local entities

• Need for greater operational control and decision-making speed

Strategic Questions for Leadership:

• What governance presence do clients and regulators expect this year versus next?

• How do EOR fees compare to total entity costs including director and legal representative expenses?

• Does our team have capacity to manage director obligations effectively?

• How critical are local banking relationships and contract execution speed to our business model?

The director requirements shouldn't be the sole factor, but they're an important variable in the total cost and complexity calculation.

Practical Steps to Appoint or Replace a Company Director in Brazil

Here's a practical roadmap for mid-market teams coordinating director appointments from European headquarters.

Preparation Phase:

1. Confirm internal approvals through parent board resolutions and ensure reserved matters are properly addressed

2. Gather required documents including identification, CPF registration, and director acceptance letters

3. For non-residents, prepare apostilled documents and select legal representative

Execution Phase:

4. Draft and execute power of attorney defining legal representative scope and authority

5. File appointment documentation with relevant state Board of Trade in Portuguese

6. Update banking relationships, tax registries, and major counterparty records

7. Refresh signature cards and procurement system authorities

Integration Phase:

8. Align internal governance including board calendars and reporting lines

9. Establish monitoring procedures for legal representative activities

10. Document transition procedures for future reference

Timeline Considerations: Allow several weeks for the complete process, with additional time for international document certification. In practice, REDESIM registry system limitations for non-resident directors can cause additional delays. State-specific requirements can vary, so local counsel coordination is often valuable.

The key is treating this as a planned project rather than an urgent administrative task, allowing proper time for documentation and coordination.

How Mid Market Leaders Can Get Strategic Clarity on Brazilian Director Decisions

Getting Brazilian director decisions right requires moving beyond compliance checklists to strategic thinking about your long-term Brazil operations.

Assessment Steps:

• Map current director roles and legal representative mandates against desired control and decision-making authority

• Identify gaps in residency coverage, banking access, and documentation standards

• Model different options including EOR versus entity, foreign versus local directors, and associated cost structures

• Ensure alignment with parent company governance frameworks and reserved matters policies

Strategic Integration: Rather than treating Brazil as an isolated decision, consider how director choices fit your broader global employment strategy. Companies with operations across multiple countries often benefit from consistent governance approaches that can scale and adapt.

Expert Guidance: Brazilian director decisions involve local legal requirements, tax implications, and strategic trade-offs that benefit from experienced guidance. Talk to the experts at Teamed to review your Brazil director options and develop an execution plan that aligns with your European governance framework and growth objectives.

The goal isn't just compliance, but building a sustainable governance model that supports your Brazil operations as they scale from dozens to hundreds of employees.

FAQs About Brazilian Director Requirements For Mid Market Companies

How long does it usually take to appoint or replace a company director in Brazil?

Expect several weeks rather than days due to document collection, certification requirements, and registry processing timelines. The exact duration varies by state and complexity, so plan early and allow buffer time for international document requirements.

Can one person be a director of several Brazilian companies at the same time?

Generally yes, but each appointment carries separate duties and potential liability. Ensure the individual has adequate capacity and proper governance support across all roles.

Do company directors in Brazil always receive a salary or can the role be unpaid?

Either approach is possible. Director compensation has tax and employment law implications for both the company and individual, so coordinate tax and legal advice when structuring arrangements.

How often should mid market companies review their Brazilian director structure?

At least annually or after major changes such as significant headcount growth, revenue milestones, financing rounds, or regulatory developments. Include legal representative arrangements and power of attorney scope in these reviews.

How should European boards oversee Brazilian subsidiaries without adding excessive complexity?

Use clear delegations of authority, focused periodic reporting, and alignment with existing European board practices rather than building parallel governance systems. The goal is integration, not duplication.

What is mid-market?

Mid-market typically refers to companies with 200-2,000 employees or roughly £10 million to £1 billion in revenue. These companies have complex international needs but lack the dedicated internal resources of enterprise-scale organizations.

When should a company move from using an Employer of Record in Brazil to setting up a local entity?

Common triggers include reaching headcount scale where costs become comparable, client or regulatory expectations for local corporate presence, and the need for greater operational control. Director obligations are one important variable in this business case analysis.