Business Law Report: Legal Structure and Foreign Investment in Brazil

This report provides a comprehensive overview of the legal structure of business in Brazil, examining key aspects such as foreign investment, taxation law and incentives, employment laws, contract law, agency, and intellectual property. It discusses the administrative structure, foreign investment regulations, and taxation incentives offered by the Brazilian government. The report also delves into employment laws, outlining the requirements for employment contracts, termination procedures, and relevant taxes. Furthermore, it explores contract law, agency regulations, and the protection of intellectual property rights, including patents, trademarks, and copyright. The report highlights the importance of ethical business practices and the government's initiatives to promote transparency and steady economic growth. Finally, the report provides a detailed analysis of the legal landscape for businesses in Brazil, offering insights into the country's legal framework and its implications for foreign investors.

Running head: BUSINESS LAW
Legal Structure of Brazil
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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................2
Brief discussion on legal structure:........................................................................................2
Foreign investment in Brazil:.................................................................................................3
Taxation law and incentives:..................................................................................................4
Employment laws:......................................................................................................................5
Contract law:..............................................................................................................................6
Agency:...................................................................................................................................7
Intellectual property:..................................................................................................................8
Patents:...................................................................................................................................8
Trademarks:............................................................................................................................9
Registered design:................................................................................................................10
Unregistered designs:...........................................................................................................11
Copyright:.............................................................................................................................11
Tort law:...................................................................................................................................12
Conclusion:..............................................................................................................................15
Reference..................................................................................................................................17

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Introduction:
The policy regarding development of business taken by the Brazilian
government has created certain negative effects on the foreign investment process. The
policies have been taken from legal perspective and an attempt has been made to provide an
overview on the legal structure relating to the business (Faúndez, 2016). Relationship
between the employees is one of the core factors regarding the business development. The
approach of Brazil regarding this matter has been described in this report. Certain legal
initiatives have been taken by the government to uproot the corruption and maintain a steady
growth regarding the business. All the related provision regarding the Competition Law,
Employment Law, Contract Law and Intellectual Property Act have been discussed in this
report with intent to describe the legal effect regarding the proposed matter.
Discussion:
Brief discussion on legal structure:
The administrative structure of Brazil is federal republic in nature and a lean towards
the civil law can observe in this country. The legislative and judicial provisions help to create
ethical relationship in international market and assist to develop the economy of Brazil. In
case of expanding the business internationally, good relationship is required irrespective of
any country (Graham, 2014). The main objective in this case should maintain a good
relationship with the other countries and the nature of relationship should be ethical in nature.
In Brazil, the ethics are governing the business principles. The main objective regarding the
ethical business study is to maintain a nobility in case of business transaction and create an
impressive relation between the business entities. The ethical principles are also help to

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reduce the illegal activities or the white collar crime with an objective to retain clarity in any
transaction.
The legal structure of the business in Brazil allows three aspects regarding the
business that can be categorised as follows: strategic approach regarding the structure and
feature of the business, processes regarding the taxes and imported goods and the relationship
regarding the agency and labour consideration.
Foreign investment in Brazil:
In case of expansion of any business, investments play an important role. Investment
can be national or international. International investments are sometimes known as foreign
investment. Every country needs foreign investment to develop the base of the business and
Brazil is not an exception to this rule (Mattei, 2016). The business policies of Brazil are open
to the foreign investment but there are certain limitations regarding the investment process or
grounds. The limited grounds are the authorised entities of government and can be
categorised as follows:
 Financial institutions
 Press and broadcasting services
 Domestic airlines concessions
 Postal services
 Security and transport that are confidential in nature
 Nuclear energy
 Rural land property
 And Border activities.
Foreign investors could not invest their money in the development of the cabotage
sector. The term cabotage denotes a place where the foreign aircrafts are kept and collected

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foreign nationals of a country and work as a transportation object to connect two points of the
country. There are certain rules regarding the foreign investment. In case of the direct
investment, registration from the Brazilian Central Bank is needed. If the investments are
made to develop the base of the capital market, it must get confirmation from the Brazilian
Securities Commission. There are certain additional requirements regarding the foreign
investment. The foreign investor should appoint a representative regarding the transaction
and the representative should be permanent resident of Brazil (Black, De Carvalho,
&Sampaio, 2014).
In recent times, certain legal provision has been enacted to govern the foreign
investment, all the restriction regarding the foreign investment in the case of health care
sector has been abolished, and therefore, the foreign investment is open for the health care
sector. There is a possibility to launch new proposals regarding the health care sectors in case
of the Brazilian Market.
Taxation law and incentives:
A close analysis on the incentive policies to the investors revealed that Brazil has
offered many opportunities to the investors regarding taxation system. The government on
the taxation incentives has taken a strategic approach and additional benefit will be provided
to those who invest their money in the infrastructure projects like energy, telecommunication,
oil and gas. The government has given certain rebate to the tax free areas and the non-
residents get certain facilities who invested their money in capital market. It should be taken
into consideration that the dividends are exempted from the income tax.
Two types of business vehicles are being used by the foreign investors in Brazil such
as the limited liability companies and the Closely-held company.

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Employment laws:
The main objective of the Brazilian government is to maintain equality in between the
local employees and the foreign employees. The Consolidation of Labour Laws and Brazilian
Constitution 1988 govern the rules regarding the same. in Brazil, the employment contracts
are usually written in nature, though there is no mandatory provision regarding the written
version of the employment contract (Börner et al., 2014). The written framework is a
common practice only. The terms of the written contract are making the working conditions
formal. Certain essentials are necessary for the proper construction of the contract. The
contract type should be written and terms of the contract should be mentioned precisely.
There should be certain paragraphs that mention the reasons for appointing the employees. If
the work is transferable in nature, it should be mentioned in the contract. The position and
remuneration of the employees should clearly be stated in the contract and there shall not be
any ambiguity regarding the incentives and possibility of compensation he gets for sustain
workplace injury. The conditions for the termination should also been prescribed there.
In case of Brazil, the collective bargaining agreements are also applicable in certain
circumstances. Two types of permits are given to the national and foreign employees such as
the temporary and permanent. However, the termination program is quite negative in nature
because the employer has the right to terminate the employees without showing any
reasonable cause to them. However, the employment law has promised certain benefit to the
terminated employees with an intention to protect their interest. If an employee got
terminated from his post on misconduct, the employer will terminate him after issuing a
notice. The employees who are terminated from their post without any cause, they will get

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certain compensation regarding the same. however, termination is illegal if the employee is
suffering from some physical problems like pregnancy and work related accidents.
There are certain taxes imposed on the visa granted to the national and foreign
employees. The permanent visa holders are considered as a citizen of Brazil and the
temporary visa holders are considered as paid employees or get an opportunity to stay in
Brazil for a period of 183 consecutive days per annum. A Brazilian government has to pay
taxes for getting proper services. The taxing process is different in case of the employers. The
payroll percentage is 20% for the employers of company and 22.5% in case of the financial
institution.
Contract law:
In case of Brazil, there are certain rules and statute implemented to ensure clarity
regarding the business. the enlisted legislations can be categorised as follows;
In Brazil, the commercial law, agency contract, contract between government and
international firms, sale contract, lease contract, employment contract, work and technology
contract and suppliers’ contract govern the company related matters. Therefore, it can be
stated that the principal Act regarding the Brazilian business is the Contract Act. All the
provisions will be applied on the company once it got registered from the Federal Revenue
Office. The Brazilian Civil Code is governing the general provisions of the above named
contractual subjects. Certain specific statutes govern other contracts.
There are certain requirements present to define the enforceability of the contractual
provisions. The parties should be competent to enter into the contract, there must be certain
lawful scopes and the terms of the contract should not be illegal in nature. These are
considered as the primary rule regarding the contract. There are certain secondary rules too

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that are depended on the character of the contract. the Brazilian Legislation gives an ample of
opportunity to the parties to enter into the contract as per their own wish and within the legal
parlance and the principle of free will are maintained in this case. In case the terms of the
contract are contradictory in nature or it is impossible to enforce the same, the contract
becomes void in nature. It is important to retain a balance in between the two contracting
parties. It is required that all the conditions to the contract must be beneficiary to both the
contracting parties. It is not required that one party could get plenty of opportunities by the
terms and the other party get less. The most important part in contract is that the provisions of
the contract should not go against the law and the mutual agreement between the parties
should follow legal terms with an intention to legalise the matter. In a case where any one of
the parties to the contract is foreigner, the foreign rules will apply to the contract and
therefore, in case of Brazil, there is no specific governing rule (Börner et al., 2014).
It has been mentioned under Article 224 of Brazilian Civil Code that if the
employment contract has been written in foreign language, it is necessary to translate the
same in Portuguese for the application of Brazilian rules. They are also important to have
certain legal effect. The Brazilian Consumer Code is governing the relationship between the
consumers. Certain voidable principles are being stated under the provision of Article 51 of
the Code. The rules are prevent, exempt, or reduce the seller’s or suppliers' liability for
defects of any kind in goods/services or imply a renouncement or a waiver (by the consumer)
of relevant rights. According to the clauses, "in consumer relations between supplier and
corporate-entity consumers, the amount of indemnity may be limited in justifiable situations".
Agency:
The Brazilian law has described the Agent as commercial representative and the
duties of agent is to work for the promotion of particular product, looking for the customers,
proposal to negotiate and forward the proposals to the seller with whom contractual

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relationship can be established. It is the duty of the agent to provide facilities to the product
and arrange training programmes to structuralise the commercial transactions. The agreement
is needed to be registered and plays an important part regarding the warranty coverage
service. In case of termination of agency, the Brazilian government needed to placed the
event in the territory of Brazil for the implementation of the national laws. The commercial
representatives are required to make an indemnified payment in case of termination from
their post and the process will be reversed in case of termination without cause.
There are certain differences between the agent and distributor. The supplier governs
the activities of the agent, whereas only the suppliers govern certain activities of the
distributors. Agent does not take any title regarding the goods, but the distributors get credit
for the purchase and sell of the goods. There is a provision that the agents may not handle the
products of other suppliers. However, a distributor can handle the product of different
suppliers. The agents do not use their own capital in course of their business, but a distributor
is using their own capital. The agents should bear no risk if the payment fails. The distributor
has to bear financial loss regarding the non-payment.
Intellectual property:
In Brazil, the provisions on intellectual property are applying in case of every type of
related cases. It does not apply on industrial cases only (Mundi, 2016). The important and
commonly used intellectual properties are copyrights, trademarks, patents and designs. The
problems on intellectual properties are governed by the parliamentary commission and
followed the federal law of Brazil. A small discussion on the intellectual properties is to be
given as follows:

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Patents:
The following creations are come under the sphere of Brazil- Novel, arts and certain
industrial applications. Additionally, it can be stated that the practical matters and the
industrial instruments can come under the purview of patents. Any structure or shape that is
inventory in nature can have the right of patent. The right regarding patent helps to develop
the structural object.
Brazil adopts an extensive examination system regarding patent applications. The
INPI (the National Institute of Industrial Property) has all the power to examine the
application submitted before him. The main objective of the applications is to comply with
the official as well as common requirements and intrinsic unpatented. An assessment is
necessary to confirm that the application for patent is not a part of any state’s official arts.
Certain compensations are also provided in cases where the patent rights have been violated.
The right-holder are given the rights to file complain to secure his patent right. Managerial
actions in the National Institute of Industrial Property are obtainable to combat patent
applications or annul patents. Infringement complaints can file in state courts and
cancellation complaints in federal courts. There are certain provisions defining the claims of
right-holders such as injunction search and seize order and damages. Criminal sanctions are
depending on the velocity of the case. Any person can protect his creation for twenty years
under the parameters of patent from the date of filing. The terms of protection shall not be
given less than seven years.
Trademarks:
Trademarks are another form of intellectual property right. It should be kept in mind
that the rights under the must not similar to another trademark. Similar trademarks can create
perplexity regarding the same goods. The legislation also provides certain cryptogram that is
evocative, broad, fraudulent, unlawful or divergent to public order and morality in these cases

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cannot be recorded as trademarks. Brazil adopts a significant assessment regarding trademark
registrations. It is the duty of INPI to take care of the examination and following things are
required in this case: all formal requirements must be complied, internal registration and
contradictions with other trademarks. Security for unregistered trademarks may be accessible
under unjust rivalry rules have been decided at the Paris Convention provisions regarding
well-known trademarks.
The real owner of the registered trademark can force the authority of trademark. The
owner of an unregistered trademark can exercise the same rights. Organizational proceedings
in INPI can be applied to contest trademark request or cancel the registrations. Not all the
Brazilian courts are enjoying similar power regarding the violation of trademark.
Infringement or allegation for violation can be brought in State courts whereas termination
proceedings are filed before federal courts. The claim of the right seekers can be categorized
as injunction on the creation, orders for search and seizure, infringement orders on the
products in case of violation and damages. Certain criminal provisions are also applied
depending on the velocity and effectiveness of the case.
Unlike patent provision, the validity of the trademark is ten years from the date of
registration. However, in this case, the protection can be extended up to unlimited period on
request of the owner.
Registered design:
The industrial design ought to provide the main object with a typical ocular pattern,
which is new and must be original. It is required that the design is not an imitation of others
and there should be certain possibilities to make the design.
The registration proceeding regarding the Industrial design is similar to the other
intellectual properties. An application should be filed before INPI or the National Institute of

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Industrial Property. Brazil has adopted a non-examination system regarding industrial design
submission. Submission will follow the formal requirements and the authority to check the
authenticity is only given to the INPI. It has been mentioned under the provision that
important examination should be made on the request of applicant (Engle, 2014).
The right-holder has the right to file cases if the rights regarding the registered designs
are being violated. Annulment of the provision regarding the registration is a punishable
offence and administrative proceedings can be taken against the wrongdoer. The State courts
have the power to deal with the violation proceedings and terminating process are dealt by
the Federal courts. If the allegations made by the right-holder are proved, he can made certain
prayers such as order of injunction and also claim for damage. If the acts of the wrongdoer
attract certain criminal provision, fine and imprisonment can also be imposed.
Unregistered designs:
In case of unregistered designs, rules on unfair competition will apply. In certain
circumstances, provision of Copyright law will also apply. In case of unregistered designs,
the right-holder may get certain remedies. The provision of Unfair Competition Law will be
imposed in these cases. The rights of the holders are similar to the other rights promised by
the intellectual property. However, no specific time is being mentioned in this case. The
terms of the validity can be extended up to 70 years or more.
Copyright:
The rules are quite soft in Brazil regarding the Copyright protection. If the right-
holder wants to register their name, they can do it by the help of other institutions. However,
it is depending on the nature of the copyright object. In this case also, the right-holder can
claim or infringement if violation regarding his creation can be made by others. He can make
an application to destruct the violence copies and damages can also be given to the right-