How to Fire the Company Administrator
Firing the administrator or administrators of a company is not as simple as showing them the door. Legal and financial measures need to be taking in order to make a smooth transition from the old to the new.
When starting a business in Brazil, a Brazilian is commonly hired to be the administrator of the company. The reasons for having a Brazilian administrator vary from immigration and legal requirements to general facilitation, but what if the relationship sours? If the administrator isn't good, not performing or simply a better administrator is desired, the current one will have to be fired or let go. The following processes and procedures need to be executed in order to complete such a transfer.
Social Contract
The social contract, contrato social, is how a business is legally formed. It is also how the new administrator will be designated and the old administrator will be removed. An accountant will be necessary to carry out the process of designating a new administrator.
The steps for reformulating the social contract are as follows:
- Alter the social contract of the CNPJ designating the new administrator and removing the old. The alteration must be done via the Receita Federal do Brasil – CNPJ 2.7 – Programa Gerador de Documentos do CNPJ or the CNPJ Document Generation Program.
- In the QSA form on the Receita Federal site, short for Quadra de Sócios e Administradores, outline the old administrator’s exit date and the new administrator’s entry date.
- Verify delivery receipt of the alternation by the Receita Federal.
- The declaration of fiscal benefits, or Declaração de Beneficios Fiscais, will be emitted and needs to be signed by both the new and the old administrator. Note that these signatures will have to be notarized at a notary, or in Brazil a cartório.
- Deliver the declaration to the Receita Federal and don’t forget to get a receipt!
The timeframe for this process really depends on how fast the company can make the changes to the contract, get and notarize the appropriate signatures, and deliver to the Receita Federal. A good expectation is 1 – 4 weeks.
Banking
The next step in the process is to transfer the banking information from the old administrator to the new. The process is simple yet crucial as once the old administrator is no longer legally responsible for the company, their financial responsibilities need to be removed as soon as possible. The steps for transferring the bank account holder do not vary significantly from bank to bank. They are:
- Bring the newly formalized social contract to the local bank branch office where the account was opened.
- Inform the account manager that you would like to make an alteration on the account(s) and that one administrator has left and a new one has entered.
- Present the social contract to the account manager so that the alternation can be made.
- The new administrator will need to be present along with any current administrators or other members on the account. They will need to sign the proper paperwork for taking responsibility of the bank account(s).
- The old administrator does not have to be present to sign and paperwork or release. The social contract suffices to remove the old administrator from the account.
The timeframe for this process really depends on how fast the company can get to the bank once the social contract has been updated and delivered to Receita Federal. It can be completed in 1 day.
Credit Agency – Serasa
The last part, but certainly not the least, is to transfer the account holder on Serasa to the new administrator from the old. The process is the simplest and least time consuming of all three. The steps are:
- Fax into Serasa the new and the old version of the social contract that clearly demonstrates the effected administrator changes made to the contract.
- Include in the fax the Serasa account information and the CNPJ information, which should be included in the social contract.
- Serasa will make and confirm the alteration within 5 business days.
The timeframe for this process really depends on how fast the company can submit the documents to Serasa once the social contract has been updated and delivered to Receita Federal. It can be delivered in 1 day with a maximum of 5 business days for Serasa to make the change. Allowing 1-2 weeks is a good expectation for completion.
Process Differences between LTDA and SA
There aren´t many procedural differences in the transfer of administrator process between LTDA and SA. The real difference is that an SA is a more structured company with an unlimited amount of partners or shareholders, a board and maybe more than one administrator. Consequently, the major differences in the process will stem from potentially more complex and bureaucratic internal procedures in a SA company than a LTDA company. However, the steps and procedures are the same.