How to Open a Second Branch in Brazil
Some procedures and requirements are needed before expanding your business in Brazil. This article brings information about what is needed to open another branch in Brazil.
There are many possible reasons for establishing additional branches, such as the intention to attract new consumers, enter new markets, increase profits, expanding capacity or simply needing to establish in a different place.
If the goal is to immediately have an additional location while keeping full administrative control of the business, a second branch might be just right. Just have in mind that, in Brazil, there are different procedures to have a new branch in a state other than the one where the headquarters are located.
Legal Requirements
The standard procedure to open a new branch in Brazil is:
- Registration at the Board of Trade
- Registration at the Federal Revenue
- Obtaining an additional CNPJ
- Noticing FGTS (Severance Indemnity Fund) and INSS (National Institute of Social Security)
- Registration at the Treasury Department of the municipality or state
- Obtaining a business license and other permits
Opening a branch in the same State
The first step for anyone interested on establishing a new location is to search for the local Board of Trade, where the registration of the new branch is needed. In order to do so, it is necessary to submit the following documents:
- Application to register the new branch
- Amendment of the Articles of Association, signed by the partners or attorneys
- Ficha de Cadastro Nacional (FCN, or National Register Form)
- Proof of payment of the required fees, which vary from state to state
After submitting the documents to the local Board of Trade, the new branch must have a CNPJ of its own. This is done through forms made available by the Federal Revenue. The new CNPJ number is quite similar to the existing one: the only difference are the digits from position 9 to 12, which will correspond specifically to the new location. After that, it is necessary to prepare ways of collecting contributions such as FGTS and INSS, if personnel are hired.
If the new branch will be providing services, it is necessary to be registred at the Municipality Treasury Office. However, if the activity being performed is commercial, the registration must be done at the State Treasury Office. In both cases it is necessary to obtain a separate license to issue nota fiscal.
Lastly, there are legal requirements regarding working rights and the facility where the business is taking place. The Ministry of Labor must issue a Certificado de Aprovação de Instalações (CAI, or Certificate of Approval of Facilities), which is done after the inspection processes. The same happens in relation to safety conditions.
Opening a branch in a different State
The procedure is quite similar if the new location is being opened in a different state. At the Board of Trade located in the same state as the company’s headquarters, the documents submitted must be the same as mentioned previously.
In addition, it is necessary to submit documents at the Board of Trade located in the state where the new branch will be, such as:
- Application to register the new branch
- Certified copy or original Simplified Certificate, issued by the headquarters’ Board of Trade; OR certified copy of the Articles of Association
- Certified copy of the Act deciding for the opening of a new branch, issued by the headquarters’ Board of Trade; OR Certified copy or original Simplified Certificate, issued by the headquarters’ Board of Trade
- Ficha de Cadastro Nacional (FCN, or National Register Form)
- Proof of payment of the required fees, which vary from state to state
Note that, in Brazil, naming rights are protected by the Boards of Trade at a state level. This means that if there is already a business, in the state where the new branch will be inaugurated, with the same parent company name, the opening will not be authorized. In this case, either the parent company must change its name or a lawsuit can be filed to get nationwide protection of the naming rights - which can take a few years.