LTDA vs S.A. vs SLU: Which Brazilian Entity Is Right for You?

The Short Answer

“For 95% of foreign investors, the LTDA is the right entity. I’ve set up dozens of companies for foreign clients, and the S.A. only makes sense when regulation demands it or when you plan to issue shares to many investors. Since 2019, the SLU has made the LTDA even more attractive — you no longer need a token Brazilian partner.” — Zachariah Zagol, OAB/SP 351.356

For 95%+ of foreign investors opening a company in Brazil, the LTDA (Sociedade Limitada) is the right choice. It’s simpler, cheaper, faster to set up, and has fewer compliance requirements. The S.A. (Sociedade Anônima) is required only for publicly traded companies, regulated sectors (banking, insurance, certain energy companies), and ventures with many shareholders. The SLU (Sociedade Limitada Unipessoal) — a single-owner LTDA — is the go-to for solo foreign investors. And the EIRELI? It no longer exists.

If you’re reading this article to figure out which entity you need, you almost certainly need an LTDA or SLU.

What Are the Entity Types Available in Brazil?

Brazil has several business entity types, but for foreign investors, only three matter: LTDA, SLU, and S.A. Here’s the full picture before we dive deep into each.

Three-Way Comparison Table

How Does the LTDA Work?

The Sociedade Limitada is Brazil’s LLC equivalent. It’s the most common business entity in the country — roughly 90% of all registered companies are LTDAs. For foreign investors using the investor visa, the LTDA is almost always the vehicle.

Ownership and Structure

Ownership: Divided into quotas (cotas). Each quotaholder (sócio) owns a percentage. A minimum of two quotaholders is required for a standard LTDA — but a single person can form an SLU (see below).

Liability: Limited to the total capital of the company. Individual quotaholders are not liable beyond their capital contribution — with one major caveat (see “Piercing the Corporate Veil” below).

Management: Managed by one or more administrators (administradores) designated in the articles of association (contrato social). The administrator can be a quotaholder or an outside professional. For investor visa purposes, the foreign investor is typically the administrator.

Decision-making: Major decisions require a vote of quotaholders representing at least 75% of capital (some decisions require unanimity under Código Civil Art. 1.076). Day-to-day management is handled by the administrator.

Setting Up an LTDA as a Foreign Investor

1. Choose a company name and verify availability at the Junta Comercial
2. Draft the contrato social (articles of association) — this defines ownership, management, activities (CNAE codes), and capital
3. Obtain a CPF if you don’t have one (required for all quotaholders)
4. Register at the Junta Comercial — file the contrato social, pay fees
5. Obtain CNPJ (company tax ID) from the Receita Federal
6. Open a corporate bank account and deposit the initial capital
7. Register for state and municipal taxes (ICMS, ISS as applicable)
8. Obtain alvará de funcionamento (operating license) from the municipality

Timeline: 5–15 business days for basic registration. Add 2–4 weeks for bank account and municipal licensing.

Cost: R$1,500–R$5,000 for registration (government fees + legal). Ongoing: R$1,000–R$3,000/month for accounting (mandatory — all Brazilian companies must have a licensed accountant).

Tax Regime Options for LTDAs

One of the LTDA’s biggest advantages: tax regime flexibility.

Simples Nacional: Simplified tax regime for small businesses with annual revenue up to R$4.8 million (~$960,000 USD). Single monthly tax payment of 4–33% of revenue (depending on activity and bracket). Not available for companies with foreign shareholders — this is relevant for investor visa holders. Foreign-owned LTDAs cannot use Simples Nacional. See our tax regime comparison for details.

Lucro Presumido (Presumed Profit): Available for companies with annual revenue up to R$78 million. Tax is calculated on a presumed profit margin (8% for commerce, 32% for services), regardless of actual profit. Effective tax rate: roughly 11–17% of revenue for service companies, lower for commerce. This is the most common regime for foreign-owned LTDAs.

Lucro Real (Actual Profit): Tax based on actual profit. Required for companies above R$78M revenue, financial institutions, and those with foreign-source income. More complex but can be advantageous for companies with low margins or losses (which offset taxable income).

LTDA Pros and Cons

Pros:

• Simplicity: Minimal governance requirements. No board, no fiscal council, no mandatory meetings.
• Cost: Cheap to form and maintain.
• Flexibility: Quotaholders can agree on almost any profit distribution arrangement in the contrato social.
• Privacy: Financial statements are not published.
• Speed: Registered in days, not months.

Cons:

• Limited transferability: Transferring quotas requires amending the contrato social and, in many cases, consent from other quotaholders.
• No public capital markets: You can’t take an LTDA public.
• No Simples Nacional for foreign owners: Eliminates the simplest tax regime.
• Perception: Some large Brazilian companies and government contracts prefer dealing with S.A.s.

What Is the SLU and Why Did It Replace the EIRELI?

The SLU (Sociedade Limitada Unipessoal) is the most important development in Brazilian corporate law for foreign investors in recent years. Introduced by Lei 13.874/2019 — the “Declaração de Liberdade Econômica” (Economic Freedom Law) — the SLU allows a single individual or entity to form a limited liability company.

What Was the EIRELI and Why Was It Eliminated?

Before the SLU, the EIRELI (Empresa Individual de Responsabilidade Limitada) was the only way for a single person to have a limited liability entity without partners. Created by Lei 12.441/2011, the EIRELI had a critical flaw: it required minimum capital equal to 100 times the national minimum wage.

In 2025, the minimum wage is R$1,412.00, making the EIRELI minimum capital R$141,200 — a substantial barrier for small business owners and solo entrepreneurs.

The EIRELI was officially extinguished by Lei 14.195/2021, Art. 41. All existing EIRELIs were automatically converted to SLUs by operation of law. The Juntas Comerciais processed these conversions administratively — no action was required from the business owner.

“The extinction of the EIRELI was one of the best things to happen to foreign entrepreneurs in Brazil. The R$141,200 minimum capital requirement was absurd for a solo consultant or small service provider. The SLU has zero minimum capital. If you’re reading outdated guides that still recommend the EIRELI, they’re wrong — it doesn’t exist anymore.” — Zachariah Zagol, OAB/SP 351.356

SLU: How It Works

The SLU is functionally identical to a standard LTDA except:

• One quotaholder only. The sole quotaholder holds 100% of the quotas.
• No minimum capital. Unlike the extinct EIRELI, the SLU has no minimum capital requirement (though practical considerations — including investor visa requirements — may dictate a minimum).
• Same contrato social structure. The SLU uses the same articles of association as a standard LTDA.
• Same tax regime options. Simples Nacional (if Brazilian-owned), Lucro Presumido, or Lucro Real.
• Same liability protection. Limited liability identical to a multi-member LTDA.
• Unlimited SLUs per person. Unlike the EIRELI (which limited each person to one), you can form multiple SLUs under the same owner.

SLU vs. Former EIRELI: Side-by-Side

Why the SLU Matters for Foreign Investors

Before 2019, a foreign individual opening a company in Brazil without a partner had two bad choices:

1. Form an EIRELI with R$141,200+ in capital — excessive for many small operations.
2. Form an LTDA with a token Brazilian partner holding 1% — creating unnecessary legal complications, tax exposure for the partner, and dependency on someone else’s cooperation.

The SLU eliminated both problems. Now, a single foreign individual can form a company with any amount of capital, maintain 100% ownership, and enjoy full limited liability. This is particularly powerful for investor visa applicants who want complete control of their entity.

Capital Requirements: SLU vs. Investor Visa

While the SLU has no minimum capital, the investor visa does:

• Standard investor visa: R$500,000 minimum investment
• Technology/innovation tier: R$150,000 minimum investment

These requirements apply regardless of entity type. The SLU’s zero minimum capital means you can form the company first and capitalize it later as the investment arrives — but the visa application requires proof that the capital has been invested and registered with the Banco Central.

How Does the S.A. Work?

The Sociedade Anônima is Brazil’s corporation — a more complex, heavily regulated entity governed by Lei 6.404/1976, one of the most detailed corporate laws in Latin America.

Two Types of S.A.

S.A. Aberta (Open/Public Corporation):

• Shares traded on B3 (Brazilian stock exchange)
• Registered with CVM (Comissão de Valores Mobiliários — Brazil’s SEC equivalent)
• Full disclosure requirements: quarterly financial reports, annual audited statements, material fact disclosures
• Board of directors mandatory
• External audit mandatory

S.A. Fechada (Closed/Private Corporation):

• Shares not publicly traded
• No CVM registration
• Reduced (but still significant) disclosure requirements
• Board of directors optional
• External audit required only in certain cases (Art. 177 of Lei 6.404)

When You Need an S.A.

You must use an S.A. if:

• You’re a publicly traded company or plan to IPO
• You operate in banking, insurance, or financial services (Central Bank/SUSEP requirement)
• You’re in the energy sector (some ANEEL-regulated activities)
• You’re a large infrastructure concession holder
• You want to issue debentures (corporate bonds)

You might want an S.A. if:

• You plan to raise capital from multiple investors
• You want easy share transferability (S.A. fechada shares can transfer without amending the charter)
• You’re planning an eventual IPO or M&A exit
• Your JV partner or Brazilian counterpart requires it
• You’re in a regulated sector that prefers the S.A. structure

S.A. Governance Requirements

Assembleia Geral (General Assembly): Annual meeting required within 4 months of fiscal year-end. Must approve financial statements, allocate profits, and elect directors.

Conselho de Administração (Board of Directors): Mandatory for S.A. aberta, optional for S.A. fechada. Minimum 3 members. Sets company strategy, appoints officers, oversees management.

Diretoria (Executive Officers): At least 2 officers (diretores), elected by the board (if one exists) or by the general assembly. Officers handle day-to-day operations.

Conselho Fiscal (Fiscal Council): Optional but must be installed if requested by shareholders holding 10%+ of capital. Reviews financial statements and management actions.

S.A. Costs

Total annual running cost (S.A. fechada): R$50,000–R$120,000 — 3–8x more than an LTDA/SLU.

What About Capital Requirements and Equity Structure?

LTDA/SLU Capital Structure

No minimum capital. Brazilian law does not require a minimum amount to form an LTDA or SLU. You can theoretically form a company with R$1,000 in capital — though this creates practical problems (banks may refuse to open accounts, counterparties may question your solvency).

Capital payment flexibility. Under Código Civil Art. 1.004, quotaholders are jointly liable for unpaid capital. If the contrato social states capital of R$500,000 and only R$200,000 has been paid in, the remaining R$300,000 is a joint obligation. This affects all quotaholders — even those who paid their share.

Capital types. Capital can be contributed in cash (most common for foreign investors) or in assets (real estate, equipment, intellectual property). Asset contributions require valuation. For RDE-IED registration, cash contributions through the banking system are straightforward; asset contributions create additional documentation requirements.

No share classes. LTDAs cannot issue preferred quotas or different classes of ownership interests. All quotaholders have the same rights per quota. If you need preferred equity, you need an S.A.

S.A. Capital Structure

Authorized vs. subscribed capital. An S.A. can authorize a maximum capital amount in its estatuto (bylaws), then issue shares up to that ceiling without amending the charter. The subscribed capital (actually committed by shareholders) can be lower.

Share classes. S.A.s can issue:

• Ordinary shares (ações ordinárias): Voting rights, no dividend preference
• Preferred shares (ações preferenciais): Dividend priority, limited or no voting rights. Under Lei 6.404/1976, Art. 15, preferred shares cannot exceed 50% of total capital (previously 2/3 before Lei 10.303/2001)
• Founder shares (partes beneficiárias): Entitle holders to a share of profits, but cannot exceed 10% of annual profit

Minimum paid-in capital. For S.A. aberta, shareholders must pay at least 10% of the subscription price at the time of subscription. For S.A. fechada, the estatuto sets the terms.

Debentures. Only S.A.s can issue debentures (corporate bonds) — a significant advantage for companies needing debt financing without bank intermediation. Under Lei 6.404, Art. 52, debentures can be convertible to shares, creating a hybrid financing instrument.

“The capital structure question is where the LTDA vs. S.A. decision gets real. If you need preferred shares, convertible instruments, or easy share transfers for multiple investor rounds, the S.A. is worth the cost. For everything else, the LTDA wins on simplicity.” — Zachariah Zagol, OAB/SP 351.356

How Does Governance Compare in Practice?

LTDA/SLU: Minimal Governance

The LTDA is governed by its contrato social. In practice, day-to-day governance for a foreign-owned LTDA is minimal:

• No mandatory meetings. Decisions can be made by written resolution.
• No board. The administrator manages the company.
• No fiscal council. Unless the contrato social creates one.
• No publication requirements. Financial statements stay private.
• No external audit. Unless the company qualifies as “large” under Lei 11.638/2007 (total assets exceeding R$240 million or annual revenue exceeding R$300 million).

For a foreign-owned SLU with one quotaholder who is also the administrator, governance is essentially: keep your accounting current, file your taxes, and update the contrato social when anything changes.

S.A.: Structured Governance

Even an S.A. fechada requires more governance structure:

• Annual general assembly (must approve financial statements, allocate profits, elect board/officers)
• Publication of financial statements in the Diário Oficial and a major-circulation newspaper — this costs R$2,000–R$5,000 per publication and makes your financials public
• Minutes of all meetings must be registered with the Junta Comercial
• Fiscal council can be demanded by minority shareholders (10%+ of capital)

The governance burden is manageable for a well-advised company — but it’s real overhead that serves no purpose for a solo foreign investor running a consulting business.

How Does Piercing the Corporate Veil Work?

Both LTDAs and S.A.s offer limited liability in theory. In practice, Brazilian courts pierce the corporate veil more frequently than their US or European counterparts.

Under the Código Civil Art. 50 (amended by Lei 13.874/2019), courts can reach personal assets of shareholders/quotaholders if:

• Abuse of legal entity (desvio de finalidade) — the company was used for purposes other than its stated object
• Asset confusion (confusão patrimonial) — personal and corporate finances are mixed

The 2019 Economic Freedom Law tightened the piercing standard, requiring proof of actual abuse rather than mere inability to pay. This was a positive development for investors — but the practical effect varies by court.

Labor courts remain the biggest risk. Under CLT Art. 2, courts routinely hold company owners personally liable for unpaid wages, benefits, and labor judgments — regardless of the entity type. Tax authorities (Receita Federal) can also pursue personal liability for unpaid taxes under CTN Art. 135.

“Brazilian courts, especially labor courts, pierce the corporate veil far more aggressively than their American counterparts. The entity type — LTDA, SLU, or S.A. — matters less than your financial discipline. Keep corporate and personal finances completely separate.” — Zachariah Zagol, OAB/SP 351.356

How Do You Convert Between Entity Types?

LTDA/SLU to S.A.

Possible and sometimes done when a company grows and needs more sophisticated capital structure. The process under Código Civil Art. 1.113-1.115 involves:

1. Quotaholder resolution approving the conversion (requires 75% approval for standard LTDA, or sole quotaholder decision for SLU)
2. Appraisal of company assets by three independent appraisers or a specialized firm
3. Drafting S.A. estatuto (bylaws) replacing the contrato social
4. Constitutive assembly approving the estatuto, electing board and officers
5. Registration at Junta Comercial — filing the estatuto, minutes, and appraisal report
6. Publication of the constitutive assembly minutes in the Diário Oficial

Timeline: 2–4 months. Cost: R$20,000–R$50,000 in legal and registration fees.

Key considerations:

• The company’s CNPJ is preserved — no new tax ID is needed
• All contracts, permits, and licenses remain valid
• The RDE-IED registration must be updated to reflect the new entity type
• Tax regime may need to change (Simples Nacional is not available for S.A.s)

S.A. to LTDA

Also possible, following a similar process in reverse. Less common but sometimes done for simplification when a company no longer needs the S.A. structure.

1. Shareholder resolution at general assembly
2. Drafting contrato social replacing the estatuto
3. Allocation of quotas proportional to shares held
4. Registration at Junta Comercial

Timeline: 1–3 months. Cost: R$10,000–R$30,000.

Multi-Member LTDA to SLU (or Vice Versa)

Converting a standard LTDA to an SLU is straightforward: one quotaholder buys out the others, and the contrato social is amended to reflect single ownership. Going the other direction — SLU to multi-member LTDA — requires amending the contrato social to add a new quotaholder.

Neither conversion requires a new company. The CNPJ and all legal relationships are preserved.

What About the Decision Flowchart?

Question 1: Are you in banking, insurance, or a CVM-regulated activity?

• Yes → S.A. (required by regulation)
• No → Continue

Question 2: Do you plan to go public (IPO) within 3–5 years?

• Yes → S.A. aberta (or S.A. fechada with conversion plan)
• No → Continue

Question 3: Will you have more than 20 shareholders/investors?

• Yes → S.A. fechada (easier share management)
• No → Continue

Question 4: Do you need to issue debentures or preferred shares?

• Yes → S.A. (LTDAs can’t issue these instruments)
• No → Continue

Question 5: Are you a single investor without a Brazilian partner?

• Yes → SLU (simplest and cheapest)
• No → Continue

Question 6: Is your primary goal an investor visa with a business you’ll manage directly?

• Yes → LTDA or SLU (simpler, cheaper, faster)
• No → Probably still LTDA/SLU, unless a specific need above applies

Default answer: LTDA or SLU.

What Are the Foreign Ownership Specifics?

LTDA/SLU with Foreign Quotaholder

• Foreign individual or company can hold 100% of quotas
• Foreign quotaholder needs a CPF (individual) or CNPJ (company)
• If the foreign quotaholder is non-resident, a Brazilian-resident attorney must be appointed with powers to receive legal service (procurador)
• Cannot use Simples Nacional tax regime
• RDE-IED registration required for the foreign capital

S.A. with Foreign Shareholder

• Foreign individual or company can hold shares
• Same CPF/CNPJ and procurador requirements
• Must register with BACEN (Central Bank) for foreign capital registration
• Additional CVM compliance if S.A. aberta

Capital Registration for All Entity Types

For both LTDAs and S.A.s, foreign capital entering Brazil must be registered with the Banco Central do Brasil through the RDE-IED system. This registration is critical because:

• It allows future repatriation of capital and profits
• It documents the origin of your investment (important for investor visa)
• It enables dividend remittances to your home country
• Failure to register can result in penalties and inability to repatriate funds

See our complete RDE-IED guide for details.

How Does Profit Distribution Differ?

LTDA/SLU

Profit distribution is flexible. The contrato social can specify any distribution arrangement — proportional to quotas, disproportionate (giving one quotaholder more), or based on performance metrics. There’s no legally mandated minimum distribution.

Tax on distributions: Currently, dividends distributed to individuals from Brazilian companies are tax-exempt (Art. 10, Lei 9.249/1995). This is one of Brazil’s most attractive corporate features — though reform proposals to tax dividends have been circulating for years.

S.A.

Lei 6.404/1976, Art. 202 mandates a minimum mandatory dividend — 25% of adjusted net profit, unless the estatuto specifies a different minimum. Shareholders can vote to retain profits beyond the minimum, but cannot distribute less than the statutory minimum.

Preferred shares: S.A.s can issue preferred shares (ações preferenciais) with dividend priority — these get paid before common shareholders. LTDAs can’t issue preferred instruments.

Frequently Asked Questions

Can a single person own an LTDA?

Yes. Since Lei 13.874/2019, a single individual can form a Sociedade Limitada Unipessoal (SLU). Before this law, you needed at least 2 quotaholders (which led to the common practice of giving a Brazilian partner or family member a token 1% quota). The SLU eliminated this workaround entirely.

Do I need a Brazilian partner to open a company?

No. A foreign individual can own 100% of either an LTDA (as SLU), multi-member LTDA, or S.A. However, you must appoint a Brazilian-resident procurador (attorney-in-fact) with powers to receive legal service. This person doesn’t need to be a quotaholder — they’re just your legal representative for process service.

Which entity type should I use for the investor visa?

Almost always SLU or LTDA. The investor visa requires investment in a “productive activity” — the SLU/LTDA is simpler, cheaper, and fully qualifies. Using an S.A. for investor visa purposes adds unnecessary complexity and cost unless your business genuinely requires it. See our starting a business in Brazil guide.

Can I use my LTDA for the R$500,000 investor visa and the R$150,000 tech visa?

Yes. Both investor visa tiers accept investment through an LTDA or SLU. The tech tier has additional CNAE code requirements (technology/innovation activities), but the entity type is the same. See our investor visa tier comparison.

What taxes does a foreign-owned LTDA pay?

On Lucro Presumido (the most common regime for foreign LTDAs):

• IRPJ (corporate income tax): 15% + 10% surcharge on presumed profit exceeding R$20K/month
• CSLL (social contribution on net profit): 9% on presumed profit
• PIS/COFINS: 3.65% of revenue (cumulative regime)
• ISS (municipal services tax): 2–5% of revenue (if service company)
• ICMS (state goods tax): varies (if selling goods)

Effective total tax rate for a service LTDA on Lucro Presumido: approximately 13–17% of revenue. See our tax regime comparison for detailed calculations.

Can an LTDA issue stock options to employees?

Not in the traditional sense — LTDAs don’t have “stocks.” But you can create phantom quota plans, profit-sharing agreements (PLR under Lei 10.101/2000), or actual quota grants. For startup-style equity compensation, an S.A. is more flexible.

What’s the annual compliance burden for a foreign-owned LTDA/SLU?

Monthly: accounting (mandatory), tax filings (federal, state, municipal). Annual: income tax return (ECF), DIRF, RAIS, and e-Social labor declarations. Central Bank: annual declaration of foreign capital (if applicable), RDE-IED updates. Budget R$1,000–R$3,000/month for a competent accounting firm. Non-compliance penalties are steep — the Receita Federal fines range from R$500 to 3% of transactions for late or incorrect filings.

I found an old EIRELI registration — what should I do?

If you acquired or inherited a company that was registered as an EIRELI, it was automatically converted to an SLU by operation of Lei 14.195/2021. Check with the Junta Comercial to confirm the conversion was processed. The CNPJ remains the same, and no action is needed on your part — but your contrato social may still show the old EIRELI designation and should be updated at the next amendment.

How ZS Advogados Can Help

I’ve helped dozens of foreign investors set up companies in Brazil — from solo SLU formations for investor visa applicants to complex S.A. structures for joint ventures. As the first American admitted to the OAB (OAB/SP 351.356), I understand both the Brazilian corporate framework and the concerns of foreign investors navigating it for the first time. We handle entity formation, EIRELI-to-SLU conversions, tax regime selection, capital registration, and ongoing corporate governance. Book a consultation to get started.