Business Establishment

Any entrepreneur needs to organize the elements of the production by applying a minimum set of assets (tangible and intangible) for the operation of an economic activity. The Brazilian law has given the name of "establishment" ("estabelecimento") for this group of assets to support an economic activity. The Brazilian Civil Code in section 1,142 defines "establishment" as a group of assets organized for the activity of a company by an entrepreneur (individual) or by a business company.

Establishment can be defined as a conglomerate of assets used for the company to operate a business. The establishment comprises both tangible goods (such as buildings, facilities, inventories), and intangible goods (such as trademarks and patents).

Law no. 9,279/96 ("Intellectual Property Law") sets forth the rules applicable to intellectual property, providing that they are assets that could comprise the invention, utility model, industrial design and brand. The business name is not regulated by the Intellectual Property Law, but rather by the Civil Code.

A company may have more than one establishment (one is operated by the headquarters and others that can be operated by the branches of the company).

The places where the company will have its establishments may be owned by the company or leased by third parties. If the company executes a lease agreement with a third party to rent a space for the operation of its activities, this non-residential lease will be ruled by Law no. 8,245/91. Such law provides for the mandatory renewal of the lease, provided that certain conditions are met, specifically: (i) the contract must have been made in writing and for a defined term; (ii) the minimum term of the contract or the sum of the periods of uninterrupted written contracts must be at least five years; and (iii) the lessee must be exploring the same business for a minimum uninterrupted period of three years.

The contract for the sale, usufruct or lease of an establishment will only produce effects before third after if it is registered with the Board of Commerce or in the Public Registry of Companies, as the case may be, and then published in the official press.

Important to note that if the seller does not remain with sufficient assets to solve its liabilities, the effectiveness of the transfer of the establishment will depend on the payment of all creditors or the consent of the creditors. Therefore, it is advisable that the buyer, before buying an establishment...