Corporate Capital Of Limited Liability Companies

As a general rule, no minimum corporate capital is legally required for a limited liability company. For purposes of the Articles of Incorporation of a limited liability company, It is usually suggested that the amount of the corporate capital be consistent with the initial operational needs of the company. In the event that a higher amount is needed afterwards, the partners may increase the corporate capital amount at any time, provided that the initial corporate capital has been fully paid-in.

If the partners decide to increase the corporate capital of the company, an Amendment to the Articles of Association shall be executed and filed before the Board of Commerce of the State where the head office of the company is located.

The partners may pay in the corporate capital in cash, credits or assets.

Contributions to the capital consisting of services are prohibited.

The partners' liability is restricted to the value of their quotas, but all partners are jointly and severally liable for the full payment of the corporate capital. Therefore, according to Brazilian laws, the company's assets are not linked to the partners' net worth. In the event that the company's assets are not sufficient to bear the company's obligations, if the corporate capital has not been fully paid-in, the partners shall be jointly liable up to the amount of the corporate capital. If the subscribed corporate capital has been fully paid-in by the partners, the partners will be solely liable up to the amount of their respective interest in the corporate capital.

The liability limitation is applicable to obligations of any nature, including civil and tax liabilities. With respect to tax liabilities, there is an exception regarding the liability in case the partners act with excess power or against the law or the Articles of Association.1 In these cases, the judge may disregard the corporate entity (pierce the corporate veil) in order to determine that the partners are personally liable for those obligations (i.e. debts of the company).

Contrary to what is required for corporations, in the case of limited liability companies, there is no legal obligation to have an evaluation of the assets contributed to the corporate capital by an independent third party neither to have an appraisal report prepared by such independent third party. Therefore, the amount by which certain asset is contributed to corporate capital is unilaterally set by partner who has offered the asset to the...