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Again we are delighted to hear from our partners at ACDG Law, one of Brazil’s foremost legal enterprises who continue their detailed expose on Brazilian FIPs – local private equity and venture capital investments.


In our last article published by FDI-Trade[1] we explained and detailed the appropriate structures for private equity and venture capital investments in Brazil, the Fundo de Investimento em Participações  or as they are commonly referred to “FIP”s.

Apart from tax incentives that are both well-known and popular one benefit that is often less considered when considering private equity and venture capital investments in Brazil is the unlimited private regulation of voting rights.

Voting rights are a typically covered by corporate law, which establishes several limitations to protect minority shareholders and ensure the highest standards of corporate governance. In Brazil, as in most of countries, non-voting shares are increasingly rare in capital markets and increasingly rejected by investors.

Local Brazilian law provides that companies may issue just 50% of its corporate capital in non-voting shares. Moreover, complying with international corporate governance standards, BOVESPA, the Brazilian Stock Market, ruled optional regulations, the so-called “New Market” (Novo Mercado), in which the companies shall issue 100% of its capital in voting shares, complying with a one share one vote general rule.

However, the optional regulation is obviously becoming more and more mandatory since international and institutional investors work almost singularly with securities issued by companies who are members of the New Market.

In this scenario, controlling shareholders of Brazilian public companies have their costs increased by the local regulation, and, just as foreign companies controlling shareholders, they look for structures in which these controlling costs can be reduced.

Bermuda´s corporate law, for example, permits 10 votes for each share and is often used to minimize the effects of local limitations. In cases like this the controlling shares of Brazilian company can be held by a company domiciled in Bermuda, thus the final control of the Brazilian company can be held with less than 10% of its corporate capital.

FIP´s regulation therefore ensures that its bylaw may provide different classes of shares, with different political rights, and there is no limitation in the specific regulation regarding limited voting shares or multiple votes per share.

Thus, controlling shareholders of local and foreign companies should understand the some of the less well-known benefits and the high potential of Brazilian investment structures and use FIPs, as opposed to other so called specialized jurisdiction investment vehicles, in order to avoid the high costs of control in public companies.



Bruno Caraciolo

 acdg bruno

Bruno Caraciolo Ferreira Albuquerque graduated in Law from the Católica de Pernambuco University (UNICAP) and is currently completing a master’s degree in Corporate Law at São Paulo’s Pontifícia Universidade Católica (PUC/SP).

He specializes in corporate structuring and restructuring and securitization, as well as the drafting, registration, and negotiation of a wide range of contracts. He deals on a daily basis with transactions involving investment funds, inbound and outbound investments, corporate litigation, and other legal issues. As head of the firm’s Recife office, he is the first contact for clients in Brazil’s north-eastern region.

For more information please contact ACDG Law directly – their website is

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