When a foreign company decides to operate in Brazil, one of the first questions is who may sign documents, act on behalf of the company and make valid decisions before third parties and government authorities. In this context, three roles often cause confusion: the legal representative of the non-resident shareholder, the director and the attorney-in-fact.
Although these roles may appear related in practice, they are not the same. Understanding the difference is important to avoid corporate, contractual and even regulatory problems.
The role of each person
Put simply:
- The legal representative is the person who represents non-resident shareholders and undertakes corporate obligations before the other shareholders, third parties and government authorities, within the limits of the powers granted to them.
- The director is the person responsible for managing the company and making decisions concerning the conduct of its business.
- The attorney-in-fact, in turn, acts based on specific authorization granted through a power of attorney.
Legal representative of the non-resident shareholder
When a foreign individual or legal entity holds an interest in a company incorporated in Brazil, it must appoint a representative in Brazil for certain formal acts related to its ownership interest.
This legal representative acts as the attorney-in-fact of the non-resident shareholder. Therefore, the legal representative is not necessarily a director of the Brazilian company and does not represent the company in its commercial, contractual or operational activities.
The representative’s primary role is to carry out corporate acts on behalf of the foreign shareholder, such as signing the articles of association, amendments to the articles of association, minutes, shareholders’ resolutions and other documents requiring the formal expression of the non-resident investor’s will.
It is important to emphasize that the legal representative of the foreign shareholder may not undertake obligations on behalf of the Brazilian company. The representative’s authority derives from the power of attorney received and must strictly comply with the powers set forth therein. Those powers may not include management acts concerning the Brazilian company, since such activities fall within the responsibilities of the director.
On the other hand, the representative may undertake obligations on behalf of the non-resident shareholder itself, provided that the representative is authorized to do so and acts within the limits of the power of attorney. This may occur, for example, when the representative signs an amendment to the articles of association involving a capital increase, the transfer of quotas, the appointment of a director or another decision producing effects for the foreign shareholder.
Director
The director performs an operational and strategic role and is the person who represents the company before third parties. The director is responsible for managing the company, conducting its business and making day-to-day decisions, always within the limits established by the articles of association, bylaws or appointment documents.
In the case of a company incorporated in Brazil by a foreign company, the director must necessarily be a Brazilian citizen by birth or a foreign national holding a permanent residence visa. The director is also usually the person who effectively conducts the local operations. Depending on the structure adopted, the director may also hold powers to represent the company.
These roles should not be confused: legal representation is performed on behalf of the non-resident shareholders, especially for the execution of corporate documents, while the director represents and manages the Brazilian company and must be a Brazilian citizen or a foreign national holding a permanent residence visa in Brazil, in accordance with applicable law.
Attorney-in-fact
An attorney-in-fact is a person who receives authority through a power of attorney. Such authority may be broad or limited, depending on the terms of the relevant instrument.
This role is particularly useful for specific tasks, such as signing certain contracts, representing the company in administrative proceedings, acting before government agencies or carrying out operational activities. Generally, an attorney-in-fact does not replace the company’s management structure; rather, the attorney-in-fact acts within the limits of the mandate received.
The main advantage of a power of attorney is its flexibility. However, special care must be taken in drafting the powers granted so as not to confer more authority than necessary — or less authority than the transaction requires.
Main differences
The differences between these roles become clearer when we consider three aspects: the source of the authority, the scope of the activities and the applicable responsibility.
| Role | How authority is granted | What the person does | Main limitation |
|---|---|---|---|
| Legal representative | Through a corporate or statutory act, or a power of attorney granted by the non-resident shareholder | Represents non-resident shareholders in corporate matters | Acts within the powers granted by the shareholder |
| Director | Through a corporate appointment or provision in the articles of association or bylaws | Manages and conducts the company’s business | Acts within the scope of his or her management authority |
| Attorney-in-fact | Through a power of attorney | Performs specific acts on behalf of the grantor | Is limited by the mandate received |
Why this matters
In business practice, confusing these roles can create significant problems. A contract signed by a person who did not have sufficient authority may be challenged. An inadequately drafted power of attorney may delay or even prevent a transaction. An improperly organized management structure may also create uncertainty both within and outside the company.
For foreign companies, this issue is even more sensitive because the relevant documentation is often subject to additional requirements, such as translation, formalization and compliance with Brazilian requirements. Therefore, before starting operations in Brazil, the company should carefully review who will be appointed to each role and which acts each person will be authorized to perform.
What should be reviewed in practice
Before appointing a legal representative, director or attorney-in-fact, the company should verify:
- Whether the foreign company already has a formal structure in Brazil.
- Which acts will need to be performed most frequently.
- Whether it will be necessary to sign contracts, operate bank accounts or represent the company before government agencies.
- Whether the powers should be broad or limited to specific acts.
- Whether the documentation is compatible with the planned operation.
This organization avoids unnecessary rework and helps the company operate with greater legal certainty.
Conclusion
The legal representative of the non-resident shareholder, the director and the attorney-in-fact are not interchangeable roles. Each occupies a different position within the structure of a foreign company operating in Brazil.
The legal representative acts on behalf of the non-resident shareholders, particularly in the execution of corporate documents. The director manages and represents the Brazilian company. The attorney-in-fact, in turn, performs the acts specifically authorized under a power of attorney.
Correctly distinguishing these roles is a simple but important step to provide greater security to the operation, reduce risks and allow the company to operate clearly from the outset.