Share capital: what it is, how to set it, and why it matters for your company
Learn what share capital is, how to set the right amount, how it differs from revenue and net worth, its role in tenders and credit, and how to look it up.
Share capital (capital social) is one of the fundamental data points for any company registered in Brazil. It represents the amount the partners commit to investing in the business at the time of incorporation. Although it seems like a simple concept, share capital has practical implications ranging from opening a bank account to participating in public tenders.
What is share capital?
Share capital is the total amount of resources, in cash or assets, that the partners allocate to the company when it is incorporated or when capital is increased. This amount is recorded in the articles of association (or bylaws, in the case of an S.A., Brazil's corporation type) and appears in the company's CNPJ record (Brazil's national company registry) with the Receita Federal (the Brazilian federal tax authority).
Share capital can consist of:
- Cash: the most common form, transferred directly to the company's account
- Movable assets: equipment, vehicles, inventory, among others (properly appraised)
- Real estate: land, commercial or residential properties transferred to the company
- Rights: patents, registered trademarks, receivables, and other intangible assets
Share capital vs. revenue vs. net worth
These three concepts are often confused, but they represent different things:
| Concept | What it represents | Does it change over time? |
|---|---|---|
| Share capital | Investment declared by the partners at incorporation | Only through an amendment to the articles |
| Revenue | Gross income generated by the company's operations | Yes, monthly |
| Net worth | The company's real value (assets minus liabilities) | Yes, as results come in |
A company can have share capital of R$ 10,000, generate R$ 5 million in annual revenue, and hold net worth of R$ 2 million. Share capital is a static piece of registry data — it does not necessarily reflect the company's current financial reality.
How to set the share capital amount
There is no mandatory formula for setting share capital. However, a few practical criteria should be considered:
- Actual initial investment: share capital should reflect how much will actually be invested in the company to start operations (rent, equipment, initial inventory, working capital)
- Credibility with third parties: very low share capital can give banks, suppliers, and customers the impression of a fragile company
- Specific requirements: some contracts, public tenders, and licenses require minimum share capital
- Asset protection: in limited liability companies (LTDA, SLU), share capital sets the maximum limit of the partners' liability, as long as it is fully paid in
Practical tip: avoid registering symbolic share capital (R$ 1,000) if the operation requires larger investments. Besides hurting credibility, very low share capital can be disregarded by the courts in a dispute (piercing of the corporate veil).
Minimum share capital by company type
Brazilian law does not require minimum share capital for most company types. Here is the situation by company type:
| Type | Minimum capital | Note |
|---|---|---|
| MEI | Not required | Exempt from share capital |
| EI | No legal minimum | Unlimited liability for the owner |
| SLU | No legal minimum | Replaced the EIRELI (which required 100 minimum monthly wages) |
| LTDA | No legal minimum | Freely set by the partners |
| S.A. | No general legal minimum | 10% of the capital must be deposited at incorporation |
| Regulated industries | Varies | Banks, insurers, health plan operators, and other regulated industries have specific requirements |
Although there is no legal minimum for most companies, it is worth remembering that the former EIRELI required minimum capital of 100 minimum monthly wages. With the EIRELI's abolition in 2021 and its conversion into the SLU, that requirement no longer exists.
Practical implications of share capital
The share capital amount has a real impact in many day-to-day business situations:
- Public tenders: many bidding notices require minimum share capital proportional to the contract value (usually 10% to 20%)
- Opening a business bank account: banks evaluate share capital as an indicator of the company's strength when setting credit limits and available services
- Credit and financing: financial institutions factor share capital into risk analysis when granting loans and credit lines
- Contracts with large companies: corporate buyers commonly require minimum share capital from suppliers as a qualification criterion
- Immigration and visas: foreigners applying for an investor visa must prove a minimum investment, usually represented by the share capital
How to change the share capital
Share capital can be increased or reduced through an amendment to the articles of association:
Capital increase
- The partners approve the increase and the form of payment (cash or assets)
- An amendment to the articles of association is drawn up
- The amendment is filed with the Junta Comercial (the state board of trade)
- The Receita Federal automatically updates the CNPJ record
Capital reduction
- Only allowed in case of irreparable losses or if the capital is excessive
- Creditors have 90 days to oppose the reduction
- Requires publication in the press (for LTDAs with more than 10 partners and for S.A.s)
- Must be filed with the Junta Comercial after the opposition period ends
How to look up any company's share capital
Share capital is public information, recorded in the company's CNPJ registration with the Receita Federal. On Inddex, you can look up the share capital of any Brazilian company for free:
- Go to the search page
- Type the company's CNPJ or name
- The share capital appears in the registration data, formatted in Brazilian reais (R$)
This information is especially useful for evaluating suppliers, checking tender requirements, and performing due diligence in business negotiations.
Subscribed vs. paid-in capital
Two important concepts related to share capital:
The law allows capital to be paid in installments (except for S.A.s, which require 10% at incorporation). Until the capital is fully paid in, each partner remains liable for the unpaid portion, even in limited liability companies.
Frequently asked questions
Can share capital be withdrawn from the company?
Not directly. Share capital is meant to fund the company's operations. Partners can receive profits (dividend distributions), but withdrawing the share capital itself requires a formal reduction approved by the partners, filed with the Junta Comercial, and subject to the creditors' opposition period.
Does high share capital mean a solid company?
Not necessarily. Share capital is an amount declared at incorporation and may be outdated. A company with high share capital may have burned through the entire investment and be in debt. Likewise, a company with modest share capital can be highly profitable. Share capital is an indicator, but it should not be the only evaluation criterion.
What is paying in capital with assets?
It is when a partner transfers assets (real estate, vehicles, equipment) to the company instead of cash. The assets must be appraised, and the value is recorded as part of the share capital. In LTDAs, the appraisal is done by the partners themselves (who are jointly liable for the valuation). In S.A.s, an appraisal by 3 experts or a specialized firm is mandatory.
Does the MEI have share capital?
The MEI (Microempreendedor Individual, Brazil's individual microentrepreneur category) is not required to declare share capital. However, it may state a symbolic amount at registration if desired. That amount has no practical impact on the MEI's operations. Learn more about the different company types in Brazil.