Share Purchase Agreement Brazil
In Brazil, it is customary for a seller to give insurance, guarantees and compensation to a buyer. As a general rule, these presentations related to the seller`s ability and power to carry out the transaction and to meet all obligations arising from the agreements include insurance related to the target or company`s situation (corporate good standing, financial capacity, existing liabilities, ownership of assets and real estate, compliance with regulatory and licensing rules, tax and accounting practices , relationships with public authorities), usually in the case of publicly traded companies and possibly on declarations that are related to the seller`s own business practice if the buyer believes that this could affect the risk of risk of the target entity. In this context, the seller undertakes to compensate the buyer and the target entity for any losses resulting from a misrepresentation or misrepresentation in the agreement, although there is no legal distinction between the insurance and the guarantees provided in connection with the transaction. In accordance with Federal Decree 8.325 adopted on 7 October 2014, foreign credits with a weighted average duration (duration) of more than 180 days are subject to a 0% tax on financial transactions (IOF). A 6 per cent rate of the IOF remains applicable if the maturity is shorter than a 180-day term. Given that the Brazilian government often raises and lowers IOF rates for foreign loans, current IOF interest rates should be confirmed before an agreement is implemented. Equity and asset agreements present similar risks and risks associated with protecting investors from existing objective and asset liabilities. Except in certain circumstances, Brazilian law does not offer special protection to investors in both cases, while the distribution of debts between the buyer and the seller is generally agreed in the corresponding sales and sale contract. When structuring acquisitions and restructurings, it is important to keep in mind the possible application of Brazilian tax rules with regard to transfer prices and disguised profit distributions. In general, these provisions require companies established in Brazil that purchase or sell assets, including shares, from or to a related party, to do so at a specified market value under certain rules. Differences in market value can increase tax or reduce the tax base. In Brazil, the acquisition or sale of a business, business or private asset generally involves the negotiation and execution of a share purchase or asset sale contract between the purchaser and the shareholders, businesses or owners of the target company.