Latitud Go: Frequently Asked Questions

Put simply, the only difference is the jurisdiction – "director" is the legal term in Cayman, while "administrator" (lit. translation administradores) is the corresponding term in Brazil.

According to the Partnership Act in the Cayman Islands, a "director" is someone with power to take care of all of the legal matters for your incorporation there. An "administrator", on the other hand, is someone entrusted to take care of the day-to-day management of your operation in Brazil, and to handle all of your company formation matters in the country – think agency to open a business bank account, signing on behalf of the company, etc.

Carey Olsen is the law firm responsible for the legal process of incorporating your Cayman entity, which is registered as an ELP (Exempted Limited Partnership). In order to represent your company with the Cayman authorities and register it under the Partnership Act, Carey Olsen's corporate services company, CO Services Cayman Limited, will need to be a shareholder, so they will briefly own a single share of your company.

Don't worry though: you and your co-founders get that share back as soon as the company is all set up, before you even undertake any activities. You should also know that they're not able to have any controlling interest over your company with a single share – this transaction is merely bureaucratic and is reversed during the formation process.

Notarization is the process of having a public notary attest to the authenticity of the signatures in a document. An apostille indicates the validity of the notary's seal by the Secretary of State. Your incorporation documents in the US will go through both of these processes so that they'll be recognized by local authorities when it's time to set up your operating company.

For you to sign a SAFE between your business and its investors, you should wait until the formation of the Cayman Holding is complete so its directors can sign on behalf of the company.

You can start receiving capital once the Cayman bank account is open, but in order to wire down the money to the local level you’ll have to first open a Delaware bank account. Once you have corporate bank accounts in all three jurisdictions, you'll be able to manage your cash flow by wiring down money to the US and then to your local operating country.

An Employer Identification Number (EIN) is much like an ID for your company, and it is needed to track its tax withholding status and the overall line of business. Most banks will require companies to have an EIN before offering them banking services, and you'll need an EIN for the Cayman Holding and one for your Delaware LLC.

Technically speaking, your LLC is the only shareholder for your local operating company. That means there are no individuals on the LTDA's cap table who can be appointed as administrators. In order to be able to assign administrative powers to yourself and your co-founders, your LLC needs to register for a CNPJ with the local government so that it can have a legal representative in the country calling all the shots.

For very recently incorporated companies, the certificate of incorporation is usually accepted as good standing. However, the point of a GSC is to show that the company is still as "alive" and compliant as it was at the time of incorporation – so if it's been some time since you set up your corporate structure, you'll need legal counsel to advise you on how to obtain one.

You'll need the assistance of a lawyer in the Cayman Islands jurisdiction for that – our partners at Carey Olsen would be happy to help, or you can seek your own counsel.

As a general rule of thumb, the vesting commencement date is the same as the grant date. If a founder started working on the company before its de facto incorporation, they often use an earlier date to account for the time invested, but it’s important to double-check with investors to see if they are comfortable with using earlier dates.

Check out this article for a few recommendations for LatAm countries – hope this helps!

Definitely not. We typically favor video conference tools like Zoom, and we're not in the habit of calling customers without previously scheduling it. If you need to contact us via phone, we have a dedicated WhatsApp number.

You can do what we call an equity flip, a process to reorganize your existing corporate structure and add a Delaware LLC and Cayman Holding company on top of the existing LTDA. Flips can be quite complex depending on how long your company's been around for, but we'd love to learn more about your specific situation and how we can support it – how about we book a call?

Sadly there's no WikiHow on this one, but we always suggest that founders stick with the Minimum Viable Incorporation for their specific case. The truth is that maintaining an international corporate structure comes at a cost, and it makes no sense to set one up if there's no need for it quite yet. If you're not currently fundraising, you won't need more than a local operating company for now. If you're raising a round that's smaller than US$ 500,000, or if you're raising from local VCs and angels only, talk to your investors and understand what their requirements are in order to write a check – are they willing to invest into the local operating company? If so, stick with just a LTDA for now. If not, ask them if a Delaware LLC and the local operating company would be enough – this way you'd be able to restructure your company at later stages if needed.

Generally speaking, you'll know it's time if you check at least 4 of these boxes:

We are not able to support that because the legal entities are interdependent. A proper setup means that the Cayman Islands holding company owns 100% of the LLC, which in turn owns 100% of the local operating company, and reflecting that requires involvement on all three stages.

You'll need the help of a lawyer in the new country's jurisdiction to set it up. The new operating company will be owned in its entirety by your Delaware LLC, this way you and your investors will have your equity ownership at the Cayman level accurately reflected.

Silicon Valley Bank does not charge a fee to open accounts, and they do not require you to have a minimum balance. They have two different price plans for clients: one recommended for pre-Series A companies, and one for scale ups.

Their plan for early stage startups is called the Edge bundle, and it offers a checking account with no monthly or yearly fees. With this plan, SVB offers services like incoming and outgoing wires, the use of the online banking platform, bill payment and mobile deposits– all free of charge. If we're talking basic needs, the only recurring costs you'll be facing are intermediary fees for wires, which are a flat fee of $20 dollars for transactions over $500 dollars.

Learn more about their offerings here

Establishing your three-layer offshore company structure costs between $6,900 and $8,600 depending on option add-ons like virtual office services, creation of stock option plan, express formation in the Cayman Islands, etc. The price includes all government fees, document templates, and incorporation services. The entire incorporation from start to finish takes 6-8 weeks.

For two layer structures, people usually look for a local operating company and a legal entity in the US. LLCs are tax neutral and offer great advantages for non-US citizens, but on the flip side they make setting up equity incentive plans a lot trickier, and they don't support liquidation preferences. They're a good stepping stone and a temporary solution, but will likely require a change in structure in the future.

The alternative in the US would be a C-Corp, but that would cause you and your business to be subject to double taxation, meaning you'd capture less of the value created. Holding companies in the Cayman Islands support stock options and liquidation preferences while offering tax neutrality, meaning no corporate taxes – this optimizes for tax-efficient exits down the road. You can learn more about it in full detail from this article.

There are a few small details that will be different, but the process as a whole remains virtually the same. Here's what you can expect to be different if you have a US citizen as a shareholder:

It's important to note that in order to be able to incorporate your local operating company, we do need at least one founder to be living in Brazil.

Yes! We support companies as shareholders for your incorporation. Please make sure to flag it to our team in the earlier conversations, since we need to make adjustments to the process and documentation. It will also impact drafting documents for funding rounds later on, so make sure to bring it up with your legal counsel when you cross that bridge too.

According to Brazil's legislation, different economic activities are subject to different tax treatments. This classification is used by local authorities to understand your company's business, and to properly tax it based on the corresponding bracket. Companies can have multiple CNAEs registered under them, and each activity has its own 7 digit registration number. You'll be asked to input the one that corresponds to the product or service provided when invoicing customers and generating Notas Fiscais.

To understand what CNAEs best suit your company, you'll be invited to schedule a call with our partners at BHub where they'll ask a few questions to learn more about all of your income-generating activities. They'll then provide you with a list of CNAEs your company is eligible for and, once you've reviewed them and agreed, they'll make sure to set them up under your LTDA's listed activities. You'll have this list to refer to whenever you're invoicing a customer in the future.

Reach out at go@latitud.com or via WhatsApp and we'll be happy to help.