The short answer
Most foreign-owned companies in Brazil are limited companies, or LTDAs. They are simpler, cheaper to maintain and flexible enough for subsidiaries, founder-owned businesses and holding vehicles. The corporation, or S.A., is the right choice where the business expects institutional investors, multiple share classes, a board of directors or a future listing.
Liability and capital
Both forms limit the owners' liability to the capital subscribed. Neither has a statutory minimum capital for most activities. The LTDA's capital is divided into quotas held by partners; the S.A.'s into shares held by shareholders. An S.A. may issue preferred shares with economic or voting differences, which the LTDA cannot replicate cleanly.
Governance
An LTDA is managed by one or more administrators, who may be partners or third parties, with rules set in the articles. A privately held S.A. must have at least two officers and may have a board of directors; certain matters require shareholder meetings with formal notice and minutes. The S.A. is therefore heavier to run, which is precisely what institutional investors want.
Publicity
An S.A. must publish its financial statements, subject to simplified rules for smaller companies. An LTDA generally does not, and its accounts remain private except to the tax authorities.
Cost and speed
Incorporating an LTDA is faster and its ongoing corporate housekeeping is lighter. An S.A. involves more formal acts, more filings and higher professional costs each year.
Single owner
Both forms accommodate a single owner. The single-member LTDA is the most common vehicle for wholly owned subsidiaries of foreign groups. A wholly owned S.A. subsidiary is also possible where the parent is itself a company.
Converting later
An LTDA can be converted into an S.A. when the need arises, for example ahead of a venture round. Conversion is a corporate act filed at the Board of Trade; it does not create a new company or a new CNPJ. Starting as an LTDA and converting when investors require it is the usual and sensible path.
Rule of thumb
Choose an LTDA unless you have a concrete reason for an S.A.: an imminent institutional investment, the need for preferred shares, a joint venture with formal board governance, or a regulatory requirement in your sector.