Twitter Takes Flight from Brazil

Twitter, now rebranded as X, has become largely inaccessible in Brazil following a standoff between its billionaire owner, Elon Musk, and Brazilian Supreme Court Justice Alexandre de Moraes. The dispute, centered on issues of censorship and misinformation, has resulted in millions of dollars in fines and the blocking of the platform across the country.

But the issue extends beyond free speech. It underscores a crucial aspect of Brazilian corporate law: the requirement for every company in Brazil to appoint an administrator.

Under Brazilian law, legal entities must have an administrator. The administrator is similar to a corporate officer in the US and is responsible for ensuring the company’s compliance with local regulations. Although X has withdrawn its employees from Brazil, it hasn’t formally dissolved its legal entity in the country. Therefore, it’s still required to have an administrator to manage its legal and regulatory obligations.

The role of an administrator in Brazil carries substantial responsibilities and potential liabilities. If a company fails to comply with Brazilian regulations or court orders, its administrator could be held personally liable. In the case of X, the former administrator’s bank accounts were frozen, and she was reportedly facing the possibility of prison.

For companies operating in Brazil, the stakes are high. Failing to appoint an administrator can lead to fines, legal sanctions, and even a ban on business operations. Given the personal risks involved, finding someone willing to take on the role of administrator is becoming increasingly challenging. The stakes are just that high.