New Brazilian Business Environment Law

On August 26, 2021, Provisional Measure No. 1,040/2021 was signed and converted into Law No. 14,195/2021 (“New Business Environment Law”). The New Business Environment Law seeks to simplify the opening and operation of companies in Brazil, aiming to make the country advance at least 20 positions in the World Bank's Doing Business ranking. The index is considered an international reference and measures the ease of doing business in different countries around the globe.

The New Business Environment Law seeks to stimulate the resumption of economic activity after the pandemic and to attract foreign capital. It aims to facilitate entrepreneurship in the country by promoting simplification, legal certainty and less bureaucracy. Furthermore, the new law is aligned with the liberal economic agenda of the federal government, joining recent measures such as the Economic Freedom Law and the privatization of Eletrobrás.

The New Business Environment Law entered in force on its publication date and will start to produce effects:

1. in 3 years for the procurement of electricity for consumers in specified urban areas;
2. in 360 days for the change in the prohibition of the accumulation of positions in publicly held companies;
3. in 180 days for the electronic charging of taxes related to foreign trade operations;
4. on the first business day of the month following the date of its publication regarding arts. 8, 9, 10, 11 and 12 and for the items III a XV, XVIII, XXIII and XXXI of the mains section of art. 57; and;
5. on the date of its publication, for the other provisions.

The main measures of the New Business Environment Law include:

• Easing the opening and operation of companies: Changes were implemented in Laws No. 11,598/2007 and No. 8,934/1994. These changes must now be implemented within 60 days of the New Business Environment Law’s publication by the competent bodies, entities and authorities. Among them, it is worth noting these: the automatic granting (i.e., without human analysis) of business licenses and other documents for companies classified in medium-risk activities; the unification of federal, state and municipal tax registrations in the National Register of Legal Entities (CNPJ); the maintenance of the electronic system by the bodies involved in the process of registering and legalizing companies; the electronic citation of legal entities; the expansion of credit modalities for limited companies; the ending of the residency requirement for foreign administrators; the removal of restrictions on foreign investment in some sectors; greater freedom for operating hours; the adoption of digital books and the removal of the requirement that an address be provided for the establishment.

• Governance: Among the changes are the creation of a super (plural) vote; the expansion of  the general meeting’s powers; the new obligation of an independent board member; and the extension of the deadlines for calling shareholders' general meetings from 15 to 21 or 30 days in certain cases. The Brazilian Securities and Exchange Commission will establish transitional rules for the obligations arising from such changes. For more information, see our Governance Legal Update.

• Easing of Foreign Trade: The New Business Environment Law standardizes the payment of international trade fees, simplifies international trade in services, and abolishes SISCOSERV. Several other simplifications were implemented for licenses, authorizations and administrative requirements, such as prohibiting agencies and entities of public administration from requiring documentation other than through a single electronic ticket. Changes have also been implemented in Law No. 12,546/2011 regarding the foreign trade of services, intangibles and other operations that produce variations in the assets of individuals, legal entities or other entities and to the non-preferential origin.

• Integrated Asset Recovery System (“SIRA”): Instituted by the federal executive power, under the governance of the general attorney of the National Treasury, the SIRA seeks to promote the effectiveness and efficiency of asset recovery actions by:

1. strengthening judicial decisions that aim to satisfy any obligations;
2. gathering data from legal entities and individuals to support judicial decisions in the scope of asset recovery and make such data available to interested users in a structured and organized manner; and
3. ensuring significant data and information inputs for the recovery of public or private credits.

• Profession of public translator and interpreter: Provides for this work in electronic media, removes the restriction of work to a certain state and removes the requirement for a public auction. Hence, individuals will be qualified to register to be a public translator or interpreter of one or more foreign languages, provided they meet certain proficiency requirements.

• Obtaining electricity: Accelerates the connection of electricity for low-complexity works and for new ventures. A maximum deadline of 5 days is set for authorization of works to expand the electricity grid on urban roads, with tacit approval if the authority does not give the approval. Obtaining electricity must be requested from the local concessionaire or permissionaire, who must follow the necessary procedures, within 45 days, for urban areas framed in group A and must have a responsible technician to respond administratively, civilly and criminally in case of damage.