Sanctioned in August, Law No. 14,195/21 (Business Environment Act) brings expectation of debureaucratization for Brazilian companies and incentive to investments in Brasil. The text is the result of the conversion of Provisional Measure No. 1,040/21, edited by the federal government to improve the position currently occupied by the country - 124th place - in the Doing Business ranking of the World Bank.

Among the legislative changes of a corporate nature introduced by law, the most commented measure is the facilitation of the procedure for opening companies. One of the most relevant aspects of the legal text refers to the possibility of automatic issuance of operating licenses and permits (without human analysis) for medium risk activities, provided that the entrepreneur, partner or legal guardian of the company[1] sign a term of science and responsibility.

Risk classification will consider specific state, district, and municipal laws. In the absence of legal rule, the definition will be based on the classification of the National Network for the Simplification of Registration and Legalization of Companies and Businesses (Redesim).[2] In addition, the Business Environment Act provides for the waiver of firm recognition in acts filed in the commercial boards[3] and prohibits, in the process of registering entrepreneurs carried out by Redesim, request data or information that is already in the federal government database.[4]

The Business Environment Act also amends important aspects of Law No. 6,404/76 (Law of The S/A). The first amendment refers to the provision of plural voting for one or more classes of shares to allow non-majority shareholders to control the company.[5] Such provision does not, however, apply to companies controlled directly or indirectly by the public authorities, public undertakings and mixed-economy companies and their subsidiaries. There was also increased protection for minority shareholders.

Through paragraphs I and II of paragraph 1 of Article 124 of the S/A Law, the new law changed the minimum deadlines for the convening of the general meeting of shareholders, which become:

  • in the case of a closed company, 8 days in advance for the first call and 5 days in advance for the second call; and
  • in the case of a publicly opened company, 21 days in advance for the first call and 8 days in advance for the second call.

Art. 124, paragraph 5, inc. I, it also provides that the Brazilian Securities and Exchange Commission (CVM) may, in a letter or at the request of any shareholder, and after hearing the company, determine the postponement of the general meeting for up to 30 days if the information provided is insufficient for resolution.

With the inclusion of item X in Article 122 of the S/A Law, it will be up to the general meeting of shareholders to decide on the conclusion of transactions with related parties, the disposal or contribution of assets to another company, if the value of the transaction corresponds to more than 50% of the value of the total assets of the company indicated in the last approved balance sheet.

In relation to publicly held companies, paragraphs 3⁰ and 4⁰ article 138 of the S/A Act, prohibiting the accumulation of the positions of chairman of the board of directors and the position of Chief Executive Officer or Chief Executive Officer of the Company[6] and enabling CVM to exceptionalthis rule for publicly held companies with "smaller" companies, based on the terms of its regulations.

In addition, the Business Environment Act inserted paragraph 2⁰ article 140 of the S/A Law, through which it made it mandatory for publicly held companies to participate independent directors, in the terms and deadlines to be defined by cvm. This rule was already observed as a good practice of corporate governance but became legally enforceable under the new law.

In an attempt to boost tax collection, the original text sent to sanction the President of the Republic provided for the extinction of simple societies in the Brazilian legal system – a topic of intense debate in the legal community. However, the provision was vetoed[7] by the President of the Republic, a decision celebrated by several entities – especially those linked to liberal professionals.

Despite this veto, the president sanctioned the extinction of individual limited liability company (Eireli), which was expected, given that, even before the creation of the single-person limited company format, established by the Federal Law No. 13,874/19 (Economic Freedom Law)[8], the Eireli format was already in disuse.

The new law should not be fully capable of producing immediate practical effects, since certain aspects depend on specific regulations and ordinances of the responsible bodies. In any case, the text represents an important step towards the resumption of economic activity in Brazil, fostering entrepreneurship by promoting the debureaucratization of procedures and incorporating values introduced by the Economic Freedom Act of 2019.

 

[1] Art. 6a, Caput and §1 of Law No. 11,598/07.

[2] Art. 5a, Caput law no. 11,598/07.

[3] Art. 63 of Law No. 8,934/94.

[4] Art. 11-A of Law No. 11,598/07.

[5] Art. 16 c/c 110-A of Law No. 6,404/76.

[6] This forecast will only take effect within 360 days of 08/27/2021.

[7]According to the veto message, the device contradicts public interests by profound changes in the corporate regime, subjecting a significant portion of the economically active population to unwanted tax reflexes in municipal laws and adaptation costs.

[8] Civil Code: "Art. 1,052. In the limited company, the liability of each partner is restricted to the value of their shares, but all are jointly and severally liable for the payment of the share capital.

  • 1 - The limited company may consist of one (1) or more persons."