Corporate
On March 30, 2021, the Brazilian Federal Government issued the Provisional Measure (MP) No. 1,040/2021, in order to improve the business environment in Brazil and contribute to elevating the country's position in the World Bank's “Doing Business” ranking.
MP No. 1,040/2021 sets forth legislative changes in eight areas, to wit:
1. Easing of starting a business
- Unification of federal, state, and city tax registrations in the National Register of Legal Entities (CNPJ);
- Elimination of company addresses’ analysis;
- Prior checking of business names over the Internet and use of CNPJ number (tax identification for legal entities) as a business name.
2. Protection of minority shareholders
According to the Brazilian Federal Government, the changes brought by MP No. 1,040/2021 in the Brazilian Corporate Law follow the best practices defined by the World Bank, increasing the decision-making power of shareholders, especially minority shareholders, including:
- Increase of the advance notice period for calling general meetings and sending relevant information to the shareholders, from 15 to 30 days. The Securities Commission (CVM) is also authorized to postpone the general meeting for up to 30 days if relevant documents are not disclosed to shareholders;
- Prohibition of accumulation of the positions of Chief Executive Officer and Chairman of the Board of Directors, a situation considered a non-recommended corporate governance practice;
- Obligation of independent directors in the composition of the Board of Directors of publicly-held companies.
3. Facilitation of foreign trade
- Prohibition of import licensing requirements due to the characteristics of the goods when there is no normative act with the provision;
- Availability of a single electronic ticket window for foreign trade operators;
- Form filling digitization;
- End of the requirement that imports and exports of state-owned or tax-favored goods be made by ships with the Brazilian flag;
- End of prior import licenses related to investigations of non-preferential origin.
4. Integrated Asset Recovery System (SIRA)
- Establishment of the SIRA system, which will gather registration data, relationships and equity bases of individuals and companies, aiming to reduce the transaction costs of granting credit by increasing the effectiveness of lawsuits involving the recovery of public or private credits.
5. Charges made by professional councils
- Professional councils may take administrative collection measures, such as extrajudicial notification, inclusion in delinquent registries and protest of active debt certificates. The amendment would serve to contribute to the reduction of the Brazilian judicial overcharge.
6. Profession of translator and public interpreter
- New regulations for the profession of public translator and public interpreter, revoking Decree No. 13,609, of 1943, aiming to reduce the bureaucracy of the profession by allowing translators to operate throughout the country and to carry out their work electronically.
7. Obtaining Electricity
- Solutions for the supply of electricity, such as the establishment of a deadline for the Government to authorize the execution of works to extend electricity distribution networks. The changes seek to increase the speed of some processes of access to electricity.
8. Intercurrent limitation period
The intercurrent limitation period is the extinction of a right in the course of a certain judicial procedure due to the inaction of its holder. Although doctrine and jurisprudence already recognized the existence of the institute in Brazilian Law, the MP brought the following innovation:
- Amendment of the Civil Code to ratify the institute of intercurrent limitation period, determining that it will follow the same term of the procedure’s main claim limitation period.
It is worth clarifying that the provisional measures are rules with legal force issued by the President in situations of relevance and urgency. Despite producing immediate legal effects, the provisional measures need a later approval by the National Congress to be definitively converted into an ordinary law.
The Brazilian Federal Government expects that the National Congress will approve MP No. 1,040/2021 proposal later this year.