The Federal Government issued a provisional ruling (Medida Provisória 1.040 of March 29, 2021) with important innovations in Corporate Law and in the set up and legalization of businesses in Brazil.
The intention is to modernize and simplify the business environment, with a clear purpose of improving the country’s position in international rankings, especially the World Bank’s Doing Business.
Among the topics covered by that ruling are the simplification of procedures for opening new companies and some measures for the protection of minority shareholders. These are matters that can potentially improve external interest in Brazil by reducing bureaucracy, on one hand, and encouraging foreign investors to assume a minority stake where local shareholders might otherwise take advantage of their dominant position.
Since 2007, a system called REDESIM was created to integrate various government agencies involved in the legalization of companies, enabling companies to present their applications using a centralized platform. The new ruling in expected to improve the process by forbidding those agencies from requesting information previously submitted by applicants during the process, avoiding inconsistencies in the data and adding speed.
Documents submitted to the company registry (Juntas Comerciais) will no longer require certified signatures, and the certificates issued by the registry will be officially recognized as a deed for the purposes of documenting property transfers as contribution to the companies’ capital (as in real estate or motor vehicle registries, for instance).
In what concerns protection of minority shareholders, the ruling introduced some changes to the Corporations Law (Lei n. 6.404/76) by adding certain matters to the exclusive authority of the shareholders’ general assembly. This includes acts of transformation, merger or split, dissolution or liquidation, bankruptcy requests and court-based reorganization.
Listed companies will now have to rely on the general assembly to decide on the sale of assets worth more than 50% the total assets of the company, and to decide on transactions with related parties that are deemed relevant by the securities and exchange commission (Comissão de Valores Mobiliários – CVM).
Summons to the general assembly of shareholders in listed companies will require a prior notice of 30 days, instead of 15, and the CVM will be entitled to delay the meeting when it finds that the documents and information were not sufficiently or correctly provided to the shareholders.
A new restriction (which will only become mandatory in 360 days from the new ruling) is that it will no longer be possible to have the same person occupy the positions of chairman of the board and CEO of a listed company, though the CVM may implement exceptions to that rule, applicable to smaller companies. CVM will also determine criteria for independent members to take part on the board.
Other innovations introduced by Medida Provisória 1.040 include rules that facilitate foreign trade and asset recovery.
Orlando Parente da Camara Filho – Graduated from UFAM (Universidade Federal do Amazonas) in 2002. In December 2004, he obtained the degree of Specialist in Contract Law by PUC-SP (Pontifícia Universidade Católica de São Paulo). He also holds a Specialization Degree in Corporate Law, also from PUC-SP. Member of the Brazilian Bar Association, São Paulo State, since 2004. Associated to the American Bar Association.