Regulatory Outlook 2021: The Business Environment Provisional Measure

The Federal Government enacted the Business Environment Provisional Measure (PM n. 1.040/2021), establishing legal modifications designed to improve different aspects of implementing and conducting a business. Additionally, the provisional measure intends to improve the institutional environment, hence, promote the economic recovery after the pandemic and attract of foreign investments.

The legal changes provided by the new provisional measure cover facilitation measures on:

1. Starting a business (Chapters II and VII):

  • Revising registration requirements – unifying federal, state, and municipal registration procedures under a single company registration number (CNPJ number), eliminating company address checks, and establishing automated company name registration;
  • Providing moderate-risk classification for companies, which require simplified company registration procedures in accordance with the Law of Economic Freedom (Law n. 13.874/2019); and
  • Modernizing the professional requirements for translator and interpreter public officials, facilitating company access to government services provided by those officials.

2. Minority shareholder rights (Chapter III):

  • Extending the legal capabilities of company general assemblies;
  • Providing mandatory participation of independent councilors in the general assemblies from public companies; and
  • Prohibiting the overlapping of board positions within large-scale public companies.

3. Foreign Trade (chapter IV):

  • Providing the alignment of the foreign trade regulation to the Law of Economic Freedom, including provisions on the simplification of foreign trade in services regulation;
  • Prohibiting the imposition of import licenses based on product or service characteristics (except when required by regulation), and providing the revision of all existing import licenses;
  • Shifting the investigation of non-preferential rules of origin from an import license conformity assessment (ex-ante) to a post-trade investigation, in alignment to the principles of the Law of Economic Freedom; and
  • Strengthening the Single Foreign Trade Portal, legally providing its best practices.

4. Contract execution (Chapters V, VI and IX):

  • Providing legal definitions on the application of charges from Councils of Professionals, designed to provide administrative measures in order to avoid judicialization of defaulting charges;
  • Authorizing the creation of the Integrated Asset Recuperation System (SIRA, in the Portuguese acronym), designed to identify and locate assets and debtors, asserting due collection; and
  • Including a definition on the interim statute of limitations to the Brazilian Civil Code (Law n. 10.506/2002).

5. Acquiring electric energy (Chapter VIII):

  • Establishing maximum time for authorizing electric energy connection to the power grid (5 days in the least complex scenario), and enabling the Brazilian Electricity Regulatory Agency (ANEEL) to determine maximum time for obtaining the electrical energy required by new businesses.

Note: Provisional Measures are norms with force of law, issued by the Federal Government in situations of relevance and urgency. Despite producing immediate legal effects, Provisional Measures need further consideration and approval by the Brazilian National Congress to become law.