On August 21, 2019, the Senate approved law bill nº 21/2019 for the conversion of the Provisional Measure of Economic Freedom (MP 881/2019), which establishes the Declaration of the Rights of Economic Freedom, establishes free market guarantees, regulatory impact analysis, and other measures.

The law bill is pending presidential (total or partial) sanction or veto, which should take place by September 12, 2019.

The long-awaited Provisional Measure for Economic Freedom aims to unlock entrepreneurship and the business environment in Brazil by establishing rules to ensure free markets and regulatory impact analysis.

In summary, as the respective executive summary mentions, MP 881/2019 deals with 3 matters within the scope of the economic activity:

a) interpretative guidelines for the Government before individuals;

b) elimination or simplification of administrative and judicial procedures within the Public Administration; and

c) interpretative and bureaucratic guidelines in the relations between individuals.

In short, from the perspective of corporate law, the MP amends the Civil Code, (i) reinforcing the patrimonial autonomy of the legal entity in relation to its partner (s), except in cases of abuse of corporate entity, which are delimited; (ii) admits sole ownership limited liability company.

With regard to investment funds, the MP includes this figure in the Civil Code, also establishing limits on the liability of quota holders and service providers.

In addition, MP also seeks to expedite the Commercial Companies registration, establishing shorter deadlines for document analysis and records, as well as the automatic deferral of records of less complex corporate acts, provided certain requirements are met.

We also highlight the elimination or simplification of administrative and judicial procedures within the Public Administration. In this regard, for example, the initial text exempted prior authorization from public authorities for low-risk activities for their own or family support. The Senate, extending this freedom, extended the rule to all low-risk ventures. If the classification of low-risk activities is not provided for in specific state, district or municipal law, this will be the responsibility of the Executive.

We believe that all these changes introduced to the business economic environment will support the resumption of economic growth of the country.

If you have any questions or need more information and clarifications, please contact us:

Fábio Barsotti Machado – fmachado@zaslaw.com.br

Marcel Kim Dib – mkd@zaslaw.com.br