Conversion Bill 15/2021 of Provisional Presidential Decree 1.040 – Extinguishment of the EIRELI

On June 23, 2021, the drafting of the Provisional Presidential Decree 1.040 (“PPD”) was approved by the House of Representatives, bringing an important change to corporate law, the transformation of the Limited-Liability Proprietorship (“EIRELI”), introduced by Law no. 12.441/11, into Single-Member Limited Liability Company (“SLC”), introduced by Provisional Presidential Decree 881, which was later converted into Law no. 13.874/19.

Such transformation is explained in the Conversion Bill (“CB”) 15/2021 of the PPD, which in its article 41 has the following wording: “Art. 41. The Limited-Liability Proprietorship existing on the date of this Law shall be transformed into Single-Member Limited Liability Company regardless of any alteration in their articles of incorporation. Sole paragraph. An act of the Drei will regulate the transformation referred to in this article.”

Further on, article 57 of the CB brings a series of legal system to be revoked, among them, item VI of article 44 caput of the Civil Code and article 980-A of the same Code, as being articles that regulates the EIRELI.

The dissimilarity between EIRELI and the SLC is not drastic. Both are formed by an individual or legal entity and have a separation between corporate and personal assets. The main difference is in the requirement brought applicable to the EIRELI of a Capital corresponding to 100 minimum wages, while the SLC does not have a minimum Capital parameter for its constitution.

To the extent that the SLC is already regulated by the Brazilian legal system since 2019, the extinction of the EIRELI does not promise to bring great changes, but it will help in the decision making of entrepreneurs, to simplify the company types, since the doubt between constituting an EIREL or a SLC was frequent. On the other hand, without the minimum provision of Capital, there may be an increase in demands presented to the judiciary system to resolve conflicts regarding the financial capability of the natural person to become a member of a limited liability company with low capital or of companies with capital value contradictory to the economic activity.

Anna Lucia Gonçalves

Maria Beatriz Bonifacio