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Provisional Presidential Decree No. 1.040/2021

The recently published Provisional Presidential Decree No. 1.040/2021 (hereafter referred to as “PPD”) seeks to encourage the business environment and to improve Brazil’s position in the World Bank ranking Doing Business, a worldwide reference about the business environment of a determined country.

The PPD aims, with the changes brought by it to the current Brazilian laws, to transform Brazil into one of the world’s top 50 best economies to do business, increasing the growth of the Brazilian economy and the average productivity of the Brazilian worker, and, as a result of that, to attract foreign direct investment.

The PPD brings several changes for the Brazilian entrepreneur, in different sectors, providing, among others, for:

• The creation of the system “Balcão Único”, aiming to reduce the bureaucratic proceedings to start a business: in the previous proceeding the entrepreneur should register the start-up company in 3 different tax public agencies, however, the PPD provides the unification of the enrolment before the Estate and Municipal Tax Authorities within the National Register of Corporate Taxpayers (“CNPJ”), an important update to enable the entrepreneurs to properly issue your invoices.

• Abolition of feasibility analysis of the head office address: the PPD determines that only a prior consultation (which can be done over the internet) by the entrepreneur will be enough to validate the feasibility of the address;

• Automatic registration of the trade name: the entrepreneur shall be able to verify the correctness and availability of its trade name through an internet search, being also able to use the CNPJ as the trade name.

• Companies’ national risk classification for states that do not have their own classification: automatic permits will be issued, without the need for human analysis, when the risk is considered medium, accompanied by a term of awareness and responsibility, which will considerably reduce the time it normally takes to incorporate a company.

Also, the PPD provides relevant modifications for the companies’ internal regulation, such as:

 The deadline to call meetings was duly aligned with that recommended by the World Bank, therefore, for the publicly held corporations, such period, which is currently of 15 days shall be majored to 30 days of advance;

• It is prescribed by the PPD the possibility of the Comissão de Valores Mobiliários (“CVM” – Brazilian equivalent to the Security and Exchange Commission) to postpone any meeting for up to 30 days, in it deems that the necessary documents for the agenda have not been disclosed to the shareholders in the deadline required by applicable law, from the date such documents are made available;

•  The meetings shall approve any resolution regarding the disposition and contribution of assets to another company, in case the operation’s value is equivalent to more than 50% of the value of the company’s total assets, as described in the last approved balance sheet, as well as celebration of related parties transactions, according to the relevant criteria to be defined by CVM;

•  It will become mandatory to have an Independent Adviser, in accordance with what established by CVM, on the Board of Directors for publicly held corporations, and it shall be forbidden to an administrator to hold more than one position, such as chairman of the board, chief executive officer, and chief executive officer in larger corporations. In case of small-sized corporations with lower revenue, CVM shall grant an exception to the prohibition.

Furthermore, in order to enhance legal certainty, the PPD also described the consolidation of the statutory periods of limitation, to be defined by the Brazilian Civil Code.

In addition, there has never existed in Brazil a public or private system integrating assets data in Brazil. With the authorization to create the System of Asset Recovery (“SIRA”), under the supervision of the Office of the General Counsel for the Federal Treasury, there will be a gathering of registration data of individuals and companies, making faster in judicial processes the collection and recovery of credits not only public but also private.

When dealing specifically with technology, a maximum period of 5 days is established for issuing the authorization for connection of electricity on public roads and for technical approval, if the responsible authority does not manifest itself. It is also allowed that Aneel (“National Agency of Eletric Power”) shall define the maximum limitation period for obtaining electricity.

Regarding the foreign trade, the PPD brought relevant changes, in order to prohibit the demand that requires the submission of the import license on account of the characteristic of the goods, removing nontariff barriers and facilitating the import. There are provisions for the elimination of the minimum price policy, prohibiting the direct and indirect federal public administration entities from preventing the authorization or licensing of export operations due to their financial values, with exception of procedures of a tax or customs nature under the competent jurisdiction of the Brazilian Federal Revenue Special Office. Based on this, there will be a review in the import regulatory licenses, adjusting the Foreign Trade regulations to the Law No. 13.874/19 (“Economic Freedom Law”).

The provisional presidential decree also promises the creation of a new system that will replace SISCOSERV (integrated system of foreign trade in services, intangibles, and other operations that produce variation in equity), as a result of data shared by agencies and authorities of the federal government, simplifying the routine of companies and corporations.

Besides that, there has been extinguished the obligation of foreign trades be made only by estate-owned enterprises and that favoured goods be carried out only by means of ships flying the Brazilian flag, in order to speed up the import process, without further damages to the country. Furthermore, de PPD establishes the creation of an eletronic attendance service (“Portal Único”) to submit files, data or information to the agencies and authorities of the federal government as a condition for the importing e exporting of goods. With this, it is estimated that 50% of imports will be made through the Portal Único by the end of 2021.

With the institutionalization and strengthening of the Portal Único to the operators of foreign trade, which makes the filling out of forms completely digital and centralizes them in a single place, the importing and exporting licensing requirements tends to decrease, making the process simpler and faster.

Additionally to that, there will be no longer required to obtain a preliminary import license, and the sanctions in the case of investigations for non-preferential origin products will be applied only after the conclusion of the investigation, based on the principle of good faith and subsidiary and exceptional intervention in the economy.

In conclusion, Presidential Order No. 13.609/43 was entirely repealed by the PPD, which used to regulate that translators were only allowed to work in the states where they were registered, and now translators and interpreters are allowed to work all over the country, and even by electronic means. 

The PPD has become effective since its publication, however, it is pending voting by the Brazilian Congress in order to be converted into an Ordinary Law and, thus, have a permanent character.

Giulianna Bazzetti de Sá e Bianca Siciliano de Lima