Corporate Newsletter: Law 14.195/2021 – Making it easier to start a business and cutting down on corporate red tape

31.Aug.2021

On August 26th, President Jair Bolsonaro sanctioned Law no. 14,195/2021, aimed at improving the business environment in the country. The new approved Law originated from Conversion Bill no. 15/21 (“PLV 15/21”), resulting from Provisional Measure no. 1,040/2021, known as the Provisional Measure for the Modernization of the Business Environment in Brazil.

Law 1495/2021 addresses several issues that seek to enhance the business environment in Brazil, also improving its position in the Doing Business ranking, annually raised by the World Bank and whose purpose is to assess the conditions that various countries offer to the local business environment, such as the level of regulation to open a business or to obtain credit.  In 2020 Brazil fell 15 places in the ranking and ranked 124th out of 190 countries.

Among the many changes made by the Law, in this article we will deal especially with the facilitation for starting a business and the cutting down on red tape for companies. Let’s see below the main changes:

MAKING IT EASIER TO START A BUSINESS

  • The agencies and entities involved in the process of registration and legalization of companies must maintain at the disposal of users, free of charge, in person or through the Internet, simplified registration form, which contains the updated data of the company, as well as information, guidelines and tools that allow prior research on the steps of registration or enrollment, amendment and termination of companies, including licensing and operating permits.
  • Availability of an application for online research with immediate response as to the existence of a company name and the possibility of exercising a business activity in the place indicated for the operation of the commercial site, in order to provide users with clarity as to the documentation required for registration and/or alteration at the registration agencies.
  • – Risk classification of activities, applicable in the case of absence of specific state, district or city legislation, and in cases in which the degree of risk of the activity is considered to be medium, the operation permit and licenses will be issued automatically, not requiring any more prior viability. The operating license will be issued automatically upon the signing of a term of awareness and responsibility by the entrepreneur, partner, or person legally in charge of the company, who undertakes to comply with the requirements for the operation and exercise of the economic activity contained in the corporate purpose.
  • Unification of tax registrations through the National Register of Legal Entities – CNPJ. This way, there will be no more state and city registration numbers.
  • Use of the CNPJ number as the company name, followed by the identification of the corporate or legal nature, when required by law.
  • Creation of a uniform understanding about the exemption of signature notarization in documents filed at boards of trade.
  • Prohibition of requiring data or information already contained in Federal Government databases.

CUTTING DOWN ON RED TAPE:

  • The Individual Limited Liability Companies (EIRELI) will be transformed into a Single Person Limited Company regardless of any alteration in its articles of incorporation.
  • General meetings may be held by electronic means.
  • The place where the business activity is exercised may be virtual. When the place where the business activity is performed is virtual, the address informed for registration purposes may be, depending on the case, that of the individual businessman or that of one of the partners of the business company.
  • The designation of the corporate purpose in the name of the Business Corporation becomes optional.
  • In private companies, it is now allowed to replace the books of Registration of Registered Shares, Transfer of Registered Shares, Registration of Registered Beneficiary Parties, Minutes of the General Meeting and Attendance of Shareholders by mechanized or electronic means.

Although the changes and innovations brought by Law 14,195/2021 promise to reduce the red tape for businesses in Brazil, some questions remain:  How will the modifications be regulated? How will the adoption of mechanized or electronic corporate books be?

Thus, we must wait for the next steps to understand how the modifications and novelties will be adopted and regulated, especially by the Boards of Trade.

Leite, Tosto e Barros’ Corporate Law team is always available to provide legal advice on this matter.

*Lawyer Ivana Saemy Wada and partner Mariana Nogueira collaborated in this newsletter.

 

Cadastre-se e fique atualizado

Seu e-mail está seguro. Somos totalmente contra SPAM.

Leave a Reply

Your email address will not be published. Required fields are marked *