Corporate Impacts of the Provisional Measure 1.040 and Other Changes in Corporate Records

On March 30, 2021, the Provisional Measure 1.040 (“PM”) was published, which seeks to simplify some processes and bring more security to investors and companies in Brazil in accordance with recommendations made by the World Bank in its “Doing Business” guide with the intent of improving Brazil’s position in such ranking.

Simplification of registration of Corporate Acts

One of the main alterations promoted by the PM aims to simplify and expedite the opening of the companies in Brazil, by determining the unification of federal, state and municipal tax registrations in the CNPJ and creating automatic procedures for issuing operating permits for low risk activities.

The PM also removes the obligation to include in the corporate name a reference to the activity carried out by the company and attributes to the Department of Business Registration and Integration (“DREI”) the power to examine requests for opening a branch of a foreign company in Brazil.

The procedures for registering corporate acts by Commercial Boards must be carried out by the National Network for the Simplification of Registration and Legalization of Companies and Businesses (“Redesim”), which should not require information that is already contained in the federal database. In addition, the PM also instructs that, in cases where specific prior authorizations are required by certain public bodies, Redesim should be used to inform the applicable bodies about corporate records carried out, eliminating the need for prior government authorization.

The PM granted a period of 60 days for the agencies to adapt to these changes. Therefore, it is still expected that DREI will issue new regulations to be followed by the Commercial Boards to adapt their procedures for registering corporate acts in line with the provisions of the PM.

Protection of Minority Shareholders

In order to protect shareholders of publicly-held companies, especially minority shareholders, the PM also changed certain provisions of Law No. 6,404 / 76 (“Brazilian Corporate Law”). In this sense, we list below the main changes brought by the PM:

1. Expansion of the attributions of the Shareholders Meetings of the companies to resolve on the matter of sale or contribution of assets, so that the value of the operation corresponds to more than 50% of the Company’s total assets;
2. The prior notice period for the first call of the shareholders meeting is increased from 15 (fifteen) to 30 (thirty) days;
3. The postponement of the Shareholders Meeting within 30 (thirty) days in case relevant documents and information from the Shareholders Meeting are not made available to shareholders;
4. Constraint on the accumulation of positions of company’s chief executive officer or chief executive officer and chairman of the board of directors. It should be noted that this change will take effect only 360 days after the publication of the PM; and
5. Mandatory participation of independent directors in the composition of the board of directors, in accordance with terms and deadlines defined by the CVM.

With respect to the alteration indicated in item (ii), the CVM has already issued Resolution No. 25 on March 30, 2021, which brings a transitional provision: the minimum period of 30 days for calling shareholders meetings, will apply to Shareholders Meetings convened from May 1, 2021, in order to allow meetings that have already been convened or may be convened until April 30, 2021 to maintain their original schedule.

Digital Books

Separately to the PM edition, and with a knowledge of modernizing, standardizing and automating the authentication of Accounting Books and Corporate Books, on February 19, 2021, DREI published Normative Instruction 82/2021 (“IN 82/21”), which will enter into force on June 22, 2021.

According to the new regulations, the accounting and corporate books must be exclusively digital with the possibility of being made or launched on electronic platforms, stored or not on the servers of the Commercial Boards. In addition, the opening and closing terms must be signed by the interested party or duly appointed attorney-in-fact and by a legally qualified accountant, with a digital certificate issued by an entity accredited by ICP Brazil. Accounting or corporate books relating to previous periods may be signed by those responsible for the bookkeeping in the period to which it refers, or by the current responsible.

Finally, meeting the requirements, the authentication of the terms of opening and closing the accounting or corporate books must be automatically deferred by the competent Commercial Board when the interested party declares that it has fulfilled all legal formalities and presents proof of payment of the collection form.