Franco Advogados | São Paulo | Porto Alegre | Brasília | Florianópolis

Simplifying the Incorporation of Brazilian Companies

In the search for improvement in the business environment in Brazil, the Federal Government issued Provisional Measure 1040, of 03/29/2021 (MP 1040). Among other issues, MP 1040 deals with the simplification of procedures for opening companies, aiming at the better classification of Brazil in the World Bank ranking in its Doing Business report, an objective that has been pursued by the Government.

One of the themes of MP 1040 for this purpose is the licensing of activities, which continued to be a longer procedure in the process of incorporating companies. Low-risk activities were already released from licensing, which, in practice, was replaced by a statement from the entrepreneur.

Now, MP 1040 has provided that the Federal Government will rule on the risk classification of activities and those considered to be of medium risk will have the operation licenses issued automatically, without human analysis, through the system responsible for the integration of the agencies and registration entities.

In such cases, the issuance of the operation license will depend on the signing of a term of responsibility and acknowledgement under a commitment to comply with the requirements required for the operation and exercise of the economic activities included in the corporate purpose, for the purpose of complying with sanitary, environmental and fire prevention standards. The responsibility term shall also include information on the requirements that must be met before the start of business activity.

Undoubtedly, the measure reduces the bureaucracy in the process of incorporating companies and the regulation of the matter shall occur until 5/29/2021. It remains to be seen which activities will be classified under medium risk and whether the automatic issuance of an operation license will not jeopardize compliance with sanitary, environmental and fire safety standards. MP 1040 makes it clear that automatic issuance does not preclude the inspection activities of the authorities.

Another aspect provided for in MP 1040 is the unification of data collection for the incorporation of companies, so that the data presented in the integration system will be used for purposes of obtaining CNPJ, state and municipal tax enrollments and, also, for licenses.

Finally, some amendments of MP 1040 to the Commercial Registry Law (Law 8934/94) also bring simplifications, such as (i) the centralization of the competence of the DREI (National Department of Business Registration and Integration) to instruct, examine and forward requests for authorization for nationalization or installation of foreign companies’ branches, (ii) the treatment of similarity of business names, which now depends on questioning from interested parties, being only prohibited the registration of identical business names, (iii) the exemption from the certification of signatures in documents submitted for registration, including powers of attorney.

It is expected that MP 1040 will be converted into law within the legal term, so that the measures provided for therein can be permanently maintained.

By Renata Pisaneschi and Camila de Sousa

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