Provisional Measure (Medida Provisória) 1,040/2021 was published on March 30, 2021. Among other matters, it aims to facilitate the establishment of companies in Brazil, improve protection of minority shareholders of listed companies, streamline the foreign trade process, improve the Integrated System for Recovery of Assets, and alter the rules set out in the Civil Code on the time-bar for procedural acts in ongoing litigation (“MP 1,040/2021”).

Below are more details on the alterations promoted by MP 1,040/2021:

(i) Facilitation of obtaining authorization for companies to operate: Law 11,598/2007 (better known as the “REDESIM Law”) has been modified for: (a) attribution of effectiveness for an indeterminate period to public acts of release related to the operation of business establishments, except in cases of activity with some degree of risk; and (b) automatic issuance of operating permits and licenses for activities whose degree of risk is considered medium, according to acts of the executive branch of the federal, state, Federal District and municipal governments. On this matter, it should be noted that since the enactment of Law 13,874/2019, the activities classified as having low risk can be exercised without the need for any public release acts.

(ii) Expansion of the protection of minority shareholders of listed companies: MP 1,040/2021 made changes in Law 6,404/1976 (Law of Corporations), applicable exclusively to listed companies, among them: (a) determination of private competence of the general meeting to deliberate on the sale of relevant assets and the conclusion of relevant transactions with related parties, with the Brazilian Securities Commission (CVM) being entrusted with defining the criteria for relevance; (b) increase of the prior notice period for the first summons for general meetings of listed companies to 30 days (previously it was 15 days); (c) prohibition of accumulating the positions of chairperson of the board of directors and chief executive officer of the same company, with the CVM being empowered to grant exceptions to that restriction in cases of companies with low gross revenue; and (d) obligation to have independent directors, with the proportions and terms in office to be defined by the CVM.

(iii) Streamlining of foreign trade: Besides new rules on the matter, alterations were promoted in Law 12,546/2011 with the objective of facilitating foreign commerce. Among the new provisions are those established in Art. 7 of MP 1,040/2021, which prevent bodies and entities of the direct or indirect federal public administration from: (a) establishing limits to the values of goods or related services involved in import or export transactions; and (b) refusing to authorize or license import or export transactions because of the amounts involved. Those prohibitions, however, are not applicable to the regulations or procedures involving taxation and/or customs clearance, which remain under the remit of the Federal Revenue Service.

(iv) Identification and recovery of assets and protection of credits: MP 1,040/2021 authorizes the creation by the federal executive branch of the Integrated System for Recovery of Assets (Sistema Integrado de Recuperação de Ativos – SIRA), constituted by a set of instruments, mechanisms and initiatives to gather public listing data and information on the assets of companies and individuals, with the objective of: (a) facilitating the identification and location of assets of debtors; and (b) enabling the constriction of such assets and prevention of their disposal for the purpose of injuring creditors.

(v) “Procedural prescription”: Art. 206-A was added to the Civil Code, to determine that the time-bar for procedural acts is the same as that for filing civil suits.

Provisional measures take effect immediately with status of ordinary law and remain in effect for 60 days from their publication date, extendable once only for an equal period, during which they are subject to approval/amendment/rejection by Congress on a priority basis. If approved, with or without amendments, they are converted into law. If rejected, they lose their effect retroactively to publication.

More information, as well as the full text of MP 1,040/2021 (in Portuguese), can be found at the website of the Presidency of the Republic (http://www.planalto.gov.br).