The Normative Instruction No. 81 (IN 81) of the Brazilian Department of Business Registration and Integration (DREI), which was published in June and comes into effect on July 1st, 2020, revises and restates several rules related to corporate registrations and corporate regulations currently in force.
IN 81, which revoked several rules previously enacted by DREI in connection with the regulations applicable to the companies’ registration and restated into one single normative instruction the rules relating to the registration processes of incorporation, modification and extinction of legal entities in general, is based on the principles of simplification and reduction of bureaucracy reinforced by the Economic Freedom Law (Lei da Liberdade Econômica) – Law 13,874/2019.
We outline below the main modifications brought by IN 81:
The Commercial Registries will no longer require the corporate name of companies and Individual Limited Liability Entities (EIRELI) to contain a word or expression designating the main activity of the corporate purpose of the entities, provided that the effective application of such part of IN 81 with respect to limited liability companies may still be subject to discussions.
Transformation and Conversion of Associations and Cooperatives
The corporate transactions of transformation of associations and cooperatives into business companies, as well as the conversion of their prior registrations with the Public Registry of Deeds, Documents and of Legal Entities into registrations with the Commercial Registries as a going concern will now be permitted by such authority.
Formalities relating to notarization of signatures and certification of documents
Provided that a statement of authenticity issued by an accountant or a lawyer acting on behalf of the company is presented, confirming the veracity of the signatures and/or the authenticity of the copy of documents submitted to the Commercial Registry, the notarization and/or certification by the Public Registries will be dismissed, including in connection with powers of attorney and personal identification documents.
Payment of capital stock of EIRELI
The obligation to pay in the capital stock of an EIRELI immediately upon its incorporation will be limited to the amount equivalent to 100 times the minimum wage in force in Brazil at the time. Accordingly, any sum that exceeds said legal minimum amount may be paid in at a future moment. Previously, part of the Commercial Registries construed that there was a legal requirement to immediately pay in the totality of the capital stock, even when it exceeded the aforementioned legal minimum amount. By the same token, capital increases of EIRELI may now be paid in on future date.
Legal concepts applicable to limited liability companies
While the legislation currently in force already permitted the limited liability companies to be governed, subsidiarily, by the Brazilian corporations’ law (Law No. 6,404/1976), IN 81 innovated the interpretation of the applicable rules when it stated that, to the extent said companies adopt concepts of the corporations, it will be assumed that said companies are subject to the Brazilian corporations’ law, on a supplementary basis.
It applies, for instance, if a given limited liability company elects to adopt preferred quotas, treasury quotas, board of directors and fiscal council.
Furthermore, IN 81 sets forth the possibility of preferred shares with restriction of or without voting rights – which may be challenged from a legal standpoint. Previously, only quotas of different classes were allowed, in the proportions and conditions defined in the articles of association.
Automatic Registration Expansion
The corporate acts of incorporation, amendment and extinction of an individual entrepreneur, EIRELI and limited liability companies, among others, shall now be automatically approved by the relevant Commercial Registry whenever the respective documents adopt standards established by DREI.
Once the aforementioned registrations are automatically approved, the Commercial Registry shall have two business days to examine whether the legal formalities related to the corporate act have been complied with and, in case any defect is identified, the company will be notified to remediate it within 30 days.
This very specific portion of IN 81 is the only one that will not come into effect on July 1 and will only produce its effects as of October 13, 2020.