Publicado em 27/08/2021

Improvements to the business environment in Brazil | Law No. 14,195/2021 – Corporate aspects

On August 27, 2021, Law No. 14,195 (Law 14,195), derived from the “Provisional Measure to improve the Brazilian business environment”, was enacted.

The several changes implemented by Law 14,195 include articles that aim to modify certain rules applicable to Brazilian corporations, amending, therefore, Law No. 6,404/1976 (Brazilian Corporation Law) and to enable the issuance of securities, set forth in Law 6,385/1976, by limited liability companies.

Among the main changes implemented to the Brazilian Corporation Law, it is important to highlight the purposes of:

1. Protecting the minority shareholders of publicly-held companies, upon the inclusion of new matters subject to the exclusive approval by general shareholders’ meetings, the increase of the minimum call notice period for general shareholders’ meeting to 21 days in advance, and the postponement of general shareholders’ meetings for up to 30 days when the necessary documents or information have not been timely or satisfactorily made available to shareholders;
2. Incorporating best practices of corporate governance into the Brazilian Corporation Law, by not allowing the same individual to accumulate the positions of chairman of the board of directors and chief executive officer or main executive of the company and by setting forth the mandatory participation of independent directors in publicly-held companies; and
3. To promote the Brazilian capital markets, by creating the plural voting system (with limitation of time and number of votes per share), allowing a more transparent corporate structure in cases of capital contribution, initial listing of shares or investment rounds, in which the maintenance of shareholding control by the original shareholders is desired.

Moreover, it is worth highlighting the new rule introduced by Law 14,195, by means of which limited liability companies will be allowed to issue debentures (under the denomination of commercial notes), pursuant to the terms of Law 6,385/1976.

Apart from the changes introduced outside the scope of corporate and capital market law, Law 14,195 enters into force and produces its effects as of August 27, 2021, except for item (ii), above, with regard to the prohibition of accumulating the positions of chairman of the board of directors and chief executive officer or main executive of publicly-held corporation – which shall come into effect on August 22, 2022. It is worth mentioning, however, that, according to article 7 of Law 14,195, the Brazilian Securities and Exchange Commission (CVM) may establish rules for the transition of the obligations arising from such matters.

Dias Carneiro Advogados is entirely available to provide any clarifications and to assist with this matter.