Law No. 14,195 of August 26, 2021 amended several provisions of Corporate Law, from the creation of the Plural Vote to the simplification of the company formation process, laying down the following rules:
1) Amendments to the Law of Corporations:
a) Plural Vote – Companies may create a class of common shares that carry more than one vote per share, as per the following rules:
– may be adopted by public/listed or private companies, save for those listed on the stock exchange on the date the Law was published;
– maximum of 10 votes per common share;
– with an initial term of up to 7 years, which may be extended;
– the plural vote cannot be used in resolutions regarding management’s compensation or transactions with related parties.
b) General Shareholders’ Meeting
– expansion of its authority to deliberate on: (i) the conversion, merger, amalgamation and spin-off of the company, its dissolution and liquidation, election and removal of liquidators and approval of accounts; (ii) authorization for management to file for bankruptcy and apply for judicial restructuring; and (iii) in the case of public companies, the entering into of transactions with related parties and the approval of the sale of assets above 50% of the company’s total assets;
– Increase of the notice period for convening General Shareholders’ Meetings to 21 days in advance for the first call, and 8 days for the second call, permitting the CVM (Brazilian Securities Commission) to postpone the date of the meeting for up to 30 days if the relevant documents are not timely disclosed to the shareholders.
c) Management
– In public companies: (i) prohibition of the accumulation of the positions of President of the Board of Directors and Chief Executive Officer or principal executive of the company; (ii) mandatory participation of independent directors on the Board of Directors;
– Possibility of appointment of persons resident overseas as officers, provided they appoint an attorney-in-fact resident in Brazil.
2) Company formation facilitation and subsequent registrations:
• Automatic issuance of business licenses and other permits for medium risk activities.
• Unification in the National Corporate Taxpayers’ Registry (“Cadastro Nacional de Pessoa Jurídica” – “CNPJ”) of federal, state, and municipal tax enrolments.
• The company name may consist of the CNPJ number, plus the type of corporate or legal identification.
3) Foreign Trade Facilitation:
• Prohibition of requiring an import or export license by a government agency without grounds on an express normative act; and
• Formalization of the operation of the Single Foreign Trade Portal, which has been implemented by the Government to process importation and exportation transactions in a simpler and faster way. All bodies involved in the customs clearance of imported and exported goods must use this electronic system, no longer requiring the presentation of documents and information by other means.
4) Other Important Measures:
• Creation of the Integrated Asset Recovery System (“Sistema Integrado de Recuperação de Ativos” – “SIRA”), to be managed by the National Treasury’s Attorney General Office, to facilitate the identification and location of assets and debtors and the constriction and disposal of assets;
• Single member limited liability companies (“Empresas Individuais de Responsabilidade Limitada” – “EIRELI”) shall be automatically converted into single-member limited liability companies without the need of amending their articles of incorporation.
• Summons will preferentially be served by electronic means, to e-mail addresses indicated by the defendant in the Judiciary’s database.