Decree No. 11,129/22, which regulates Law No. 12,846/13 (Brazilian Clean Company Act) and revokes Decree No. 8,420/15, Published

The Federal Government published, on July 12, 2022, Federal Decree No. 11,129/22 (“New Decree”), regulating Federal Law No. 12,846/13 (“Brazilian Clean Company Act”), which provides for the administrative and civil liability of legal entities for the practice of acts against the public administration, both domestic or foreign. The New Decree will come into force on July 18, 2022 and will replace the former Federal Decree No. 8,420/2015.

Among the main changes brought by the New Decree, the following stand out:

  1. Changes in the percentages of the factors for calculating the fine to be applied to the legal entity that violates the Brazilian Clean Company Act;
  2. Greater detailing of some parameters for evaluating the compliance program. Increase from 4% to 5% of the fine reduction factor, in case the legal entity has an effective compliance program at the time of violation of the Brazilian Clean Company Act;
  3. With regard to leniency agreements, it is worth highlighting the express mention of the government’s objectives with their conclusion, the establishment of monitoring as a requirement for the conclusion of agreements, in addition to the express possibility of offsetting the amounts paid as compensation for damages in possible other sanctioning proceedings; and
  4. Definition of rules and procedures for the Preliminary Investigation and the Administrative Liability Proceeding (PAR).



One of the most relevant aspects of the New Decree was the change in the percentages of factors for calculating the fine arising from the Brazilian Clean Company Act, which can range from 0.1 to 20% of the gross revenue of the legal entity (excluding taxes) in the year prior to the establishment of the Administrative Liability Proceeding.

The New Decree instituted the following changes in the increase factors for fine calculation: (i) increase of up to 4% in the case of perpetration of multiple harmful acts (compared to the previous limit of up to 2.5% per continued harmful act); (ii) increase of up to 3% (compared to the previous limit of 2.5%) in the case of possible knowledge of the board or management body; (iii) increase of 3% in case of recidivism (the previous limit was 5%); (iv) increase of 1% to 5% depending on the values of the government contracts/agreements affected by the harmful acts, with an increase in this percentage from BRL 500,000.00 to BRL 250,000,000.00 (compared to the previous range of BRL 1,500,000.00 up to BRL 1,000,000,000.00).

The New Decree also changed the reduction factors in the calculation of the fine as follows: (i) decrease of up to 0.5% (compared to the previous limit of 1%) in cases of non-consummation of the infraction; (ii) decrease of up to 1% (compared to the previous limit of 1.5%) in the case of voluntary compensation for damages; (iii) decrease of up to 5% (compared to the previous limit of 4%) in the event of the existence and application of an effective compliance program at the time of the violation.

In addition, the New Decree established a methodology to estimate the benefit obtained by the legal entity through the harmful acts, which considers: (i) the total amount of revenue obtained by the legal entity in the scope of the government contracts involved, excluding its legitimate costs; (ii) total amount of the expenses avoided due to the harmful act; and (iii) the profit obtained by the legal entity due to the harmful act.


Compliance program

Regarding the evaluation of the effectiveness of compliance programs, the New Decree brought some changes, among which it is worth mentioning: (i) the need to demonstrate the commitment of the top management through the adequate allocation of resources to the compliance program; (ii) greater rigor in the management of the risks inherent to the activities performed by the legal entity, including the conduction of periodic risk assessments and the efficient allocation of the legal entity’s resources; (iii) the need to carry out appropriate diligences for the hiring and monitoring of third parties, now with express mention of brokers, consultants and commercial representatives, as well as politically exposed persons (PEPs) and their families; and (iv) the recommendation to carry out due diligence and monitoring for donations and sponsorships.


Leniency agreement

With regard to the leniency agreement, the New Decree defines that it must be used by the government as a means of increasing the investigation capacity of authorities, of enhancing its ability to recover assets and, also, to promote the culture of integrity in the public sector.

In addition, the New Decree establishes monitoring as a requirement for the execution of leniency agreements, which can be waived in cases of less serious harmful acts, in the public interest and in the remediation measures adopted by the legal entity.

The New Decree also expressed the possibility of offsetting the amounts disbursed by legal entities as compensation for damages in possible other proceedings for the same facts.


Preliminary investigation

The New Decree stipulated new rules and rites for the preliminary investigation of potentially harmful acts against the public administration, which include increasing the list of investigative measures to be adopted. As an example, according to the New Decree, the commission responsible for the preliminary investigation may request from the competent bodies: (i) banking information on the movement of public funds, even if confidential, and (ii) tax information.


Administrative Liability Proceeding (PAR)

Finally, in relation to the PAR rite, the New Decree brought the following innovations: (i) the obligation of the PAR commission, in the act of indictment of the legal entity, to indicate the harmful act investigated, the evidence that supports the argument of the occurrence of the harmful act and the specific legal framework attributed to the legal entity and (ii) the possibility of notification and subpoena of a foreign legal entity, regardless of the existence (or absence) of an attorney, representative, manager or administrator constituted in its affiliate, agency, branch, establishment or office located in Brazil.

Finally, the New Decree establishes that any violations of the Brazilian Clean Company Act that also represent an administrative violation of Law 14,133/2021 (New Public Procurement Law) or other public administration procurement legislation will be judged jointly, in the same Administrative Liability Proceeding.

Demarest’s Compliance and Investigations team is available to answer any questions and provide clarification on the subject.