Legal Framework for Startups comes into effect and simplifies rules for Corporations

Complementary Law No. 182, of June 1, 2021, entered into force on August 31, 2021, establishing the legal framework for startups and amending the Brazilian Corporations Law as well as Complementary Law No. 123, of December 14, 2006.

The new Complementary Law amends article 143 of the Corporations Law, allowing the Executive Board to be composed of at least 1 officer (compared to the previous requirement of at least 2 officers).

It also brings significant changes to article 294 of the same Law, increasing the range of companies that can enjoy the benefits mentioned therein for all closely-held companies with annual gross revenue of up to BRL 78 million.

The benefits include the possibility of carrying out the publications required by the Corporations Law electronically, in addition to allowing the replacement of corporate books with mechanized or electronic records.

There is also the addition of Paragraph 4 to article 294, which allows, in the event of omission of the bylaws regarding the distribution of dividends, that these be freely established by the General Meeting, provided that the right of preferred shareholders to receive fixed or minimum dividends to which they have priority is not impaired. Therefore, as expressly provided for, in the case of closely-held companies with annual gross revenue of up to BRL 78 million, article 202 of the Corporations Law, which establishes criteria for the determination of dividends in case of omission of the bylaws, will not apply.

Finally, it is noteworthy that items I and II of article 294 were revoked, which dealt with the possibility of calling the General Meeting by notice delivered to all shareholders, against a receipt, as well as waiving the requirement to publish the documents referred to in article 133 (financial statements, management report, opinion of the independent auditors and opinion of the tax council), provided that they were, through certified copies, filed in the commercial register together with the minutes of the meeting that deliberated on them.

Demarest’s Corporate Law team is available to provide further information or clarification on the new Law, as well as other related matters.