PM 881 and the impacts on business start-ups in Brazil

By Madeleine Blankenstein

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If you are planning to start a new business, be aware of the changes that may occur once the Senate passes the Law based on Provisional Measure 881, the so-called Economic Freedom law. It establishes guarantees for market freedom, and decreases the influence of state in regulatory matters.

In the document, in terms of the establishment of new legal entities, companies with “Limited Responsibility ” may be established with only one partner and will not have the minimum capital requirement to be started. There will be a smaller volume of requirements such as:

Exemption from business license to open activities considered low risk; and

New criteria for partners to be held responsible for corporate debt. According to the proposal of the new law, the partners can only be held responsible in cases where there is proven deviation of purpose of the debt, such as using the company for the purpose of injuring creditors or in cases of property confusion.

Labor issues are a separate chapter

In terms of labor laws, the PM points out that the requirement of time control will only be necessary for companies with more than 20 workers. Overtime and working regulations on Sundays will no longer require prior authorization at a collective agreement and e-Social will have changes to simplify its process.

Despite needing more approvals to become a reality, the PM points out that the government has an interest in simplifying bureaucratic processes and making the country more attractive for foreign investment, a factor essential for a sustainable recovery of the Brazilian economy, even with the unstable global scenario. We can finally wait for good news!

Madeleine Blankenstein is a partner in institutional relations at HLB Brasil.

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