Published on the Official Gazette of the Federal Executive of April 30, 2019, Provisional Measure 881 (“MP 881”) instituted the Declaration of the Rights of Economic Freedom, establishing standards for the protection of free initiative and free performance of economic activities.

Even though certain provisions shall be object of complementary regulation, MP 881’s main objective is to reduce the Government intervention in economic activities, especially those classified as low-risk activities, in according to a classification to be further issued by the Federal Executive Power and, pending said classification, in accordance with Resolution 24/2011 of the Committee for the Management of the National Network for the Simplification of Registration and Legalization of Companies and Businesses – CGSIM.

Among the breakthroughs of MP 881, we highlight the right to develop low-risk economic activities without the necessity of public acts for releasing the economic activity, being allowed to obtain permits, licenses and authorizations through automatic approval, if the fixed deadline for the analysis of such application expired without the manifestation of the competent authority.

Another important aspect of MP 881 is the establishment of a committee composed of members of the Administrative Tax Appeals Council (CARF), the Brazilian Federal Revenue (RFB) and the National Treasury Attorney-General’s Office (PGFN) to publish statements of precedents for the federal tax administration to be observed in the administrative, normative and decision-making acts of said bodies, as well as expanded the list of hypotheses of exemption to file compulsory appeals by the Union and the list of hypotheses for the withdrawal in appeals already filed by the Union, both in administrative or judicial proceedings.

It is worth mentioning that MP 881 also promoted significant changes in several Brazilian regulations, of which we highlight:

• Investment Funds: Possibility of limiting the responsibility of each investor to the value of its quotas, as well as limiting the responsibility of fiduciary service providers to the fulfillment of their respective duties and without joint and several liability;
• Piercing the Corporate Veil: Adopting criteria in accordance with current jurisprudence with the purpose of clarifying the concepts of “asset confusion” and “misuse of purpose”;
• Limited Liability Company: Possibility of incorporating a limited liability company with a sole partner; and
• Brazilian Securities and Exchange Commission (CVM): Pending the issuance of complementary regulations by CVM, small and medium-sized companies (concepts to be defined by said complementary regulations) may have facilitated access to the capital market through regulatory waivers and exemptions.

Lastly, we highlight that MP 881 produces immediate effects and with a maximum validity of 120 (one hundred and twenty) days from its publication, and it must be submitted for analysis and approval by the National Congress for later conversion into law, under penalty of becoming void.

If you have any questions or need more information and clarifications, please contact us:

Jarbas Velloso                 Marcel Kim Dib

jv@zancan.com.br          mkd@zancan.com.br