Lya Doria Maeda
Lawyer at Marcos Martins Advogados
Provisional Measure 881/19, also known as the Economic Freedom Provisional Measure, was signed into law on April 30 of this year. With impacts on various branches of law, including civil, business, economic, urban planning and labor law, many entrepreneurs may benefit from the Provisional Measure.
The basis of the Provisional Measure is Article 170[1] of the Federal Constitution, which establishes the general principles of economic activity in Brazil, such as free enterprise and free competition, as well as favored treatment for small businesses. In this case, Provisional Measure 881/19 deepens the principles of the Magna Carta, providing for minimal state intervention in economic activities, as well as bringing various legislative innovations to the business sector.
There is good news for companies in the most diverse segments and of all sizes. For startups, companies generally linked to technology and innovation, the Provisional Measure brought several benefits, such as the end of prior authorization for low-risk economic activities, as long as they are carried out on private property (art. 3, item I of the Provisional Measure), and bureaucratic immunity to innovate. In this case, the innovation is protected in national territory, under the terms of art. 3, item VII of Provisional Measure 881/19:
- Art. 3 The rights of every person, natural or legal, essential to the country’s economic development and growth, subject to the provisions of the sole paragraph of art. 170 of the Constitution, are:
- VII – to implement, test and offer, free of charge or not, a new product or service to a private and restricted group of people of legal age and capacity, who will make use exclusively of their own private property or that of consensual third parties, after free and clear consent, without requirement or public act of release of the economic activity, except in hypotheses of national security, public or sanitary security or public health, respecting current legislation, including with regard to intellectual property.
Freedom of time and day to produce, employ and generate income (art. 3, item II), for example, is another benefit for startups, but it also affects large producers. If in the case of start-up entrepreneurs this is just a translation of the reality they face, who often operate at night in start-up incubators, coworkings or even in their own homes, the measure will also affect large producers, since, in theory, production can be continuous.
Another provision that will benefit companies of the most diverse sizes is that of Article 3,item IX, whereby in requests for public acts authorizing low-risk economic activities, once all the necessary documents and elements have been submitted, the entrepreneur will be given a time limit in the act for the analysis of their request, which, if it goes unanswered, will result in tacit approval of the case, with the exception of cases expressly prohibited by law. This is designed to avoid what is known as a “blank deadline”, whereby there is no prediction of when the decision will be taken and, even if there is a deadline, if it is not met there is no punishment for public bodies that fail to meet it. Now, if the deadline is not met, the application will be considered approved for all intents and purposes, which will benefit innovation in Brazil, as well as giving greater legal certainty to all entrepreneurs in their dealings with state bureaucracy.
Some more technical measures will also be beneficial to entrepreneurs, such as the binding effect of administrative decisions (art. 3, item IV of the Provisional Measure). In general terms, decisions taken by public administration bodies will be erga omnes¸ which means that, in equal cases, the decision taken in one case will bind the others. The aim of this provision is to avoid the uncertainty of different rulings by different tax authorities for companies in the same circumstances.
Another measure that has a direct impact on companies is that provided for in article 3,item VIII of Provisional Measure 881/19, which gives more weight to what is agreed between the parties, bringing the rules of business law into play in a subsidiary manner to what is agreed by the agents. It also stipulates that no public order rule of business law can be invoked to benefit the party that agreed against it, except in the case of violation of rights protected by the public administration or of third parties unrelated to the contract.
3, item III); the institution and/or reinforcement of good faith in civil, business, economic and urban planning law (art. 3, item V); provisions to remove the effects of outdated infralegal rules (art. 3, item VI), among others, for which it is recommended to read the Provisional Measure in its entirety.
Although it is still a provisional measure, which must be voted on by Congress in order to be validated as law, and whose text can still be discussed in court, it has immediate effect and can be used by your business immediately.
Is this subject of interest to you? The team at Marcos Martins Advogados has extensive experience in creating and providing legal advice to companies of all sizes, and is qualified to deal with all demands aimed at guaranteeing your company’s maximum performance. C
[1] Federal Constitution. Art. 170. The economic order, based on valuing human work and free enterprise, aims to ensure dignified existence for all, in accordance with the dictates of social justice, with due regard for the following principles:
I – national sovereignty;
II – private property;
III – the social function of property;
IV – free competition;
V – consumer protection;
VI – environmental protection;
VII – reduction of regional and social inequalities;
VIII – pursuit of full employment;
IX – favorable treatment for small Brazilian companies with national capital.
Sole paragraph. Everyone is guaranteed the free exercise of any economic activity, regardless of authorization from public bodies, except in the cases provided for by law.
