Rafael Tridico Faria
Lawyer at Marcos Martins Advogados
On June 15, 2020, the Ministry of Economy, through the National Department of Business Registration and Integration – DREI, published in the Federal Official Gazette Normative Instruction No. 81 of June 10, 2020, which revoked a total of 56 normative acts of the DREI between 2013 and 2020, of which 44 were Normative Instructions and 12 were Circular Letters, and consolidated the general rules and guidelines of the Public Registry of Companies into a single Normative Instruction.
This move by the DREI is in line with the efforts to reduce bureaucracy that the federal government has been promoting since 2018, as determined by Law No. 13,726/18[1], which provides for the rationalization of administrative acts and procedures of the Federal Government, the States, the Federal District and the Municipalities and instituted the Seal of Reduction of Bureaucracy and Simplification.
More recently, we had the enactment of the Economic Freedom Law, Law No. 13,874/19[2], which established the Declaration of Economic Freedom Rights, and also Decree No. 10,139/19[3], which orders the review and consolidation of normative acts that are less than a decree, setting a deadline of September 2021 for agencies to comply with this review and consolidation of their normative acts under penalty of sanctions.
Furthermore, taking into account the different understandings of the Boards of Trade of different states and Registry Offices, and with the intention of reducing bureaucracy in its dispersed normative acts and consolidating certain understandings, the DREI consolidated its Normative Instructions and Circular Letters, also reviewing certain rules in order to facilitate public business registration. The new Normative Instruction No. 81/20 has therefore become the single document for consulting procedures and rules for registering acts such as opening, amending and closing business companies.
With this, DREI hopes that the service provided by the Trade Boards and Registry Offices will be improved, guaranteeing easier access and greater agility for entrepreneurs, reducing the famous “Brazil cost” – that is, the large number of bureaucracies and merely formal requirements that plague business life in the country, which impacts our economy and even the advance of new technologies in a very relevant way.
The revision carried out by Normative Instruction 81/20 (hereinafter “IN”) brings the DREI rules into line with current legislation and case law. The main revised points are described below:
Business Name
According to article 18 of the IN, the company name may be formed with any words in the national or foreign language. Before the IN was enacted, the name had to indicate the company’s purpose (e.g. “Participações”, “Construção”, etc.).
Still on the subject of the company name, article 22 prohibits the inclusion of words or expressions that are offensive to morals and good customs. The IN also prohibits the use of names that include or reproduce, in their composition, acronyms or names of bodies or entities of the direct or indirect public administration or international organizations, except when it is reasonable to assume that the other terms contained in the name will not cause confusion or doubt. Finally, the IN prohibits the use of names with words or expressions that denote an activity not included in the company’s corporate purpose.
No need to authenticate documents and notarize names
In line with the reduction of bureaucracy brought about by the Economic Freedom Act and Law 13.726/18, article 28 of the IN exempts the authentication of copies by notaries and the acknowledgement of signatures on documents submitted for registration before the Trade Boards. It should be noted that this requirement entailed a high degree of formality and significant costs.
Instead of having documents notarized, documents must contain a declaration of authenticity signed by the interested party’s lawyer, accountant or accounting technician, along the lines of the declaration attached to the IN. The document can also be authenticated by the Board of Trade itself, by comparing the original document with its copy.
Signature recognition will be waived, so that the Board of Trade official must authenticate the document itself by comparing the signature with the one on the signatory’s identity document or if the signatory is present and signs the document in front of the official.
Automatic Registration of Acts
According to article 43, the filing of incorporation, amendment and termination of individual entrepreneurs, EIRELI, limited liability companies, except public companies, as well as the incorporation of cooperatives will be granted automatically, provided that (i) prior consultations on the feasibility of the business name and location have been completed, where applicable; (ii) the instrument contains only the clauses standardized by DREI, in accordance with the annexes to the IN; and (iii) it presents, in physical or digital form, the documents required to support the filing request, in accordance with the annexes to the IN.
It is important to note that according to article 43, paragraph 1, automatic registration does not apply to cases arising from transformation, merger, spin-off or conversion and payment of capital with shares in another company.
Transformation of Associations and Cooperatives
As already stipulated by the Civil Code in article 2.033, cooperatives and associations can be transformed into companies and vice versa, under the terms of articles 59 and 84 of the IN.
This was a very controversial issue. The transformation of associations into limited companies was authorized by some registry offices, but not by others, and if approved by the registry offices, it was sometimes denied by the Trade Boards, leaving many associations/companies in a kind of “limbo”.
Payment of EIRELI capital
The Manual for the registration of Individual Limited Liability Companies (the EIRELIs) attached to the IN states that it will no longer be necessary to update the value of the EIRELI’s share capital when the federal government updates the value of the minimum wage.
The EIRELI Registration Manual also now allows the amount exceeding the minimum capital of one hundred times the minimum wage in force in the country to be paid in at a future date.
Preferred shares
The Limited Liability Company Registration Manual now provides for the possibility of “preferred shares” in limited liability companies, as long as the Articles of Association provide for the supplementary application of Law 6404/76 (Brazilian Corporate Law). In this sense, quotas of different classes will be allowed, in the proportions and conditions defined in the articles of association, which give their holders different economic and political rights, and the voting rights of the shareholder holding the respective preferential quota may be suppressed or limited, subject to the limits of Law 6.404 of 1976, which must be applied in a supplementary manner.
The new Normative Instruction is welcome in a scenario where incentives are needed to make business activity more efficient. There is an urgent need to reduce red tape in the country and any moves in this direction will always be welcomed by the general public.
However, it will be necessary to observe how the Boards of Trade will adopt the rules brought in by DREI. As mentioned earlier, there is still a big discrepancy between the procedures and rules adopted by the Boards of Trade and the Registry Offices of each state in the country and, to date, attempts to unify procedures by the DREI have not proved to be all that effective.
Although Normative Instruction No. 81/20 itself requires mandatory compliance with its provisions by the Boards of Trade in its article 9, we must carefully monitor its application as of July 1, 2020, the date on which the Normative Instruction will come into force.
Normative Instruction 81/20 is undoubtedly a step in the direction of unifying procedures between the 27 Boards of Trade and, with this, generating greater legal certainty and speed in the business environment, especially with regard to the filing of corporate acts and will constitute an important advance in the market.
Any questions? Talk to our lawyers and get advice.
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[1]BRAZIL. Law No. 13,726 of October 8, 2018. Rationalizes administrative acts and procedures of the Powers of the Union, the States, the Federal District and the Municipalities and establishes the Seal of Debureaucratization and Simplification. Available at http://www.planalto.gov.br/ccivil_03/_ato2015-2018/2018/lei/L13726.htm.
[2]BRAZIL. Law No. 13.874, of September 20, 2019. Establishes the Declaration of Economic Freedom Rights; establishes free market guarantees; amends Laws Nos. 10.406, of January 10, 2002 (Civil Code), 6.404, of December 15, 1976, 11.598, of December 3, 2007, 12.682, of July 9, 2012, 6.015, of December 31, 1973, 10.522, of July 19, 2002, 8. 934, of November 18, 1994, Decree-Law No. 9,760, of September 5, 1946, and the Consolidation of Labor Laws, approved by Decree-Law No. 5,452, of May 1, 1943; repeals Delegated Law No. 4, of September 26, 1962, Law No. 11,887, of December 24, 2008, and provisions of Decree-Law No. 73, of November 21, 1966; and makes other provisions. Available at http://www.planalto.gov.br/ccivil_03/_ato2019-2022/2019/lei/L13874.htm.
[3] BRAZIL. Decree No. 10.139, of November 28, 2019. Provides for the revision and consolidation of normative acts lower than a decree. Available at http://www.planalto.gov.br/ccivil_03/_ato2019-2022/2019/decreto/D10139.htm#art22.
