On 26 August 2021, Law nº. 14,195/21, the Business Environment Law, was sanctioned, which has its origin in Provisional Measure No. 1,040/21.
Considering that such law aims at fostering the Brazilian economy, which is seeking recovery after the unfortunate consequences resulting from the COVID-19 pandemic, we have conducted a brief study on three issues that have an impact on corporate law, namely, the issuance of commercial notes by companies (corporations, limited liability companies and cooperatives); the possibility of a company having a manager resident abroad; and, the repeal of the provision that established limits on the liability of the company in the event of acts performed by its managers in excess of their powers.
Regarding the first point, commercial notes, it should be clarified, initially, that this is a credit instrument that was previously regulated only by Normative Instruction nº. 566, of July 31, 2015, of the Real Estate Securities Commission.
Law 14,195/21 governed commercial notes and provided, in article 45, that they were "a credit security not convertible into shares, freely negotiable, representing a promise to pay in cash, issued exclusively in book-entry form through institutions authorised to provide bookkeeping services by the Securities Commission".
Moreover, with the advent of the Business Environment Law, some rules imposed by Normative Instruction nº. 566/2015 were relaxed, and the following became allowed: (i) issuance of the commercial note by all cooperatives; (ii) book-entry form; and, (iii) possibility of periodic payment of face value and interest, for example.
The Law also sets out the requirements that must be included in the constitutive instrument of the commercial note, as follows the name "Commercial Note"; the name or corporate name of the issuer; the place and date of issue; the issue number and the division into series (if any); the face value; the place of payment; the description of the guarantee in rem or as security (if any); the date and conditions of maturity; the interest rate; the amortization and yield payment clause (if any); the price index adjustment clause (if any); and, the amendments and rectifications (if any).
It should be noted that the law provides that the commercial note is an extrajudicial enforceable instrument, which may be executed regardless of protest, based on a certificate issued by the bookkeeping agent or central depository, and may be considered overdue in the event of default on the obligation stated in the term of issue.
Thus, we believe that the Economic Environment Law may bring about an increase in the circulation of these bonds, as a way of short-term financing for companies that do not wish to obtain bank financing, facilitating credit and reducing the costs involved. In addition, it will provide a reduction in time and cost.
Another change introduced by the Business Environment Law is the possibility of the company being managed by natural persons domiciled abroad.
Article 146, paragraph 2 of Law Nº. 6404 of 15 December 1976, the Corporations Law, is hereby amended to read as follows
"Art. 146. Only natural persons may be elected as members of management bodies.
(…)
§2. The investiture of a manager residing or domiciled abroad is subject to the constitution of a representative residing in Brazil, with powers to receive up to at least 3 (three) years after the end of the manager's term of office:
I - summons in actions brought against him based on the corporate legislation; and
II - summons and subpoenas in administrative proceedings initiated by the Securities and Exchange Commission of Brazil, in the event of his holding a management position in a publicly-held company.
It is of utmost importance and essential to observe the requirement listed above for the regular and valid tenure of the administrator residing abroad.
This is a great innovation since, until the enactment of the Law under analysis, the positions of Directors could only be occupied by individuals residing in Brazil.
Finally, we make brief considerations on the revocation of the sole paragraph of article 1,015 of the Brazilian Civil Code, which limited the liability of the company in case of acts performed by its managers in excess of their power.
The measure aims to protect third parties in good faith who contract with the company, since the aforementioned paragraph established hypothesis under which the company could claim not to be obliged to comply with the commitments assumed by the directors, as follows
"Article 1.015. When the articles of association are silent, the managers may perform all acts pertaining to the management of the company; if the object of the company is not the same, the encumbrance or sale of real estate assets depends on what the majority of the partners decide.
Sole Paragraph. The excess on the part of the managers may only be opposed to third parties if at least one of the following hypothesis occurs
I - if the limitation of powers is registered or recorded in the company's proper register
II - if it is proven that it was known to the third party
III - in the case of an operation evidently foreign to the company's business".
Thus, with the exclusion of the sole paragraph of art. 1015 of CC, even if the administrator has acted with excess, the company will be bound to what was adjusted by him.
It should be clarified that it will be up to the company to rule out the good faith of the third party in order to allege the excess of mandate, proving that the third party was aware of the excess of mandate, that the powers of the administrator and/or its limitations were duly registered in.
documents that could be obtained by the third party and that the nature of the operation was strange to the corporate purpose of the company.
In view of the above, although the rule is recent, and still subject to questions regarding the changes promoted, we believe it is an important milestone to modernize the business environment, being able to reduce the bureaucracy that permeates the companies, as well as to encourage the economic heating so desired after the Covid-19 pandemic.
GT Lawyers - October 19, 2021
Article prepared by Fernanda Lefrève Buff, lawyer at GTLawyers and revised by partner Tamy Tanzilli. For more information, please contact the phone (11) 3504 7600 or e-mail ttanzilli@gtlawyers.com.br.
