Less Corporate Requisitions = Quicker Turnarounds

Quick Read:

• Corporate registrations will be faster, as requisitions will be standardised and more limited.
• Powers of officers at Companies Registries have been reduced. This is likely to lead to less corruption.
• Although not all corporate filings are covered by this new regulation, the government is on the right track.

Background

The registration of corporate documents – for the setup and maintenance of Brazilian companies – is a formalistic process. Brazil’s Companies Registries (Juntas Comerciais or Boards of Trade) are State-based bodies with some discretion to issue their own rules regarding procedures for corporate registrations.

Each document filed with a Companies Registry is reviewed by an officer before being approved for registration. Due to the rather pedantic rules and the strict approach taken officers (who until now held wide discretionary powers) requisitions are common, causing delays and many times leading to officers demanding bribes to speed up the registration of documents.

New Rule

On 6 August 2018 the Ministry of Industry, Foreign Affairs and Services published Normative Instruction DREI 48/2018. This new regulation creates rules to standardise most requisitions throughout Brazil’s Company Registries.

Right from its preamble, the new regulation states that corporate registrations and filings “need to be exercised, throughout the national territory, in a uniform, harmonised and interdependent manner” and recognises that “general requisitions without following strict guidelines, applied under imprecise categories” are undesirable and compromise the Ministry’s goals.

The new regulation sets out exhaustive rules for Companies Registries to refuse an application for registration, stating that any requisition other than those set out in its annexes are prohibited. Unfortunately, however, rules relating to corporations and transformations, incorporations, mergers and spin-offs have been expressly excluded from the reach of the new rules. There is also an ultimate discretion for unusual cases: an officer may seek an opinion from the relevant Company Registry’s general counsel who, if there are sufficient grounds to do so, send the question for deliberation by the Company Registry’s full board (and, from there, to the national oversight body).

Moreover, the new rule requires that the Companies Registry must provide explanatory notes for the requisition. These must be delivered to the applicant together with the requisition.

Additionally, all requisitions will now need to be made in the first review of the documents and the officer who makes the requisition will now be responsible for reviewing whether the requisition has been complied with. These were often a source of major frustration for professionals and individuals, as new and different requisitions would be made upon resubmission of documents complying with the previous requisition.

A Positive Step

The new rule is another positive step towards a better regulatory environment in Brazil. It is expected that new regulations will be rolled out to speed up corporate registrations.

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Company Registration Compliance Corporate Filings

Last modified: August 15, 2018