By Luis Felipe Eiras

The new Bill 9.590/2018 that is being processed by the Chamber of Deputies, proposed by deputy João Henrique Holanda Caldas of PSB/AL, intends to regulate in a concrete manner criteria to define the concept of startup in Brazil, this subject is little addressed by national legislation.

The project, which “provides for startups and presents measures to stimulate the creation of these companies, and provides other measures”, seeks to establish more favorable conditions for the creation of these companies that, according to the understanding of the text, obtain high growth potential as a result of innovative characteristics of their processes, products or services, and therefore there should be better regulation in the legal sphere, which, still, is primitive and rigid regarding the definition of such a debatable matter.

It is important to emphasize that, according to the provisions of the possible regulations, startups are limited companies, or individual companies with limited liability – thus excluding the possibility of configuring a corporation in this type of company – still in the process of being structured, whose constitution took place less than 60 months ago, making it impossible for the creation of this company to result from a corporate operation of division, merger, incorporation or acquisition of companies.

Thus, the annual revenue cannot exceed 4.8 million reais per year, and the distribution of profits or interest on capital cannot exceed 1% (one percent) of the net profit for the year, and this determination must be provided for in its articles of association, in addition to stipulating that 20% of its gross revenue must be allocated to development and research. Furthermore, it requires the need for more than one third of its professionals to obtain some type of postgraduate degree in an area similar to the company's corporate purpose. startup, as well as having the financial statements and articles of association with their amendments filed in the commercial registry, remaining available online within five business days after their preparation.

However, the advantages proposed by the project must also be analyzed, since the startups can receive investments from the investment fund for participation in economic production intensive in research, development and innovation (FID-PD&I) and from the investment fund for participation in infrastructure (FIP-IE), and these companies also have more beneficial and favorable criteria in bidding processes, in addition to other provisions that aim to encourage the installation and creation of this type of company in Brazil.

In a way, the intention of Brazilian legislators to address a contemporary issue that is present in the development of several countries is commendable, but unfortunately, analyzing the provisions of the project, the inexperience of the Legislature in dealing with this matter becomes evident.

From the moment the project restricts the adoption of the corporation as a corporate type of startups, this being a corporate plan with more effective governance, just because it prevents the adoption of the most beneficial taxation system for the entrepreneur, the SIMPLES, the State, which obtains an essential participation for the development of this range of companies, takes the opposite path to the evolution of entrepreneurship, instigating in a failed way the increase of startups, as well as when it regulates the minimum distribution of dividends and interest on the company's capital, thus forcing the adoption of the limited company as a corporate type.

Therefore, despite the good intention of the project to regulate innovative business companies such as startups, there is also a latent misunderstanding and understanding of the corporate type to which they fit, so that the legal certainty brought by the bill becomes disaggregating in important points for the development of startups, perhaps being an initial milestone that will need to be improved in the future, but which guarantees legality to the entrepreneurship necessary for the country's growth.