By: André Jerusalem

On June 1, 2021, Complementary Law No. 182/21 was sanctioned, with the Legal Framework for Startups as its theme, which aims to establish specific regulations on the subject in the country, which as a consequence, would foster the business environment in Brazil and the hiring of startups by the Public Administration. 

With this law, companies that meet the following criteria will be considered as “startups”: 

• Revenue of up to 16 million reais in the previous calendar year; 
• Up to 10 years of registration in the National Registry of Legal Entities; and 
• Enrollment in the special “Inova Simples” regime or declaration, in the articles of association, of operation as an innovative business model.
  

The importance of this milestone for the Brazilian business environment is extremely great, as such a measure considerably reduces bureaucracy and increases the legal security of the business for entrepreneurs and investors, in addition to the potential to bring new investments to this segment, which has been strengthening in recent years. 

In the words of the Special Secretary for Productivity and Competitiveness of the Ministry of Economy, Carlos Da Costa, “When we think about Brazil, freedom is our greatest value. And entrepreneurs need freedom. Without it, there is no innovation,” the secretary noted. “This milestone is a cry for freedom for our entrepreneurs, who often give up comfortable jobs and family time. Therefore, what they want most is the freedom to transform our country. The new Brazil is an innovative, free country that generates jobs and transforms based on the talent of entrepreneurs. Today is a day of celebration and gratitude for those involved. Now let’s work harder and believe in Brazil!” he concluded. 

With the publication of the new Legal Framework, the investor who makes the contribution without entering the share capital of the startup will not be considered a partner and will not have the right to manage or vote in the administration of the invested company. This measure removes the investor's liability, who will therefore not be liable for any debt of the startup, except in cases specified by law – cases of willful, illicit or bad faith conduct.  

Startups may also receive funds from companies that have obligations to invest in research, development and innovation. These companies may invest their obligations in Equity Funds or Equity Investment Funds that invest in startups. 

The law also creates easier conditions for companies with annual revenues of up to R$78 million to adopt the corporate form of SA (Sociedade Anônima). For this to work, they were authorized to replace publishing materials, and may have mandatory publications by digital means and replace physical books with electronic records. 

It is worth noting that the law grants the Securities and Exchange Commission (CVM) the possibility of waiving and restructuring obligations for publicly-held corporations with a turnover of up to R$500 million, with the aim of facilitating the opening of this company to the capital market. 

In conclusion, the application of Complementary Law No. 182/21 came to facilitate the business environment for startups in Brazil, which is something new for our legal reality, and also to identify the obstacles that hinder the entrepreneurship ecosystem in Brazil, especially for startup companies, thus bringing regulatory improvements for their better implementation and development.