Paulo Coelho da Rocha of Demarest Advogados in São Paulo looks at the latest changes in the Brazilian legislature


Despite a economic slow down in the past couple of years, Brazil remains a primary destination for direct foreign investment. According to United Nation’s Economic Commission for Latin America and the Caribbean, foreign direct investment in Brazil totalled $64 billion in 2013, a mere 2% decrease compared to 2012, but still enough to place Brazil in 7th place among the top recipients of foreign direct investment in the world.

As in previous years, in 2013 nearly 40% of foreign direct investment in Brazil was destined for consumer services, an industry sector that grew more than the GDP of the country during the same period. Such a large focus in that segment can be explained by economic stability, reduction of social inequality and the rise of the “new” middle class, which together have generated a strong demand for a number of new services.  However, the services industry may not be able to retain the same attraction for foreign direct investment in the coming years, since this particular market will probably be more mature with fewer opportunities for new foreign players, and the growth of the middle class may not continue growing at the same rate.

On the other hand, the Brazilian infrastructure sector is likely to increase the volume of foreign direct investments in the next few years, considering the forecasted concessions of roads, railroads, ports, airports and oil reserves, with new concession rules attractive to foreign investors.

Recent legal developments affecting foreign investment

Anticorruption Law

In January 2014, the Brazilian Anticorruption law (Law 12, 846/13) came into force. This law establishes strict civil and administrative liability (although not criminal) for corporate entities that promise, offer or give, directly or indirectly, an undue advantage to a public agent, or third person related to such public agent. The law also prohibits bid rigging and other frauds in the public procurement process.

Law 12,846 reaches foreign legal entities with a registered office, branch or representation in the Brazilian territory, executives, members of the board and anyone acting or taking part in the act (although such individuals are not subject to the same strict liability as the companies). It also provides for the joint liability of companies of the same group (e.g., controlling and controlled companies).

This new legislation has increased the awareness of compliance amongst Brazilian companies, which are increasingly adopting higher compliance standards and training for its employees. Likewise, compliance became an important component in the context of an acquisition due diligence.


In June 2013 Law 12.815/13 came into force, making it more attractive for investors to invest in Brazilian ports and also obtain concession for private terminals. Of particular interest, the new law allows private terminals to handle third parties’ cargo and also hire labour freely (public ports have to hire through the more expensive Órgão Gestor de Mão de Obra – OGMO). These new rules are likely to attract foreign investment to private terminals, which will probably begin handling containers as well.

The “new” CADE

Two years have passed since Law 12.529/11 came into force and created a new legal framework for antitrust in Brazil. The new law introduced the pre-merger notification, new thresholds to determine whether a transaction needs to be submitted for approval by the Conselho Administrativo de Defesa Econômica - CADE (the Brazilian Antitrust Agency) and also optimized the review process, specially the “fast track” for the analysis of less complex transactions. As a result, the average time for review of a merger transaction in Brazil has been reduced by nearly 80% and now takes an average 26 days.


Rural land

Since 2010, with the publication of an Opinion of the Federal Attorney General (Advocacia Geral da União), foreigners and Brazilian companies with foreign control interested in acquiring rural land are required to obtain prior approval from the Instituto Nacional de Colonização e Reforma Agrária (INCRA) and/or the National Defense Council (CDN).  This has been the cause of much debate and, given the barriers to foreign investment imposed by these rules, it is rumoured that the Federal Government or Congress may act making it easier for foreigners and Brazilian companies with foreign control to acquire rural land in Brazil.

Privatisations and concessions

Brazil has privatised five of its largest airports in the past two years, most of which went to international companies. More privatisations and concessions are expected in sectors as diverse as urban mobility, oil reserves and telecom (the auction for the use of the 700 MHz spectrum for 4G mobile broadband services is expected soon).

New Commercial Code

In 2002, the new Brazilian Civil Code introduced changes to corporate law that brought uncertainty to well-established concepts and rules. The introduction of unreasonable supermajority quorums for decisions in limited partnerships was particularly disruptive to the business environment. Because of all the controversy surrounding the Civil Code since 2011, Brazilian Congress is discussing the project of a new Commercial Code, which revokes the corporate rules introduced by the 2002 Civil Code, restoring certain traditional concepts (such as simple majority control) while modernising others. The project of the new Commercial Code is based on four main concepts: increased legal certainty, improvement of the business environment, simplification and modernisation of rules. Anyone with equity interests in Brazil should follow the project closely.


Paulo Coelho da Rocha


Demarest Advogados

São Paulo


About the author

Mr Rocha graduated from Universidade de São Paulo Law School and holds an LLM in corporate law from the New York University School of Law, and is regularly appointed as a leading lawyer in his field by important directories such as Chambers & Partners, IFLR1000, Who's Who Legal, LACCA and Análise Advocacia.

Mr Rocha is a member of the Board of Lex Mundi, of the Advisory Board of Working Group on Legal Opinions of the American Bar Association and of the Lexis Nexis Advisory Board.  He is the author of a number of articles on Corporate Law and Corporate Governance and co-author of the book "Business Laws of Brazil" (West, 2014, 4th Ed.), along with other partners of Demarest Advogados.