Legal Framework for Startups Highlights of Complementary Law 182/2021

General and corporate aspects

  • The Complementary Law 182/2021 (“CL 182”) was created with the aim of promoting the competitiveness and internationalization of Brazilian companies as well as the attraction of foreign investments.
  • CL 182 defined important concepts related to the startup world including as the terms “angel investor”, “regulatory sandbox”, and “startup” itself.
  • For purposes of CL 182, startups:
    • May be companies incorporated in the form of any type of Brazilian corporate entity, such as individual entrepreneurs, Individual limited liability companies (EIRELI), entrepreneurial companies (the most common types being limited liability company and joint-stock company), cooperatives etc.;
    • May be recently incorporated companies or companies that have been registered with the Federal Revenue Services for up to 10 years;
    • Are involved in innovation in the sector of products or services offered by them; and
    • May have generated gross revenues of up to R$16 MM in the last calendar year.
  • Investments in startups may be made by individuals or companies, irrespective of whether the investment results in equity participation or not.
    • The main types of investments defined in CL 182 which do not immediately result in equity participation:
      • Stock option agreement;
      • Convertible debenture;
      • Convertible loan agreement;
      • Silent partnership (Sociedade em Conta de Participação) in compliance with the applicable rules of set forth in the Brazilian Civil Code); and
      • Angel Investment Agreement. According to the CL 182, this type of agreement cannot exceed the maximum period of 7 years). Furthermore, this agreement may define the right of redemption after 2 years of the contribution, upon receipt of assets.
    • Investors using any of the above listed investment options will not have management or voting rights. In addition, this kind of investors is not at risk of becoming personally liable for certain debts, including judicial reorganization and disregard of legal personality. Further, this kind of investor may not receive tax-free dividends, except for the investment in a silent partnership.
    • Capital contributions made by investment funds are subject to the rules of the Securities and Exchange Commission of Brazil.
  • Brazilian Companies which have investment obligations in research, development and innovation areas may invest through:
    • Endowment funds – the investors of an endowment fund do not receive a remuneration on their investments because of the philanthropic nature of these funds;
    • Investment Participation Funds (Fundos de Investimento em Participação, in the categories:
      • Seed capital;
      • Emerging companies;
      • Companies with intensive economic production in research, development, and innovation.
    • Investments in programs, invitation to bid, or competitions aimed at funding, accelerating, and scaling startups, managed by public institutions.
  • CL 182 also modifies the Brazilian Corporation Law as follows:
    • The executive committee (diretoria) no longer requires two officers – the nomination of one officer is sufficient;
    • Closely-held corporations with annual gross revenues of up to R$78milion may publish their corporate/financial documents electronically; the physical corporate books may be replaced by mechanized or electronic ones;
    • The shareholders in a general meeting may decide to distribute dividends without certain legal restrictions which had to be observed previously, in case the bylaws do not define specific rules, as long as the preferred shareholders’ right to receive the fixed or minimum dividends is not prejudiced.
    • Creation of the “small corporation” concept, which is a company with annual gross revenues below R$500MM. The Securities and Exchange Commission of Brazil may establish simplified procedures for these corporations g.: obtaining issuer registration, public distribution of securities and preparation and provision of periodic and extraordinary information.
    • Simplification of access to the capital market for smaller corporations: no need for smaller corporations to institute a fiscal council, exemption from the requirement of an intermediating financial institution, etc.
  • CL 182 will come into force on 30 August 2021, which is 90 days from its publication in the Federal Official Gazette on 1 June 2021.



Tax aspects

  • Modification of the “Inova Simples” a simplified taxation regime created by Complementary Law no. 167/2019. All companies which are eligible for this regime must adopt the expression “Inova Simples (I.S.)” in their business name.

Bidding, Public Areement (CPSI) and Supply Agreement

  • Public authorities may contract individuals or legal entities, alone or in consortium, for the testing of innovative solutions developed by them or to be developed, with or without technological risk, by means of a special bidding procedure, as defined in CL 182.
  • The Public Agreement for Innovative Solution (CPSI) will have the following conditions, among others:
    • 12 months term, renewable for an equal period;
    • Maximum value of R$ 1.6 MM;
    • Definition of the ownership of the intellectual property rights of the creations resulting from the CPSI;
    • Control of business objectives; and
    • Obligation to deliver a report on the progress of the agreement performance.
  • The Supply Agreement may be signed with the same CPSI contractor, after the termination of the CPSI and no other bidding process will be required. The purpose of the Supply Agreement will be the supply of the product, process or solution resulting from the CPSI or, as the case may be, for the integration of the solution to the technological infrastructure or work process of the public authority. The Supply Agreement may have a term of up to 24 months, renewable for an equal period, and its value may be up to R$ 8 MM.

Intelectual Property

  • As a further benefit, the patent applications made by companies joining the “Inova Simples” taxation regime will be prioritized at the Brazilian National Institute of Industrial Property (INPI).

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