BRAZIL: The Brazilian Government brings before the Congress the startup regulatory framework bill

January 2021 – Brazil – Rossetti Advogados

On October 20, 2020, the Federal Government brought before the Brazilian Congress a bill (PL) to create the so-called Regulatory Framework for Startups. Based on Supplementary Bill 249/20, the bill seeks to create a better business environment, simplify the organization of such companies, stimulate investment in innovation and foster employment and innovation.

The new regulatory framework defines that Startups are newly incorporated or recently operating companies the core business of which is devoted to the employment of innovative methods in business models, products or services offered to the public or to other companies.

In addition, the bill sets out other conditions for a company to be deemed a startup. They are:

  • to have annual gross revenue of up to R$16 million in the previous calendar year or R$1.3 million times the number of months of activity in the previous calendar year, whenever it operates for less than one year;
  • to be enrolled with the National Corporate Taxpayer Register (CNPJ) for up to six years;
  • they must meet at least one of the following requirements: declaration, in their articles of association or By-Laws or amendments thereto, that they use innovative business models; or that they fall under the Simplified Special Regime for Brazilian Startups (Inova Simples).

Another aspect discussed in the bill relates to the attraction of investment by Startups. According to the proposed rules, startups may accept contributions to capital both from legal entities and individuals, which contributions to capital shall not become part of the company’s share capital or capital stock. These angel investors will not become shareholders of the company and shall neither have the right to interfere in its management nor the voting right in its board of directors. 

However, they may participate in the resolutions strictly for advisory purposes, as stipulated in the agreement. On the other hand, the investors that act in this modality will also not be liable for any debt of the startup, including in the event of court-supervised reorganization.

The bill also contemplates the possibility of adjustment of the startups to the Regulatory Sandbox that allows certain companies, especially those that operate in the financial industry, to test, under certain conditions, projects that bring financial innovations and innovative means of payment to their clients. 

The bill sets out that the rules relating to the Regulatory Sandbox will be subsequently defined by the regulatory authorities – in this respect, we have the already enacted Central Bank (BC) Resolution No. 29 and National Monetary Council (CMN) Resolution No. 4.865, both dated October 26, 2020. 

These rules respond to a growing demand from FinTechs, which are entering the Brazilian market. 

Finally, we note that in addition to the Startups, the final provisions of the bill contemplate a measure aimed at simplifying the process of incorporation of joint-stock companies, not only for startups, but also for all joint-stock companies with annual revenue below R$78 million.

With the new framework, these companies will be able, without limitation, to publish call notices and disclose balance sheets and other documents in digital means. Thus, they will no longer be required to provide these publications in printed newspapers of broad circulation, as currently made by publicly-held companies – and required by law.

Now, the bill will be analyzed first in the Chamber of Deputies and subsequently in the Senate. In the end, in case it is approved by the legislative branch, it will represent yet another of many other advances of this government to unblock the intricate Brazilian business environment.

For more information on the above or in other matters, please contact Maristela SA Rossetti ( or Gilberto Rossetti (

This article is based on publicly available information and given for informational purposes only. It is not intended as legal advice or as a comprehensive analysis of the matters referred to herein.