Brazilian Government Publishes The Provisional Measure Of Economic Freedom

On April 30, 2019, the Federal Government issued the so-called “Economic Freedom PM (Provisional Measure)”. Published on the same date in an extra edition of the Federal Official Gazette, the Provisional Measure No. 881 (PM No. 881) establishes the “Declaration of the Rights of Economic Freedom” and deals with other relevant matters.

Through the referred PM, the Federal Administration seeks to reduce bureaucracy of the entrepreneurial activities, especially those at low risk, and, with minimum intervention from the Government, stimulate entrepreneurship and innovation.

The principles that guide PM No. 881 are: (i) presumption of freedom on the exercise of economic activities; (ii) presumption of good faith on the private entities; and (iii) subsidiary, minimum and exceptional intervention of the Government on the economy.

We have prepared a brief, yet preliminary, of the main topics of PM No. 881. Considering the materiality of the matter, some items bellow will be subject of specific analysis in newsletters that shall soon be published.

Declaration of the Rights of Economic Freedom

The Declaration of the Rights of Economic Freedom (DREF) establishes rules and principles to secure the protection of free initiative and free exercise of economic activity. It also deals with the functioning of the Government as regulatory and normative agent, as provided for in the Federal Constitution.

According to the DREF, it is the right of any person to promote low risk economic activity, in which private property is used exclusively, without the requirement of public acts for authorizing the economic activity. This initiative is especially relevant for the Brazilian startups ecosystem, because if its activities are considered within the concept of low risk, functioning permits and licenses - a bureaucracy that most of the times is considered excessive for these companies - will not be required. Worth stressing that the definition of “low risk activity” shall be subject of further regulation and such activities shall be mandatorily conducted at private properties.

Furthermore, among other legal provisions, the DREF brings meaningful innovations. Generally described, below are some examples of such provisions that we deemed material:

Isonomic treatment of the public administration in relation to the exercise of acts of authorization of the economic activity, which shall be bonded to the same criteria of interpretation adopted in previous decisions; guarantee that the agreed upon by the parties on corporate business shall prevail...