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Brazilian government sanctions Legal Framework for Startups and Innovative Entrepreneurship

The Complimentary Law Nº 182, written partially by the Ministry of Economic Affairs (Sepec/ME), was enacted by Congress and sanctioned by the president last Tuesday, June 1st, after passing through the Senate. The new law supports the creation of innovative businesses, attracts more investments in the sector, and opens possibilities for startups in bidding processes. 

We listed the main changes to come after the sanction of the law and how the startup sector will be affected by it.

The new legislation represents more opportunities for innovation and investments in Brazil’s economy, a major step towards the growth of the startup sector


The official definition of Startups

● The text defines Startups as “businesses or corporations which work in innovation applied to business models or a product and service offered”. 

● The organization’s gross revenue cannot exceed 16 million reais.

● The startup’s registration on the Cadastro Nacional de Pessoa Jurídica (CNPJ) must not exceed 10 years.

Access to investments destined to innovation

● Startups can receive investments from people and companies. 

● The investors can participate in the startups’ social capital or not, depending on the agreement between the parts. 

● By not participating in the social capital of the startup, the investor, called “Investidor-anjo”, or Angel-investor, is free from answering for any of the startup’s debts. In this modality, the investor only receives paid compensation according to their contribution. 

● Companies that have obligations to invest in research and development, due to bestowals with regulatory agencies, are authorized to do so by investing in startups.

Experimental Regulatory Environment (Sandbox regulatory)

● Regulatory agencies can override the application of mandatory rules so startups and innovative companies experiment with innovative business models and test technologies and techniques, always accompanied by the regulator.

Access to the bidding process

● The law creates a new model of bidding where the public administration can hire startups and innovative solutions.

● The bidding process shall consist of the problem to be solved and the results expected by the public administration, fitting to the bidders to come up with new solutions to the issue. 

Overall, the new law attempts to offer a more friendly environment to startups, guaranteeing competitiveness and new solutions to support the growth of the sector.