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Appointment of a Administrators Resident Abroad in Corporations and Limited Liability Companies

Law n° 14.195/21 (Business Environment Law), passed on August 26, 2021, represents a significant evolution towards reducing bureaucracy and improving the business environment in Brazil.

Among the valuable changes introduced by this law, we will briefly discuss the new wording of article 146, paragraph 2, of Law No. 6404/76, the Brazilian Corporations Law, which allowed, subject to specific requirements, the election of individuals residing or domiciled abroad to occupy the position of member of management, both in joint-stock companies and in limited liability companies, the latter when ruled in a supplementary manner by the Corporations Law. Until the approval of the referred law, such individuals residing abroad could only be part of the Board of Directors:

"Art. 146. Only natural persons as members of the administrative bodies can be elected.


§2. The investiture of an administrator residing or domiciled abroad is subject to the constitution of a representative living in Brazil, with powers, valid for at least 3 (three) years after the end of the administrator's term of office, to receive:

I - Summons in actions brought against him based on the corporate legislation; and

II - Summons and subpoenas in administrative proceedings initiated by the Securities and Exchange Commission in the case of exercise of management position in a publicly-held company."

This change was very well received, especially by international companies that now have the option to elect for management positions natural persons who have a residence abroad, including in the place where the headquarters of the partner / controlling shareholder is located.

It is worth mentioning that the Normative Instruction DREI/ME no. 112, of January 20, 2022, brought more legal security on the subject by incorporating, in article 13, the change promoted by the Business Environment Law:

"Art. 13. In the case of the appointment of a Brazilian or foreigner not residing in Brazil to the position of administrator (member of the board of directors or the board of executive officers) in a joint-stock company, investiture will be conditioned to the appointment of a representative residing in the country, under the terms of § 2, of art. 146, of Law nº 6,404, of December 15, 1976. "

It should be noted that this innovation should also meet the needs of a globalized world and the transformations resulting from the Covid-19 pandemic, among them remote work.

Furthermore, this change may increase the flow of foreign investments in Brazil. The possibility of appointing members of management who are resident/domiciled in the location of the controlling company's headquarters, for example, and, thus, closer to the group's culture, can provide foreign groups with greater security and, consequently, lead to an increase in their investments in Brazil.

However, we cannot lose sight of the fact that, although the rule is in force and represents a significant innovation, we still have to face some practical issues to make it effective, such as, for example, the non-existence of the competent event in the REDESIM system "DBE".

The Brazilian IRS has already determined the creation of the events of inclusion/alteration of the Partners and Administrators Chart for the companies that have directors domiciled abroad (070 - Administrator resident abroad). However, we are still in the system’s adaptation phase and waiting for its implementation.

In view of the above, although the Business Environment Law is already in effect and represents a significant advance to modernize the business environment, reducing bureaucratization and barriers for companies, in practice, and in what concerns the administrator residing abroad, the law is still dependent on measures and adjustments to become effective, as informed above.

For more information about other innovations brought by Law No. 14.195/21, we suggest checking the publication made by GTLawyers in October 2021, containing brief additional considerations about the legislation in reference.

Article prepared by Fernanda Lefrève Buff, lawyer at GTLawyers and revised by partner Priscila Conde. For more information, please contact the phone (11) 3504 7600 or e-mail pconde@gtlawyers.com.br.