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Landmark For Statups In Brazil: Advance For Regulation And Incentive To Investments

The Federal Government has approved it after years of expectation

The National Congress has finally considered a set of regulations that promises to facilitate the existence of Companies that are considered startups. Also, the main objective for the creation of such bill is the creation of points that will delimit the area of operation of Brazilian startups. Legally, this legislation will provide a safer situation for entrepreneurs and, of course, for potential investors in Brazil. This breakthrough also came at a good moment because of the number of Startups in Brazil during 2020. According to official data released by the Brazilian Startups Association (ABStartups), in 2020, Brazil had 12.7 thousand Companies classified within such category.

Which companies will fit the standards for being considered a startup?

According to a message sent through the National Congress by the Economy Minister Paulo Guedes and Marcos Pontes (from the Ministry of Science, Technology, and Innovation) startups are recently created Companies. They are also enterprises that apply innovative methods related to their business models. For a Company to be regarded as a startup, some requirements have to be fulfilled:

  • Gross annual revenues of up to 16 million reais during the previous year of activities, or 1.3 million reais multiplied by the number of months of activities in the previous calendar year.
  • Companies that have up to six years with the National Register of Legal Entities (CNPJ).
  • Businesses that meet some minimal prerequisites, such as declaration during constitutive or changer act, the utilization of innovative trades.
  • Framed into the special regime of Inova Simples, which is a simplified special regime for tax liabilities to some Companies.
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Of all the companies that could be considered startups in Brazil, there are 12.7 thousand which fit in such category.


In a nutshell, the Legal Landmark of Startups in Brazil come with several benefits

Let us check more closely about such advantages in this topic. Considering mainly that it will definitely help the debureaucratization process that actually is really damaging for the economical growth in the Country. Below we prepared a list of the boons that could come with the creation of the landmark.

1 – Adminiting the contribution of Capital

It means that private individuals or legal entities will be able to participate, or not, in the equity capital of the startup.

2 – Simplified Regulatory Conditions

It will help the testing of products and services, as well as business models that are considered innovative for the market in reality.

3 – Fomentation of the startups ecosystem

This will happen through a restriction in the participation in bids only for Companies that are actually categorized as startups.

4- Formation of consortiums

Those will only be allowed between Companies that are already considered and framed as startups.

5 – Flexibilitation of labor laws

This category is interesting because such Companies considered as startups will be able to obtain Contracts with a particular term, up to 4 years. Possibility of Stock Options as a part of the compensation and conversions into equity holdings.

Hiring of such companies by the State

The proposal authorizes the public administration organs and entities to have relationships with Companies that adhere to the standards of startups in simplified conditions. So such partnerships will assist in the creation of innovative business models that might test innovative techniques and experimental technologies in Brazil. This kind of public bidding will help to solve public demands that might need innovative technological solutions. And, certainly, promoting the innovation in Brazil with the Aid of the purchase power and possibilities of the State.

Conclusion

In this article, we are talking about a very important landmark in Brazil that will help in the instigation of the arising of startups. Such a landmark has been duscussed in the National Congress for the past years, but on the 20th of December 2020, this has become a reality as a draft bill. The text since then has started to be processed in the House of Representatives in Brazil. Such a decision will be very important for Brazilian new and innovative businesses for the next years! Did you like our post? Don’t forget to comment about this topic and follow us on our LinkedIn page for more interesting news about Brazil and also our foreign relations!

References

WWW12.SENADO.LEG.BR. Projeto do governo cria marco legal das startups e do empreendedorismo inovador. Available at: <https://www12.senado.leg.br/noticias/materias/2020/10/21/projeto-do-governo-cria-marco-legal-das-startups-e-do-empreendedorismo-inovador>.

CANALTECH.COM.BR. Oito perguntas sobre: o Marco Legal das Startups. Available at: <https://canaltech.com.br/startup/oito-perguntas-sobre-o-marco-legal-das-startups-173858/#:~:text=Eduardo%20Zilberberg%3A%20O%20Marco%20Legal,o%20empreendedorismo%20e%20a%20inova%C3%A7%C3%A3o.&text=No%20dia%2019%2F10%2C%20o,tramitando%20na%20C%C3%A2mara%20dos%20Deputados.>.