Presidential Decree No. 876, published on March 14 of this year, amended Law No. 8,934/1994, which deals with the public registration of business companies, among other matters. The main change was the inclusion of new paragraphs in articles 42 and 63 of the law, which, for the most part, aim to create mechanisms that accelerate the process of creation and registration, especially for limited liability companies and sole proprietor limited liability companies (Eireli). According to the explanatory memorandum of MP 876, the measure "is consistent with the need to reduce red tape and the number of days to form a company in Brazil."

According to the new wording of Law No. 8,934, articles of incorporation for individual entrepreneurs, limited liability companies, and Eirelis must be recorded with the competent board of trade automatically, provided that: (i) prior consultations on the feasibility of the business name and viability of location are approved; and (ii) the standard incorporation template established by the National Department of Business Registration and Integration is used. By means of automatic authorization to record the incorporation act, the registration numbers with the National Register of Corporate Taxpayers (CNPJ) and the state registration of the competent revenue service must also be issued, when this body is prompted by the board of trade, and according to the corporate purpose of the business entity subject to registration.

Within two business days, counting from the automatic authorization to record the incorporation act, the board of trade must review the legal formalities of the process and, if there is an insurmountable error, the registration must be canceled, together with the enrollments issued. If a curable defect is identified, the board of trade must specify the relevant requirements, which shall not affect the registration granted.

It should be clarified, however, that, depending on the corporate purpose designated for the business entity, the automatic authorization to record incorporation acts referred to in MP 876 presupposes fulfillment of prior procedures with environmental, state, municipal, and regulatory bodies, among others, which may take some time.

In addition to the automatic authorization mechanism, MP 876 brought in new wording for Law No. 8,934 so as to establish that authentication of documents presented to the board of trade will be waived when a lawyer or accountant of the interested party affirms, under personal liability, the authenticity of the copy of the respective document. The explanatory memorandum of MP 876 claims that this amendment "meets the ideals of simplification and de-bureaucratization, while reducing the possibility of fraud or at least facilitates holding those responsible criminally liable in the event that it occurs."

The intention to reduce red tape of business registration in Brazil and to reduce the time for forming companies is commendable and necessary, but the effectiveness of this measures will depend on the adaptation of the boards of trade. The presidential decree produces immediate effects, but depends on the approval of the National Congress in order to be converted definitively into law. Its term of duration is 60 days, extendable once for the same period.