BRAZIL LAW AND PRACTICE Contributed by: Alan Campos Elias Thomaz, Juliana Sene Ikeda, Ricardo Barretto Ferreira da Silva and Camila Sabino Del Sasso, Campos Thomaz Advogados
8. Other Review/Approvals 8.1 Other Regimes
the annulment of the decision and, in some cases, the subsequent approval of the investment. 7.4 National Security Review Enforcement Non-compliance with registration obligations may lead to administrative penalties, fines and difficul - ties in remitting dividends or repatriating capital. In regulated sectors, conducting an investment without required authorisation can render the transaction void or subject to regulatory sanctions. The penalties depend on the type of activity carried out by the foreign company and the applicable laws and regulations. In general, the following consequenc - es should be considered. • Administrative sanctions: These may include fines imposed by regulatory agencies, as well as the suspension or revocation of licences, permits or concessions necessary for operating in Brazil. • BACEN penalties: Failure to register foreign capital with the Central Bank may result in fines, restric - tions on profit remittances or capital repatriation, and possible exchange rate- or tax-related liabili - ties. • Civil and criminal proceedings: In cases involving sensitive or strategic sectors, particularly those related to national security, violations may trig - ger civil and criminal proceedings. Sanctions may include asset forfeiture, revocation of ownership rights and court injunctions or prohibitions on future participation in the relevant sector. Given these potential risks, it is essential that foreign companies wishing to operate in Brazil seek special - ised legal and regulatory advice prior to entering the Brazilian market or executing any investment transac - tion. Proper legal guidance ensures compliance with Brazilian law, minimises exposure to sanctions and safeguards the investor’s ability to operate lawfully. Non-compliance may have serious consequences, including financial losses, reputational damage or even prohibition from conducting business in the country.
FDI in Brazil is generally liberal and not subject to pri - or governmental approval, except in specific sectors governed by national interest, security or regulatory policy. The legal environment is open, transparent and anchored in constitutional guarantees of equal treat - ment for domestic and foreign investors. Nonetheless, a range of special regimes and oversight mechanisms apply depending on the nature of the investment, its structure and the sector of operation. Foreign Exchange and BACEN Registration All cross-border equity and debt investments are subject to foreign exchange registration with BACEN under the RDE-IED system. This registration is declara - tory, not discretionary: it is designed to record inflows, reinvestments and remittances, enabling the investor to repatriate capital and dividends in the future. Companies receiving foreign investment must register the foreign shareholder’s details, including the country of origin, corporate structure and ultimate beneficial ownership, as well as the value and currency of the contribution. Updates are required annually for com - panies with assets or net equity below BRL300 million and quarterly for those above this threshold. In parallel, foreign exchange transactions must be executed through authorised financial institutions and comply with the AML and counterterrorist financing regulations issued by BACEN and the Financial Activi - ties Control Council ( Conselho de Controle de Ativi- dades Financeiras COAF). Recent reforms under the New Foreign Exchange Legal Framework have further modernised the regime, simplifying procedures and enabling greater flexibility in the use of foreign cur - rency accounts. Sector-Specific Regulatory Regimes While Brazil’s general FDI framework is open, certain industries remain subject to sector-specific authorisa - tion or ownership restrictions. These controls are not typically discriminatory but reflect strategic or public interest considerations. The principal sectors include the following.
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