BRAZIL Law and Practice Contributed by: Rodrigo Casarotti, Alexandre David, Ricardo Melaré and Gabriela Claro, /asbz
7.2 Primary Securities Market Regulators Private and public M&A are grounded in the Brazilian Civil Code and the Corporations Law, with general contract law principles applying. For listed companies and admitted securities, the Brazilian Capital Markets Law (Law No 6,385/1976) and CVM regulations gov- ern disclosure and, where applicable, tender offers. The CVM administers and enforces federal securities law. In listed-company cases, B3’s listing rules and its self-regulatory powers also apply. Alleged corporate law violations are pursued by private plaintiffs before state courts or arbitration, depending on by-laws and transaction documents. 7.3 Restrictions on Foreign Investments Brazil is generally open to foreign investment, but specific sectors have restrictions (eg, defence-relat- ed activities, nuclear energy, press and broadcasting, rural land near borders and, in certain cases, aviation and financial services). These rarely affect pure tech- nology or software M&A unless the target operates in a regulated segment (eg, fintech, telecoms, criti- cal infrastructure). Foreign direct investment must be registered with the Central Bank’s electronic RDE-IED system; this registration is procedural, not discretion- ary or suspensory, provided sectoral rules are met. 7.4 National Security Review/Export Control Brazil has no cross-sector national security review regime comparable to those in some jurisdictions. National security and foreign ownership issues arise through sector-specific rules (eg, defence, media, landholding). As a rule, Brazil does not restrict invest- ment based solely on the investor’s jurisdiction, but investments must comply with sanctions implement- ed by Brazil and with anti-money-laundering and KYC rules. Export control rules apply to defence, dual-use and other sensitive goods/technologies. The Interministe- rial Commission for the Control of Exports of Sensi- tive Goods co-ordinates policy. For technology M&A, export controls matter where targets export controlled technologies or defence-related products; end use and licensing are addressed in diligence, conditions precedent and post-closing covenants. Exports must be registered in SISCOMEX (an export system of the Brazilian Federal Revenue Service); prior licences or
authorisations may be required depending on goods/ technologies. 7.5 Antitrust Regulations Brazil operates a mandatory, suspensory merger-con- trol regime administered by CADE ( Conselho Admin- istrativo de Defesa Econômica ). A filing is required for acts of economic concentration with effects in Brazil that meet turnover thresholds: in the preceding finan- cial year, at least one economic group involved must have gross revenues in Brazil of BRL750 million or more, and at least one group on the other side must have BRL75 million or more. Parties must notify pre- closing and are prohibited from implementing in Brazil before clearance; gun jumping can result in fines and, in extreme cases, in the transaction being rendered ineffective in Brazil. Deals below thresholds are not notifiable, though CADE may review exceptional cas- es ex officio. 7.6 Labour Law Regulations General Environment and “Primacy of Reality” Brazil has a historically employee-protective labour regime. Employment relations are primarily governed by the Consolidation of Labour Laws ( Consolidação das Leis do Trabalho – CLT), interpreted by a special- ised system of labour courts, and complemented by active trade unions and collective bargaining agree- ments (CBAs), which often grant additional rights and typically apply at category level even where an indi- vidual employee is not personally unionised. A tradi- tional feature of Brazilian labour law is the “primacy of reality”: the existence of an employment relationship is determined by its substance rather than its form. Courts have long recharacterised consultancy or ser- vices agreements as employment where the factual indicia are present (eg, personal services, subordina- tion, regularity and payment of wages), with corre- sponding labour and social security consequences; more recent higher-court case law has tended to scru- tinise reclassifications more carefully, but the principle remains a practical risk. Labour and social security matters are monitored by multiple authorities, including labour inspection bod- ies, the Ministry of Labour and Employment ( Ministério do Trabalho e Emprego – MTE) and the Labour Pros- ecution Office ( Ministério Público do Trabalho – MPT),
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