BRAZIL Law and Practice Contributed by: Vitor Henriques and Gabriela Sella, Franco Leutewiler Henriques Advogados
For the purpose of defining an economic group, CADE considers companies that are under com - mon control, whether internal or external, and companies where any of such companies hold, directly or indirectly, at least 20% of the equity ownership or voting rights. Investment funds are considered part of the same economic group for the purpose of calcu - lating the revenue referred to above, as follows: • the economic group of each investor who holds, directly or indirectly, a participation equal to or greater than 50% of the quotas of the fund involved in the transaction through individual ownership or through any type of quotaholder agreement; and • the companies controlled by the fund involved in the transaction and the companies in which the mentioned fund holds, directly or indirectly, a participation equal to or greater than 20% of the share capital or voting rights. Regardless of the criteria mentioned above, CADE may require the submission of concentra - tion acts for its analysis within one year following For those involved in M&A deals and foreign investments in Brazil, a key area of concern should be labour law regulations covering employment agreements, employee benefits, termination protocols and the risks associated with labour liabilities. Ensuring compliance with Brazilian labour laws is vital to minimise potential risks and liabilities arising from the integration and restructuring of the workforce following an acquisition. Furthermore, having a clear under - standing of collective bargaining agreements, labour union dynamics and industry-specific the closing of any transaction. 2.5 Labour Law Regulations
regulations is essential for the smooth execu - tion of M&A transactions in Brazil. 2.6 National Security Review Although Brazil lacks a formalised national secu - rity review process like some other jurisdictions, certain transactions may receive closer scrutiny from regulatory and/or governmental authori - ties, especially those involving sectors that are deemed critical to national security, such as defence, telecommunications and critical infra - structure. Depending on the investment sector involved in an M&A transaction, regulatory agen - cies and other public bodies, as applicable, are responsible for the analysis of the national public interest involved. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments While not directly related to the context of M&A deals, Law No 14,195/2021 (also known as the Business Environment Improvement Law) was important in improving the business environ - ment in Brazil by simplifying processes, reduc - ing corporate bureaucracy and creating a liberal environment favouring private investments, thus bringing real changes to the entire Brazilian busi - ness sector and consequently boosting the M&A market. Law No 14,801/2024 also represents a signifi - cant advancement in the Brazilian capital mar - ket and an improvement in access to financial resources, whether through reduced interest rates or infrastructure debentures announced by the Brazilian government, which will also con - tribute to attracting investments to the country. In this context, new opportunities will arise for
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