New law simplifies foreign investment in Brazil’s telecommunications sector
Law No. 14,195/2021 aims to make it easier to open companies, attract investment, and reduce bureaucracy
Approved on August 26, 2021, Law No. 14, 195/2021 considers a series of measures to simplify doing business in Brazil. The new law stems from Provisional Measure No. 1040/2021 and introduces changes to processes related to opening companies, protection for minority shareholders, and reducing red tape.
Seeking to promote further investment within the telecommunications sector, the new law has also revoked Article 18, sole paragraph of Brazil’s General Telecommunications Law (LGT). Regulated by Decree No. 2617/1998, this provision gave the Executive body the power to limit the extent to which foreign capital could be invested in Brazilian telecommunications service providers. When such services were in the public interest, the decree determined that any foreign capital had to be invested indirectly via companies incorporated and based in Brazil.
Although this did not mean that foreign investments were prohibited, Brazilian telecommunications service providers could not receive foreign capital unless it first passed through a locally established holding company.
With Article 18, sole paragraph of the LGT now repealed, foreign investors may directly invest in Brazil’s telecommunications sector.
For further information about this topic, please contact Mattos Filho’s Telecommunications practice area.