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Provisional Measure authorizes the increase of foreign ownership in Brazilian airlines

Administrative Law

​On December 13, 2018, Provisional Measure No. 863 ("PM") was published in the official gazette, amending Federal Law No. 7,565/1986 (the "Brazilian Aeronautics Code") and eliminating the limit for foreign ownership in companies holding concessions for public aviation services. Prior to publication of the PM, the maximum equity ownership by foreign companies was limited to 20% per cent. of the voting capital of such companies (Article 181, section II of the Brazilian Aeronautics Code, now revoked). 

Pursuant to the PM, a concession or authorization to provide public aviation services may be granted to any entity constituted under Brazilian law, with headquarters and administration located in Brazil and with no restrictions as to its corporate type, division of capital or administration.

Furthermore, the PM also revokes provisions that required authorization from ANAC (the National Civil Aviation Agency) for certain corporate transactions, such as, a transfer of 2% of the corporate capital of companies holding concessions for public aviation services (Article 185, Paragraph 2, Sections II and III of the Brazilian Aeronautics Code, also revoked by the PM).

The PM, which eases the entry of international investors into the Brazilian aviation market will remain in effect for 60 days, renewable for another 60-day period. In order not to lose its effectiveness, the PM must be converted into law following approval by both the Chamber of Deputies and the Senate, and, after that, should there be modifications to its original text by the Congress, the PM must be submitted to the President for approval. 

Finally, please note that on March 1, 2016, the Presidency approved Provisional Measure No. 714, which increased from 20% to 49% the limit for foreign ownership in Brazilian aviation companies. However, these changes were vetoed at the time and not incorporated into the Brazilian legal system.

The PM, in Portuguese only, is available in electronic format and can be accessed through this link.

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