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Startups and the New Business Environment Law

Entrepreneurs and those who aspire to become an entrepreneur usually fear the traditional Brazilian business environment, due to the difficulties, bureaucracy and costs that arise from the creation and maintenance of a company.

Aiming to change this reality and in order to encourage the offer of innovative products and services to society, measures were taken to encourage entrepreneurial activities in Brazil and provide a scenario in which small businesses and startups have the opportunity to be incorporated and become professional in a faster and more simplified way.

Pursuant to Law No. 14.195/2021 (New Business Environment Law), the registration bodies must provide free information about the stages of registration of the company, necessary documentation, viability of the address and the intended corporate name. The São Paulo State Board of Trade – JUCESP, for example, on its home page in the internet (, already offers a tool enabling such research, as well as gathering of information and instructions.

The National Registry of Legal Entities (CNPJ) will become the only required identification number, unifying the federal, state and municipal tax registrations.

The granting of licenses and permits for medium-risk activities[1] will be automatic, with the legal representative’s commitment to complying, before starting activities, with the sanitary, environmental and fire prevention standards. Privately-held corporations may adopt digital books, instead of books kept in paper.

Companies whose business activity is virtual may adopt the address of the individual entrepreneur or one of the partners.

To encourage foreign investment in the country, residency in Brazil for foreign administrators will no longer be required. Restrictions on foreign investment in some sectors will also be removed.

With the same purpose as the New Business Environment Law, the Legal Framework for Startups (Complementary Law nº 182/2021) presents a series of incentives to promote the business environment and attract investments for innovative entrepreneurship. The Complementary Law also defines the types of investors, investment alternatives for innovative companies/startups and rules for hiring by the public administration.

Small businesses and startups will also have different regulation for some aspects of the Personal Data Protection Law – LGPD – (Law No. 13.709/2018), leading to an adjustment of the regulatory burden to the size of the company. The ANPD – National Data Authority has submitted to public consultation a draft Resolution that eases standards for small corporations treatment agents, including startups, which introduces flexibility in some LGPD devices, such as the mandatory appointment of a Data Protection Officer (DPO). The Resolution also deals with other simplifications, but these will not necessarily apply to all small agents – they will apply, for example, to those who process high-risk personal data on a large scale. In any case, it is yet another indication of the authorities’ concern to create more favorable and adequate conditions for entrepreneurship, fostering innovation and multiplying the possibility of investments in the country, which helps the search for growth recovery.

Maria Carolina Mendonça de Barros
Partner of Mendonça de Barros Advogados. Graduate Law Degree from University of São Paulo Law School. Master Degree in International Law from University of São Paulo Law School. PhD in International Law from from University of São Paulo Law School. ECPC-B Professional DPO Certification, Maastricht University. CIPP/E. Data Privacy Brasil Certification in Privacy and Data Protection, Data Privacy Brasil.

Karina Perossi, corporate lawyer
Corporations, M&A, Debt Restructuring and Crisis Management Specialist. Graduate Law Degree from PUC/SP. LLM Degree from Georgetown University.

[1] According to the rating of the National Network for the Simplification of Registration and Legalization of Companies and Businesses – RedeSim.

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