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“Non-compete” -the need for restrictive interpretation of the non-competition clause

Recognized as a moral and loyalty obligation, the non-competition or non-compete clause, in general, restricts the performance of the parties to a contract so that one does not carry out activity considered competitive to the other. This clause is commonly used in purchase and sale of shares (M&A), in which it aims to protect and maintain the financial and operational viability of the business, and can be applied in various market segments and in different situations.

In such purchases and sales of shares, for example, it has become quite common to oppose the non-compete clause, restricting, by means of it, by the will of the parties, competing activities between the seller and the buyer for a certain period of time and in a certain segment, thus reducing the risk that the investment of this operation is not satisfactory to the parties due to possible competition.

Although they seem simple, non-compete clauses have requirements for their validity, such as: predetermined duration, delimitation of territory and activity. In addition to these requirements, the non – compete clauses are also accompanied by an arbitrated indemnity in sufficient amount to compensate the individual for the period in which they are prevented from acting as a result of it, being recognized by the doctrine as a moral and loyalty obligation, thus pricing the non-competition of these partners, who cease to integrate the corporate framework and are prevented from acting in the market.

It is important to note that there are several types of no – compete clauses. The most common is concerned with restricting the performance of directors and/or controllers of companies, for a period of time, within a certain segment, providing that they will not be able to act in businesses similar to that divested and/or that they were part of.

A practical example would be the purchase of a company creating urban mobility applications. The controller and / or programming director of the application and all its intelligence knows the entire programming system of this, its strengths and its points that could be improved, in addition to having market knowledge. It would not be fair that this controller and/or director, a month after the purchase of this company, went to work for its largest competitor or engaged in an identical project.

However, despite the competitive restriction, for the validity of the clause, as mentioned above, in addition to specifying the activity and time, the non-competition clause must provide for sufficient compensation to compensate the individual for the period in which they are prevented from acting as a result of said clause.

There is also the possibility of the institution of non-compete clauses for the restriction of the practice of certain activities between legal entities and/or companies linked to them. It is a widespread practice between the parties, that is, the parties expressly stipulate the restriction that must occur.

This concern, present in every non-competition clause, in expressly delimiting the details of the restriction, occurs because these end up directly restricting free competition[1] and free initiative[2], both constitutionally established principles.Thus, it is necessary that the non-compete clauses be interpreted in a restrictive manner, due to reasonable concern of a possible “expansion” in its interpretation, imposing restrictions on those who have committed themselves through it that are not expressly mentioned in the agreement.

In this way, it is understood that the application and interpretation of these clauses must always be restrictive, not least because the clauses will always be interpreted in favor of constitutional freedoms (free initiative and free competition), and the parties cannot be obliged not to undertake or not to compete beyond the limits expressly agreed therein.

The Brazilian courts have already moved towards a peaceful understanding in this regard, analyzing cautiously what were the limits agreed between the parties, so that the non-compete clauses are not interpreted extensively, but restrictively and only pay attention to what was agreed and the way it was agreed, thus respecting the constitutional principles already mentioned.

A judgment that is worth mentioning is from 1911, from the Court of Justice of the state of São Paulo, in which the bad faith of a merchant who after the sale of his store to a third party, established with him that he could not have the installation of another store on Consolação Street was discussed. However, the merchant installed a new store on a street close to that mentioned.

The court understood that there was no bad faith of this merchant, who initially sold his store, since the parties freely restricted the territory in what would be the “Forbidden Zone” of the new store facility, and the terms were clear: on Consolation Street. Since at the time a greater restriction was not made (a radius counting from Rua da Consolação, for example), the merchant who felt injured could not charge for something not expressly provided for in the contract once agreed.

Thus, the non-compete clause must always be interpreted in a restrictive manner, taking into account what is expressly agreed between the parties and in respect of the principle of Pacta Sunt Servanda.

Giovanna Luz Carlos-lawyer, graduated in law, from Centro Universitário Padre Anchieta (2019), enrolled in the Brazilian Bar Association, São Paulo Section (OAB/SP) (2020). Postgraduate in Civil Procedure from Faculdade Damásio De Jesus. Lawyer and Administrative Coordinator of TM Associados.

Leonardo Theon de Moraes-lawyer, graduated in law, with emphasis in business law, from Universidade Presbiteriana Mackenzie (2012), enrolled in the Brazilian Bar Association, São Paulo Section (OAB/SP) (2012). Postgraduate and Specialist IN Business Law from the São Paulo School of Law of the Getúlio Vargas Foundation (2014), Master in political and Economic Law from the Mackenzie Presbyterian University (2017), author of books and articles, lecturer, Professor in undergraduate, MBA and Executive Education at FIPECAFI and member of the São Paulo Lawyers Association (AASP). Founding partner of TM Associados.

<[1] the principle of free competition, which is described in Article 170, item IV of the Federal Constitution of 1988, comes to complement the idea of Free initiative, that is, this principle will ensure competitiveness in the market, guaranteeing equal rights for all, and thus allowing anyone to explore any commercial activity, except for any legal impediments.
[2] Free Will and freedom in the choice of an economic activity, as well as the freedom to choose the means by which one intends to achieve this economic activity.

5 de setembro de 2021/por AdminTmAssociados
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Corporate Compliance – a perpetuity tool for companies

Many err in thinking that corporate compliance is only a necessary initiative for large companies and focused, only and only, on anti-corruption strategies. In reality, in the current corporate environment, especially when entering into new partnerships and hiring, compliance is a mandatory and fundamental resource.

Legal compliance or, for those who like foreignness, compliance, since the Brazilian corruption scandal in 2015 (watch the movie “The Laundry”), continues on the agenda in the most diverse companies, both to improve corporate governance rules and to monitor how companies have acted in favor of social objectives (such as ESG – Environment, Social and Governance).

Compliance is ensuring that business practices are in accordance with internal statutes and regulations, as well as laws in general. Thus, business compliance is an important tool to combat illegalities within companies, preventing legal and financial risks for the organization.

With an efficient compliance program, it is possible to protect the company from possible sanctions, lawsuits and reputational damage. In addition, the implementation of compliance policies can help increase transparency and business ethics, improving the trust of customers, employees, suppliers and investors in the company.

Still, a structured compliance extends to practically all areas and sectors of the company, because we have as ‘basic’ types of compliance: contractual compliance, labor compliance, tax compliance, data protection compliance and environmental compliance.

Each of these types is aimed at ensuring that the company complies with the norms, laws and regulations applicable to each of the areas. For example, contractual compliance aims to ensure that the company strictly complies with the clauses and conditions of the contracts it enters into with employees, suppliers, customers and other business partners.

Compliance thus ensures that the company complies with the obligations it has committed to its business partners and, in addition, protects itself from any problems and complications that may arise throughout this business relationship.

Meanwhile, tax compliance aims to ensure that the company complies with tax obligations while avoiding fines and penalties. Compliance in data protection, on the other hand, aims to guarantee the security and privacy of the data of customers and employees that are treated, thus avoiding possible data leaks, security incidents and the application of sanctions by the National Data Protection Authority (ANPD).

Environmental compliance aims to ensure that the company complies with environmental laws and regulations, avoiding damage to the environment and possible fines and sanctions. Currently also applied in ESG (Environmental, Social and Governance) programs, environmental compliance has gained a lot of relevance and has become a requirement within companies, charged not only by the national and international market, but also by a large part of society, that is, by its own customers.

And finally, we can talk about labor compliance, which aims to ensure that the company is complying with all the laws and regulations provided for in labor legislation, providing a safe environment for its employees and, especially, protecting itself from high convictions in any lawsuits and inspections by the competent bodies.

In summary, corporate compliance, carried out in a structured way, covering all areas of the company, is essential to ensure the transparency, integrity and sustainability of the company’s business.

Thus, to ensure the perpetuity of business, enable the capture of investments and the conquest of great partners and more and more customers, we have business compliance no longer as a choice, but rather as a must for companies that want to perpetuate themselves in the business world.

With planning, regulation, transparency and access to information, it is possible to create an efficient business compliance program and keep the company healthy and prosperous within the current market.

Marina Sampaio Costa-lawyer, graduated in law, from Centro Universitário Padre Anchieta (2018), enrolled in the Brazilian Bar Association, São Paulo Section (2019). Postgraduate in Business Law from Faculdade Legale, postgraduate in corporate law and Compliance from Escola Paulista de Direito (EPD), author of articles. Lawyer and Operations Coordinator at TM Associados.

Leonardo Theon de Moraes-lawyer, graduated in law, with emphasis in business law, from Universidade Presbiteriana Mackenzie (2012), enrolled in the Brazilian Bar Association, São Paulo Section (OAB/SP) (2012). Postgraduate and Specialist IN Business Law from the São Paulo School of Law of the Getúlio Vargas Foundation (2014), Master in political and Economic Law from the Mackenzie Presbyterian University (2017), author of books and articles, lecturer, Professor in undergraduate, MBA and Executive Education at FIPECAFI and member of the São Paulo Lawyers Association (AASP). Founding partner of TM Associados.

5 de setembro de 2021/por AdminTmAssociados
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The participation of a foreigner in a limited company in Brazil

Brazil has been a popular destination for foreign investment, and many entrepreneurs have an interest in establishing companies in the country[1]. In this context, the following question arises: Can a foreigner participate in a society in Brazil?

Yeah! A foreigner can participate in a company in Brazil and in this article we will point out the necessary steps for the Constitution or entry of a foreigner as a partner in a limited company (LTDA) in Brazil, let’s go:

  1. Determination of the partners of the company and determination of the representatives of the partners in Brazil: first, it is necessary to determine who will be the partners of the company, the capital that will be invested, the activity that will be carried out, loca, among others pertinent to the business.
  2. Appointment of legal representative in Brazil with powers to receive subpoenas on behalf of the foreign partner: it is necessary (legal obligation) for the foreign partner to appoint a natural person resident in Brazil, as his legal representative in the country, giving him powers to receive subpoenas in lawsuits filed against him.

This power of attorney must: (i) have the signature of the foreigner notarized in Brazil or (ii) be notarized (by a notary located in another country) and consularized (recognized by a Brazilian consulate in the same country in which it was notarized), after the power of attorney must be registered in a notary’s office in Brazil and in the commercial Board of the state headquarters of the company that the foreigner will be part of. We emphasize that Brazil is a signatory to The Hague Convention, so for documents notarized in other countries that are also signatories, it is enough for the notary to issue the document with the Apostille of The Hague Convention and consularization will not be necessary, however the other steps provided in item (ii) will continue to be necessary.

  1. Sending, presenting and validating the documents of foreign partners: the personal documents of foreign partners must be legalized in the country of origin (similar to a certified copy) and consularized in a Brazilian embassy or consulate located in the country in which they are legalized – if the country is also a signatory of The Hague Convention, the same rule applies to the power of attorney. Then, these documents must be translated by a sworn translator in Brazil and registered in a notary’s office for titles and documents.
  2. Registration of foreign partners in the Internal Revenue Service: foreign partners need to register with the Federal Revenue Service of Brazil, both as an individual – CPF – federal revenue and as a legal entity – CNPJ. The registration of legal entities will be through registration with the Central Bank of Brazil, through CADEMP within the system called: SISBACEN.
  3. Determination of the initial address of the headquarters and conclusion of a rental agreement: the initial address of the company’s headquarters must be defined and concluded a rental agreement or other as the case may be.
  4. Preparation and registration of the company’s articles of Incorporation with the Board of trade: the first step is to conduct a business name search and consultation with the Board of trade in order to ensure that the name chosen for the company is available and can be used. Next, you need to determine the extent of the administrator’s powers. Finally, it is necessary to determine the address and object of the company, that is, where the company will be located and what will be its field of activity.
  5. Hiring an accountant: hiring an accountant is mandatory for companies in Brazil. The accountant will be responsible for assisting in the preparation of financial statements, calculation of taxes, among other accounting issues.
  6. Registration of the company incorporated in the Internal Revenue Service (CNPJ): after preparing and registering the social contract with the Board of trade, you must register the company with the Internal Revenue Service. For this, it is necessary to provide information about the company and after analyzing the documentation, the IRS will issue the National Register of legal entities (CNPJ), which is the official registration of the company. This item does not apply to localities that have an agreement between the Board, revenue, among others.
  7. Registration with the Central Bank of Brazil (BACEN): registration with the Central Bank of Brazil (BACEN) for a limited company is necessary when the company intends to carry out operations that involve foreign exchange, such as imports, exports and transfers of resources between Brazil and other countries. The registration of investments between legal entities in BACEN (operation carried out by partners when they contribute capital to a company) is made through the Foreign Direct Investment Registration System (RDE-IED) and is mandatory for all companies that fall under the activities subject to this regulation.
  8. Opening a bank account-legal entity: to open a bank account in the name of the company, it is necessary to have the CNPJ and the social contract registered with the Board of trade. In addition, it is important to check the documents required by the chosen bank, such as a certified copy of the articles of incorporation, proof of address, documents from the partners and the legal representative of the company.
  9. Registration of the company in the State Revenue (state registration): registration in the state revenue, is mandatory for companies that carry out operations for the sale of products or services subject to ICMS. To apply for registration, it is necessary to present the documentation required by the state body, which may vary according to the state of operation of the company. This item does not apply to localities that have an agreement between the Board, revenue, among others.
  10. Registration of the company in the FGTS and INSS: registration in the Guarantee Fund for length of Service (FGTS) and in the National Social Security Institute (INSS) is mandatory for companies that have registered employees. This item does not apply to localities that have an agreement between the Board, revenue, among others.
  11. Municipal registration: municipal registration is mandatory for companies that have activities subject to municipal taxation, such as the tax on services of any nature (ISS). To apply for registration, it is necessary to present the documentation required by the municipal body, which may vary according to the city in which the company operates. This item does not apply to localities that have an agreement between the Board, revenue, among others.
  12. Obtain licenses and permits: depending on the activity of the company, it may be necessary to obtain licenses and permits from specific bodies, such as registration in SISCOMEX/qualification in RADAR, registration of professional cameras (CREA, CORCESP, e. g), operating license (Fire Safety Inspection); Anvisa; environmental licensing; Ministry of Agriculture, Livestock and supply (MAPA) and others.

In addition to legal procedures, the foreigner should also be aware of some limitations when it comes to investing in Brazil. For example, there are restrictions in certain sectors, such as mining services, hydropower, and telecommunications.

Thus, once regulatory procedures have been overcome, with the economic growth of Brazil, the creation of a limited company can be an excellent option for foreigners looking to start a business in the country.

Sabrina de Melo-Bachelor of laws from Centro Universitário Padre Anchieta (2022). Paralegal Advisory Department at TM Associates.

Leonardo Theon de Moraes-lawyer, graduated in law, with emphasis in business law, from Universidade Presbiteriana Mackenzie (2012), enrolled in the Brazilian Bar Association, São Paulo Section (OAB/SP) (2012). Postgraduate and Specialist IN Business Law from the São Paulo School of Law of the Getúlio Vargas Foundation (2014), Master in political and Economic Law from the Mackenzie Presbyterian University (2017), author of books and articles, lecturer, Professor in undergraduate, MBA and Executive Education at FIPECAFI and member of the São Paulo Lawyers Association (AASP). Founding partner of TM Associados.

[1] https://www.cnnbrasil.com.br/economia/em-recorde-36-empresas-estrangeiras-solicitaram-instalacao-no-brasil-em-2021/

5 de setembro de 2021/por AdminTmAssociados
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Foreigner participation in limited liability companies in Brazil

Brazil has been a popular destination for foreign investment, and many entrepreneurs are interested in establishing companies in the country[1]. In this context, the following question arises: can a foreigner participate in a company in Brazil?

Yes! A foreigner can participate in a company in Brazil, and in this article, we will outline the necessary steps for a foreigner to form or join a limited liability company (LTDA) in Brazil. Let’s get started:

  1. Determining the company’s partners and identifying the partners’ representatives in Brazil: First, it is necessary to determine who the company’s partners will be, the capital to be invested, the activity to be carried out, the location, and other business-related details.
  2. Appointing a legal representative in Brazil with the power to receive service of process on behalf of the foreign partner: It is necessary (legally required) for the foreign partner to appoint an individual residing in Brazil as their legal representative in the country, granting the latter the power to receive service of process in lawsuits filed against them.

This power of attorney must: (i) have the foreigner’s signature notarized in Brazil or (ii) be notarized (by a notary located in another country) and consularized (recognized by a Brazilian consulate in the same country where it was notarized). After that, the power of attorney must be registered with a notary’s office in Brazil and with the Commercial Registry of the state where the company to which the foreigner will be a member is headquartered. We emphasize that Brazil is a signatory to the Hague Convention, so for documents notarized in other countries that are also signatories, the notary simply issues the document with the Hague Convention Apostille, and consularization will not be necessary. However, the other steps set out in item (ii) will still be required.

  1. Submission, presentation, and validation of foreign partners’ documents: Foreign partners’ personal documents must be legalized in their country of origin (similar to a certified copy) and consularized at a Brazilian embassy or consulate located in the country where they are legalized. If the country is also a signatory to the Hague Convention, the same rules apply as for power of attorney. These documents must then be translated by a sworn translator in Brazil and registered with a notary public.
  2. Registration of foreign partners with the Federal Revenue Service: Foreign partners must register with the Brazilian Federal Revenue Service, both as an Individual (CPF) (Federal Revenue Service) and as a Legal Entity (CNPJ). Legal entities must be registered with the Central Bank of Brazil, through CADEMP (Brazilian Central Bank of Brazil), within the SISBACEN system.
  3. Determination of the initial address of the company’s headquarters and execution of a lease agreement: The initial address of the company’s headquarters must be determined, and a lease agreement or other agreement, as applicable, must be executed.
  4. Drafting and Registering the Company’s Articles of Association with the Commercial Registry: The first step is to conduct a business name search and consultation with the Commercial Registry to ensure that the chosen name is available and usable. Next, it is necessary to determine the extent of the administrator’s powers. Finally, it is necessary to determine the address and purpose of the company, that is, where the company will be located and what its line of business will be.
  5. Hiring an Accountant: Hiring an accountant is mandatory for companies in Brazil. The accountant will be responsible for assisting with the preparation of financial statements, tax calculations, and other accounting matters.
  6. Registering the Incorporated Company with the Federal Revenue Service (CNPJ): After drafting and registering the articles of association with the Commercial Registry, the company must be registered with the Federal Revenue Service. To do this, it is necessary to provide information about the company. After reviewing the documentation, the Federal Revenue Service will issue the National Registry of Legal Entities (CNPJ), which is the company’s official registration. This item does not apply to locations with agreements between the Board of Trade, Revenue, or other agencies.
  7. Registration with the Central Bank of Brazil (BACEN): Registration with the Central Bank of Brazil (BACEN) for a limited liability company is required when the company intends to conduct transactions involving foreign exchange, such as imports, exports, and transfers of funds between Brazil and other countries. Registration of investments between legal entities with the BACEN (a transaction carried out by partners when they contribute capital to a company) is done through the Foreign Direct Investment Registration System (RDE-IED) and is mandatory for all companies that fall within the scope of these regulations.
  1. Opening a Bank Account – Legal Entity: To open a bank account in your company’s name, you must have a CNPJ (Brazilian Taxpayer Registry) and articles of incorporation registered with the Commercial Registry (Board of Trade). Additionally, it is important to verify the documents required by your chosen bank, such as a certified copy of the articles of incorporation, proof of address, and documents of the partners and the company’s legal representative.
  2. Registering the Company with the State Revenue Service (State Registration): Registration with the State Revenue Service is mandatory for companies that sell products or services subject to ICMS (Tax on Goods and Services). To apply for registration, you must submit the documentation required by the state agency, which may vary depending on the state where the company operates. This item does not apply to locations with agreements between the Board of Trade, the Revenue Service, or others.
  3. Registering the Company with the FGTS (Severance Indemnity Fund) and the INSS (National Institute of Social Security): Registration with the Severance Indemnity Fund (FGTS) and the National Institute of Social Security (INSS) is mandatory for companies with registered employees. This item does not apply to locations with agreements between the Board of Trade, Revenue, or other agencies.
  4. Municipal Registration: Municipal registration is mandatory for companies whose activities are subject to municipal taxation, such as the Tax on Services of Any Nature (ISS). To apply for registration, you must submit the documentation required by the municipal agency, which may vary depending on the city where the company operates. This item does not apply to locations with agreements between the Board of Trade, Revenue, or other agencies.
  5. Obtaining Licenses and Permits: Depending on the company’s activity, it may be necessary to obtain licenses and permits from specific agencies, such as SISCOMEX Registration/RADAR Accreditation, Professional Chamber Registration (CREA, CORCESP, etc.), Operating Permit (Fire Department Safety Inspection); Anvisa; Environmental Licensing; Ministry of Agriculture, Livestock, and Supply (MAPA), and others.

In addition to legal procedures, foreigners should also be aware of certain limitations when it comes to investing in Brazil. For example, there are restrictions in certain sectors, such as mining services, hydropower, and telecommunications.

Therefore, once regulatory procedures are overcome, with Brazil’s economic growth, creating a limited liability company can be an excellent option for foreigners looking to start a business in the country.

Sabrina de Melo – Bachelor of Laws from Padre Anchieta University Center (2022). Paralegal in the Advisory Department at TM Associados.

Leonardo Theon de Moraes – Attorney, graduated in law, with an emphasis on business law, from Mackenzie Presbyterian University (2012), registered with the Brazilian Bar Association, São Paulo Section (OAB/SP) (2012). Postgraduate and Specialist in Business Law from the São Paulo Law School of the Getúlio Vargas Foundation (2014), Master’s in Political and Economic Law from Mackenzie Presbyterian University (2017), author of books and articles, speaker, professor in undergraduate, MBA, and Executive Education programs at FIPECAFI, and member of the São Paulo Lawyers Association (AASP). Founding partner of TM Associados.

[1] https://www.cnnbrasil.com.br/economia/em-recorde-36-empresas-estrangeiras-solicitaram-instalacao-no-brasil-em-2021/

30 de agosto de 2021/por AdminTmAssociados
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Family Crimes

Typically caused by mismanagement or linked to factors external to the company, such as the 2008 crisis and the current crisis affecting Brazil, so-called economic, financial, and asset crises can lead to companies becoming delinquent or, in more severe cases, insolvent.

Insolvency is characterized not only when liabilities exceed the company’s assets, but also when the company lacks the capacity to generate sufficient cash to honor its commitments. These crises are defined in Articles 748 to 750 of the Code of Civil Procedure.

When identified and prolonged, these crises can render companies unable to carry out their activities, in which case Brazilian business owners may seek judicial reorganization or bankruptcy.

In this regard, Law No. 11,101 of 2005 addresses the procedures adopted in out-of-court and judicial reorganization processes, bankruptcy, and the crimes known as bankruptcy crimes, which are primarily committed when fraudulent activity is identified that aims to harm the creditors of a company undergoing judicial reorganization or bankruptcy.

Bankruptcy crimes are classified and divided into:

– Fraud against creditors:

Fraud against creditors is defined in Article 168 of Law No. 11,101/2005 and consists of the practice of a fraudulent act to obtain an undue advantage for oneself or others, resulting in losses for creditors.

– Misleading:

Misleading is defined in Article 171, Caput, of Law 11.101/2005, and consists of withholding or omitting information, as well as providing false information in the bankruptcy proceedings, in order to mislead the Court, the Public Prosecutor’s Office, Creditors, or the judicial administrator to obtain any advantage over them.

– Favoring Creditors:

Favoring Creditors is defined in Article 172 of Law 11.101/2005, and consists of the diversion of assets to benefit one or more creditors, causing harm to others.

– Illegal Activity:

Illegal Activity is defined in Article 176 of Law 11.101/2005, and consists of performing tasks or performing functions for which one is not qualified or is incapacitated by a court order.

– Failure to Provide Mandatory Accounting Documents:

Failure to provide accounting documents is covered by Article 178 of Law 11.101/2005 and consists of failing to prepare, record, or authenticate the company’s mandatory accounting records.

Bankruptcy crimes, in addition to being punishable by fines, are punishable by detention and even imprisonment.

Law 11.101/2005, in its Article 181, defines the consequences of a conviction for a bankruptcy crime, which are:

Disqualification from engaging in business activities;
Disqualification from holding a position or role on the board of directors, executive board, or management of companies subject to the Bankruptcy and Judicial Reorganization Law;
The inability to manage a company by mandate or through business management. These effects are not automatic and must be specified in the sentencing ruling, lasting up to 5 (five) years from the end of the sentence served by the convicted offender.

Although these practices may seem far-fetched from the law, bankruptcy crimes are very common among struggling companies, such as those that end up favoring one creditor over another in order to maintain their operations.

In these cases, when a company begins to make decisions about prioritizing one payment over another, among other things, the golden tip is to seek specialized consulting to help navigate the crisis, so as not to miss the timing of a possible recovery, for example, or even to avoid committing bankruptcy.

For a better understanding of bankruptcy and judicial reorganization, see the article: https://tmassociados.com.br/falencia-e-recuperacao-judicial-quais-sao-as-principais-diferencas/

Leonardo Theon de Moraes – Attorney, graduated in law, with an emphasis on business law, from Mackenzie Presbyterian University (2012), registered with the Brazilian Bar Association, São Paulo Section (OAB/SP) (2012). He holds a postgraduate degree and a specialist degree in business law from the Getúlio Vargas Foundation São Paulo School of Law (2014), a master’s degree in political and economic law from Mackenzie Presbyterian University (2017). He is the author of books and articles, a speaker, a university professor, and a member of the São Paulo Bar Association (AASP). He is a founding partner of TM Associados.

Pedro Anselmo Boaventura – Graduated in law from Padre Anchieta University Center (2021). Postgraduate student in Civil and Business Law at Damásio de Jesus College. Paralegal in the Advisory Department of TM Associados.

30 de agosto de 2021/por AdminTmAssociados
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Recovery of ICMS amounts under Simples Nacional

Companies subject to the Simples Nacional (National Simple Tax Regime) that carry out manufacturing operations on behalf of third parties have an excellent tax opportunity.

Manufacturing on behalf of third parties occurs when a company sends raw materials or semi-finished products to another company, which will then perform a transformation or processing process before returning the finished product. In this process, the company that performs the transformation is called the manufacturing company, and the company that sends the raw materials is called the ordering company.

It is important to note that manufacturing on behalf of third parties should not be confused with manufacturing to order; they are distinct types of manufacturing, as provided by tax legislation.

In manufacturing on behalf of third parties, the raw materials are supplied by the ordering company, with the manufacturing company being responsible only for the labor. On the other hand, in manufacturing to order, the manufacturing company is responsible for both the supply of the raw materials and the labor, and ICMS is due in this case.

Regarding third-party manufacturing, São Paulo State legislation provides that the ICMS (Tax on Goods and Services) will be paid by the ordering party, not the manufacturer.

However, manufacturers are typically under the Simples Nacional (Simples Nacional) system and end up paying the full tax rate, including the ICMS itself. This is due to the fact that under the Simples Nacional (Simples Nacional) calculation system, taxpayers pay a single tax rate based on their revenue, which covers the following taxes: IRPJ (Income Tax), CSLL (Social Contribution on Net Income), PIS (Social Contribution on Net Income), COFINS (Social Contribution on Net Income), CPP (Consumer Tax on Goods and Services), ICMS (Social Contribution on Net Income), ISS (Social Contribution on Net Income), and IPI (Social Contribution on Net Income).

However, manufacturers are not required to pay ICMS. The State of São Paulo has even issued responses to inquiries regarding the interpretation of tax legislation that favor the non-payment of ICMS in third-party manufacturing.

Therefore, manufacturers have the option of excluding ICMS from the Simples Nacional tax rate and recovering the tax unduly paid over the past five years. The estimated tax savings correspond to one-third of the Simples Nacional tax rate due during the fiscal year.

Raphael O. F. de Toledo Piza holds a Master’s degree in Accounting and Actuarial Sciences from the Pontifical Catholic University of São Paulo, a degree in Economics from IBMEC São Paulo (Insper), and a degree in Law from Mackenzie Presbyterian University. He has ten years of experience in the tax field, including stints at traditional law firms and large audit firms (the Big Four).

Beatriz Giansante Moquiute, attorney, graduated in law with a concentration in tax law from Mackenzie Presbyterian University (2021), and is a registered attorney with the Brazilian Bar Association, Section 9 São Paulo (OAB/SP) (2022). She is currently pursuing a postgraduate degree in Tax Law from the Pontifical Catholic University of Rio Grande do Sul. She is a lawyer in the Tax Department at TM Associados.

30 de agosto de 2021/por AdminTmAssociados
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To the ‘ buyer’s remorse Purchases on The point of view of the Consumer

With the growing popularity of online shopping, it has become increasingly more important to discuss is the ‘buyer’s remorse’ for the purchases made over the internet, among other cases, the purchase of out-of-business (such as, in addition to the internet, over the telephone). Being on the right of retraction is regulated by the Consumer protection Code, in its article 49[1].

The right of retraction is to the right of the consumer to withdraw from a purchase of a product or a service without a statement of reasons, within 7 days of your receipt of the product, or the signing of the contract. This right does not apply to purchases made from outside of the premises, such as in-stores and telesales.

In the case of online shopping, and the deadline for exercising of the right of retraction begins to run from the date of receipt of the product. The user is advised to get in touch with the supplier to inform you of the cancellation, the supplier shall have the duty to take back the product and make the refund of the purchase price paid by the customer, including shipping and handling.

However, it is important to point out that it is the ‘ buyer’s remorse is not applicable to any other situations. There are some exceptions that are set out in the Consumer Code, such as, for example, the services provided to you immediately after the engagement and the products are perishable.

Another important issue is the ability of the supplier to require the returned product is in perfect condition. Of the Consumer Code provides that the consumer is able to test the product, but must return it to us in the same condition in which you received it. Therefore, if the product has been damaged or used improperly by the customer, the supplier is entitled to refuse to accept the return.

The other important thing to remember is that it is the ‘buyer’s remorse’ is not the same as that of the law of return. The swap is an agreement between the consumer and the supplier for the replacement of the product, in the case of addiction[2], a fact[3] or a defect to[4]. the right of the repentance, that is, the ability to withdraw from the purchase without having to justify the reason and without which the product or service to any type of addiction, or the defect.

For this reason, it is important that the consumer be aware of the time limit set by law. Once seen, in the case of the supplier, to refuse to make a refund or accept a return of a product, the customer may turn to the consumer protection agencies, such as the one You have, or even seek legal advice to ensure that your rights are.

In the end, the right of retraction is an important tool for the protection of the consumer, primarily in online shopping, in which the consumer has not had the opportunity to see the product in person before you make a purchase. Therefore, the provider should be aware of their legal requirements, and to guarantee to the consumer the full realization of this right, thus contributing to a consumer that is fair, and balanced.

Leonardo Theon in Paris as well as in Europe, with a degree in law, with an emphasis in business law from the University Presbyterian Mackenzie (2012), which was registered at the Ordem dos Advogados do Brasil, São Paulo (OAB/SP) (2012). A post-graduate degree and an Expert in Corporate Law from the Law School of São Paulo da Fundação Getulio Vargas (2014) Master’s degree in Law and Political economics, Universidade Presbiteriana Mackenzie, brazil (2017), the author of many books and papers, keynote speaker, college professor, and member of the bar Association of São Paulo (AASP), the Chairman of the State committee of the Business Law of the FEDERAMINAS. A founding member of the TM is Associated with it.

Peter Will Report a doctorate in law at Centro Universitário Padre Anchieta (2021). Master degree in Civil and Corporate Law from the Faculty Damasio de Jesus. A lawyer for the Department of the Litigation in the TM Associated with it.


[1] Art. 49. The customer may withdraw from the contract within a period of 7 days from the date of its signature, or the act of receiving the product or service that the procurement for the supply of goods and services occurs off the premises, especially on the phone or at your home.
[2]it covers the flaws, apparent and easy-to-finding-hidden-and the products that are not in line with the rules for the manufacture, distribution, or display
[3] it in the event of damaging, as a whole, that is to say, as a synonym for the damage
[4]a product that is defective when it does not provide security in accordance with the characteristics of a normal thing.

30 de agosto de 2021/por AdminTmAssociados
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The Right of retraction from the point of view of the Provider

The right of retraction is an important part of the Consumer’s rights, and ensuring that you have a chance to withdraw from a purchase made outside of the business premises, such as shopping online or over the phone. However, many of you have questions about this law and how it can affect your business.

Initially, it is important to highlight the fact that it is the ‘buyer’s remorse’ is a guarantee provided for in the Consumer protection Code (CDC). This is the law that is applicable on purchases made from outside of the business, such as sales via the internet, by telephone, or book, for example.

According to the article 49 of the CDC, the customer has 7 days from the date of receipt of the product, or on the signing of the contract, to give up the purchase is carried out on the premises, free of charge. In this case, the supplier is required to repay the amounts eventually paid by the consumer, including the costs low, within a period of 30 days.

With this in mind, in some cases, this may be against the excessive to the vendor, especially when it comes to the products that are made to measure, decay, among many others.

This is because, in the case of custom-made products, as they are designed for a specific consumer, the provider, you may not be able to resell it to another customer in the event of regret. In such a case, a refund for the product, you can generate an excessive financial losses for the provider.

For these and many other cases, the right of retraction, should be considered, so that, when used, shall be returned to the status quo ante, as in the cases in which the consumer exercises his right of retraction for the purchase of products that are customized, for example, it is possible for the provider to be reimbursed for the expenses they had in the process of manufacturing and marketing/return the product, and provided that you prove your losses, and damages (costs of materials and labor, for example).

The courts have ruled that this indemnity shall correspond to the amount of proven, that of the amounts spent by the Provider in the manufacture of the products, provided that “the right to a regret is not reflected in the prerogative to ensure that the distrato imotivado of the contract.”[1]

In light of this, it is important that providers are aware of the right of retraction should be informed so that they can act appropriately in the event of a request for cancellation by the customer. If you have any questions concerning the matter, it is important for the provider to seek legal advice from specialists to avoid any financial losses and exposures can be avoided.

Sabrina de Melo is a Lawyer in the Department’s Advisory in the TM Associates degree in Law from the University of the Padre Anchieta (2022), and which is registered at the Ordem dos Advogados do Brasil, the Section of São Paulo (OAB/SP). A post-Graduate student of Civil Law at PUC-MG).

Leonardo Theon in Paris as well as in Europe, with a degree in law, with an emphasis in business law from the University Presbyterian Mackenzie (2012), which was registered at the Ordem dos Advogados do Brasil, São Paulo (OAB/SP) (2012). A post-graduate degree and an Expert in Corporate Law from the Law School of São Paulo da Fundação Getulio Vargas (2014) Master’s degree in Law and Political economics, Universidade Presbiteriana Mackenzie, brazil (2017), the author of many books and articles, a speaker, a teacher at the undergraduate, MBA, and Executive Education in the FIPECAFI, and as a member of the bar Association of São Paulo (AASP). A founding member of the TM is Associated with it.


[1] The institute of Consumer protection of the Federal District Consumer Df x, You have to SCD, Institute for Consumer protection – Case no. 0002317-28.2012.8.07.0018 (jusbrasil.com.s)

30 de agosto de 2021/por AdminTmAssociados
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The contract transfer of property and the Responsibility of the Parties

The Contract of Lease is commonly used by the entrepreneurs at the time of the transfer of the building trade, which, consequently, is characterized by the sale of the complex-the goods, whether tangible or intangible, and a specially organized to develop the business, whether an entrepreneur or business company.

In this kind of business, then the parties must, especially if you pay attention to the formalization of the details out, by means of a contract of their own, in order to establish the duties and rights of each one. Here, it is important to note that in all cases in which the contract is entered into, is not present or does not have the forecast of or in connection with the act, the onus will be on the application of the rule of the items 1.142 at 1.149 of the Brazilian Civil Code.

On the other hand, in addition to the legal relationship between the contracting parties themselves, that they also may be subject to liability to any third party, for which they will have to take measures ranging from the to the notice of the creditors, especially from produce, to the registration of the Contract of Lease with the board of trade, and the publication in a newspaper of wide circulation.

It is important to bear in mind that compliance with such requirements, and the caution of a report to the creditors, the aim is to establish the framework of a temporal, that will give the beginning of the period to the extinction of the liability of the selling as much as on some of its obligations. In this way, both parties resguardarão between you and the third party, and thus much of the discussion relating to the transfer of the business.

In this line you need to think over some of the key topics surrounding the lease:

  1. The liability of the Parties

In the Contract of Lease, it is of the utmost importance that the parties to make provision for the extension of the liability upon the sale of your business and providing for the treatment to be given to the debt to be recognised and any liabilities that have not yet recognised for the produce.

As provided for by law, if the conveyor is not left with sufficient assets to pay their debts, the effectiveness of the Contract, the Lease will depend upon the payment in full with your creditors, or the taking of consent (such as for the sale of the business. This means that at the start of the negotiations on the transfer of the property, the selling will need to decide which strategy will: (i) maintenance of the goods sufficient to discharge in respect of the creditors; and (ii) a discharge in full of the debt; (iii) notice to the lenders stating that the lease, in order to obtain the consent of the latter.

The other caution is relevant to the recognition of liabilities in connection with its own business premises, to ensure that the buyer takes in full of the obligation to pay such charges for the transfer.

It is valid to note also, that the alienation shall remain jointly and severally liable for a period of 01 (one) year, and it will start to count from the date of publication of the Contract, the Lease, as stated above, in the case of overdue loans on the maturity date, in the case of other loans. Therefore, it is up to the parties to determine the form of the reimbursement of the amounts required for the alienation in situations in which such expenditure would be borne by the purchaser of the property.

This is because, generally speaking, the players tend to opt for a fourth strategy, in order to provide contractually represented a landmark period for which the assumption of the obligations of that establishment, the object of the lease. Thus, the parties are able to allocate for the price and on the conditions and in the best format for the assumption of such liabilities, on the basis that such a prediction will ensure that those parts of the law of return and obtain a refund, subject to the remaining fixed contract.

  1. The seal of the competition, the selling to the buyer

With regard to the non-compete agreement between the selling and the purchaser, the parties will also have to pay attention to the forecast of the contract, in view of the omission of this point, the system generates the application of the law in order to be prohibited from competition for a period of 05 (five) years after the transfer.

In addition, if it is the intent of the parties, a contract may be able to establish the rules of the seal of the competition exclusively in the certain field of activity, as well as the location and period of time.

  1. The absence of subrogation in favour of the Contract

After the signing of the Contract, the Lease, the buyer should pay particular attention to the non-existence of the subrogation in favour of the (transfer control of the contract position them, especially the contract for the lease of the property of the business. In the negotiation for the purpose of supplementing the existing contracts should be pre-evaluated, taking into account the assumption of such termination, and, in consequence, inviabilização from the property.

Even within the framework of the III meeting of the Civil Law, he was posted to the Statement, 234, it was fixed with the understanding that: “When the good of the establishment of the business, with the agreement of the location where it will not pass automatically to the customer.”[1]

The lack of subrogation in favour of the agreement, the lease may make it impossible for the business as a whole, given that a large part of the time, the assumption of a business that involves a commercial hub, due to its location and clientele.

Depending on the factual circumstances, it may be advisable, rather than by his own purchase and sale of the shares of the company, taking into account that, in such cases, as a rule, there is no need for any amendment to the lease agreement was originally entered into. Regardless, it needs to be verified in the absence of a clause in a termination due to a change of social control, resulting in the careful analysis of the contract in order to seek the best solution for you.

  1. The assignment of the Claims that are Inherent in the Establishment of

In addition to the assumption of contracts and debts of the parties shall pay attention to the assignment of the credit facility, in order for the debtor to proceed to be paid by the purchaser. The debtor is not informed, and to make the payment to the selling, we will not be liable, and there is a regular discharge, resulting in the parties due to the transmission of values.

Despite being widely used by the business, and the act of “passing the point involves a number of circumstances and legal consequences of which have to be met at the time of the transaction between the two parties.

For this reason, the drawing up of the Contract, the Lease, any of the assumptions set out in advance, must be taken into account, in particular to ensure that there is no omission in the contract, or for which it is possible to predict from or in connection with the law, or even to preserve the performance of the contract in the case of the relationship with the creditors ‘ and the debtor or a third party in the contractual relationship.

Clarice Souza Martins, a Lawyer with a degree in law from the University FUMEC, and a bachelor of mixed media from the University of Santo Antonio de Murcia, Spain (2016), and which is registered at the Ordem dos Advogados do Brasil, Minas Gerais Section (OAB/MG) (2016). Post-graduate education using the L. L. M in Corporate Law from the Brazilian Institute of Capital markets (2018). Global MBA/LLM degree at Loyola University Chicago/IL (2019), an expert in Corporate Reorganization by the FIPECAFI (2022), and the IBDT (2023), a member of the State Council of the Business Law of the FEDERAMINAS. – A lawyer for a Senior Lacerda Diniz in the river Seine (in 2021).

Leonardo Theon in Paris as well as in Europe, with a degree in law, with an emphasis in business law from the University Presbyterian Mackenzie (2012), which was registered at the Ordem dos Advogados do Brasil, São Paulo (OAB/SP) (2012). A post-graduate degree and an Expert in Corporate Law from the Law School of São Paulo da Fundação Getulio Vargas (2014) Master’s degree in Law and Political economics, Universidade Presbiteriana Mackenzie, brazil (2017), the author of many books and articles, a speaker, a teacher at the undergraduate, MBA, and Executive Education in the FIPECAFI, a member of the bar Association of São Paulo (AASP), and the Chairman of the State committee of the Business Law of the FEDERAMINAS. A founding member of the TM is Associated with it.

[1]https://www.cjf.jus.br/enunciados/enunciado/453#:~:text=Quando%20do%20trespasse%20do%20estabelecimento,se%20transmite

30 de agosto de 2021/por AdminTmAssociados
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The Usefulness of the Justice Postulandi in the Process of the Work of Today’s

In the process, the work has its own characteristics, which are aimed at ensuring the protection of the rights of the workers, and the effectiveness of the provision of judicial review. In this context, the justice postulandi it is a right granted to the parties in both the employers and the employees, to comply with, and to serve you personally in the court’s Work, so there’s no requirement to hire a lawyer.

One of the main advantages of the justice postulandi is the possibility of access to Justice, in a simplified and cost-effective. Many times, employees do not have the financial resources to pay reasonable attorney’s fees, and living up postulandi to allow them to exercise their right of defence, and without such a requirement. In addition to the direct action of the parties contributes to the rapidity of procedure and evidence of the democratization of the access to Justice.

For these reasons, it is not possible to, for example, that one of the parties that contend for the judgment of another in the payment of the compensation of the costs incidental to the employment of attorneys, in view of the possibility of operation in the justice postulandi.

In spite of the advantages, which the justice postulandi it also presents challenges, and limitations. The lack of knowledge on the technical and legal parts may impair the effectiveness of their rights, which the law of labour is complex and requires an understanding that is appropriate for your implementation.

So, clearly, the lack of association may make it difficult for the presentation of legal arguments with a solid and complete understanding of the procedures of the proceedings, and that, since the reform of labor law in Brazil, and in the fall of 2017, the performance of the parties, without a lawyer, he became more constrained, particularly in the higher courts, such as the Superior Labor Court (TST).

Currently in the process of work, the use of the justice postulandi is subject to certain restrictions apply. The parties may proceed without a lawyer, only in the first few instances, such as in the small claims Courts of the Work, the Rods of the Work, and the district Courts of the Work. At higher levels, such as with the TST, acting without an attorney, is not permitted.

This restriction is intended to guarantee legal certainty, because the courts take a more in-depth knowledge of the law, and decision-making. In addition to this, hiring an attorney who specializes in employment law may be needed for a better protection of the rights of the parties, and an understanding of the legal issues that are involved.

It should be noted that the justice postulandi it is based on the principles of the process in the labor market, such as the simplicity of the language, the informal economy, and the protection of the rights of the workers.

In this way, the principles are intended to ensure equality of procedure and evidence, the defense of, and access to the Justice system.

Therefore, the rights of the parties, acting in person is in harmony with these principles, provided that it complied with the procedural due process to a minimum.

For the more complex, that is to say, to live up postulandi is to be exercised in an effective way, it is recommended that the parties to seek out the information and legal guidance before you act on labor cases, it is important to know your rights and responsibilities, as well as in the proceedings, in order to avoid any misunderstandings and prejudices.

In addition to this, it is critical that the Power of the Judiciary to ensure the proper guidance of the parties is not represented by legal counsel, answer questions, and by promoting gender equality, even as the access to the system and in the court of law.

Victory Ships, Caltran. A lawyer with a degree in Law, with a focus on private law from the Pontifical Catholic University of são paulo (in 2020), and which is registered at the Ordem dos Advogados do Brasil, São Paulo (2021). A post-graduate student at the Law, and in the Process of the Work, from the Pontifical Catholic University of Campinas (unicamp). She is the author of the articles. A lawyer have Associated with it.

30 de agosto de 2021/por AdminTmAssociados
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