Known as MP da Liberdade Econômica (Provisionary Measure-PM of Economic Freedom), Provisionary Measure nº 881 promises to reduce bureaucracy and other regulatory barriers that hinder the development of entrepreneurship in Brazil.
The logic behind the creation of PM of Economic Freedom is to elevate the environment of business in Brazil to the level at which developed countries function. In addition to inspiring traditional principles of the presumption of freedom in the exercise of economic activities and the presumption of good faith of the individual, PM of Economic Freedom also asserts subsidiary, minimal and exceptional intervention of the State (art. 2).
To support a less interventionist market structure, article 3 of the Provisionary Measure emphasizes a series of rights considered essential for the development and economic growth of Brazil.
It is especially worth noting startups’ right to exemption from the public license requirement to exercise activities classified as “low risk” in one’s residence or that of a consenting third party (art. 3, I). Although the exercise of this type of activity, in practice, already occurs independently of public licenses, PM of Economic Freedom is the first attempt to formalize this understanding. The purpose of this formalization is mainly to unify the Judiciary Power’s application and interpretation of the law (art. 1).
Another innovation that has a direct impact on startups is the proposed mechanism to encourage innovation: article 3, item VI, recognizes the right of the entrepreneur to ignore any applicable norms that have become outdated when developing and marketing new products and services. The provision, however, contains two limiting conditions to the exercise of this right that demand the attention of the entrepreneur: (i) the applicable standard must have become outdated “by virtue of internationally consolidated technological development”, and (ii) there should be a specific regulation governing the requirements applicable to the situation.
PM of Economic Freedom also permits the entrepreneur “to implement, test and offer” new products or services to a limited, private group of capable people of adult age without the need for a public license. It is sufficient, therefore, to obtain free and clear consent, provided that the intended test does not involve public or national security issues or has a sanitary or public health impact (art. 3, VII).
Despite PM of Economic Freedom’s changes to foster innovation and reduce bottlenecks that startups face in Brazil, the practical and uniform application of the PM still depends on complementary regulations. Terms such as “low risk” and “consolidated technological development” remain to be defined for the purposes of applying subsections I and VI of article 3.
Until then, the application of PM of Economic Freedom still leaves judges with room for the creativity. Although the Measure is still pending approval by the National Congress, it has been in force since its publication on 04/30/2019.
The 120-day period for the National Congress’ assessment of PM Economic Freedom ends on 08/28/2019, the day the PM will be converted into law or lose its effectiveness. We are monitoring the conversion of the PM into law and remain available to clarify any questions regarding this matter.
