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Measure that encourages investment in startups is signed into law

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President Jair Bolsonaro signed into law, this Tuesday (1st), a measure that establishes the Legal Framework for Startups and Innovative Entrepreneurship.  The aim of this law is to boost and regularize the growth of innovation companies in each business model.  The proposal was approved by the Chamber on the 11th of May.

The new law seeks to regulate innovation companies, and sets the rules for the contribution of capital by individuals and legal entities, authorizing the presence of these organizations during public bids.

With the regularization of these companies, it will be possible to launch products and services on the market with less bureaucracy, which will facilitate business development for startups and attract new investors.

The legal framework also defined a category of competition between startups in the face of public administration. Current legislation prevents the hiring, by the government, of startup products, due to excessive requirements.

The measure, now, will allow the contracting of more than one startup, as long as it is provided for in a notice. The public administration spending ceiling for each startup is R$1.6 million, per contract.

Which companies fit the measure as a startup?

The text of the measure includes startup companies, even with only one partner, and cooperative societies that operate in innovation applied to products, services or business models. Startups must present a gross revenue of at most R$16 million in 2020 and must have up to ten years of registration with the CNPJ.

Startups must also declare their use of innovative measures or be included in the special regime Inova Simples, which is found in the Statute of Micro and Small Enterprises (Complementary Law 123/06).

The angel investor who contributes without directly joining the company’s share capital is not considered a partner and is not liable for financial obligations, legal proceedings or debts of the startup.