On March 2, 2016, the Brazilian government published the
Provisional Measure No. 714/2016 ("MP No. 714/16"),
which, among other matters, increased the limit of equity interest
held by foreign investors in Brazilian airline companies for up to
49% of their voting capital, subject to the approval of the
relevant aviation authority. Before the MP No. 714/16, the limit of
equity interest allowed to foreign investors in Brazilian airline
companies was only 20%.
According to the new measure, the participation of foreign
investors in the voting capital can even exceed the 49% limit if
there is reciprocity between Brazil and the country of the foreign
investor, based on air services agreements executed by both
countries.
The referred normative act had a very positive impact in the
industry and is expected to boost foreign investments in the
aviation market, attract new airline companies, allow the expansion
of the international and domestic routes, as well as enable
Brazilian companies to form strategic partnerships.
The MP No. 714/16 is considered promulgated as of March 2, 2016,
being immediately effective since then but its enactment must be
approved by the Brazilian Congress within a 60-day period,
extendable for additional 60 days. During this period, the Congress
may amend its wording or even reject it, determining the effects of
the acts performed while the provisional measure was in
force.
We will follow up on the enactment process of the provisional
measure, remaining available in case any clarifications are
required.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
