Compliance Program is Now Mandatory for Companies whose Main Place of Business is in the State of Rio de Janeiro – State Law No 7.753/2017
On October 17, 2017, State Law No 7.753/2017 was enacted requiring any company that signs contracts and agreements, operates government concessions, and enters into public-private partnerships with the State of Rio de Janeiro government – either directly, indirectly or through government foundations – to have an effective compliance program in place.
State Law No 7.753 is applicable to all types of companies, be they corporations or limited liability companies, legal entities or not, including national or international foundations or associations, regardless of their legal nature. However, the only contracts subject to this state law are those that meet the following criteria:
(i) construction work and engineering services worth over BRL1,500,000.00;
(ii) services and procurement worth over BRL650,000.00; and
(iii) contract duration longer than 180 days.
A company´s Compliance Program must be developed, applied, and updated according to the individual features and risks inherent to its line of business. All companies must ensure that their Compliance Programs are constantly improved and adjusted to guarantee their effectiveness.
With respect to the criteria developed to (i) ensure the existence of a compliance program and (ii) measure the level of enforcement, State Law No 7.753 established certain criteria similar to those established by Brazil´s Anti-corruption Law, including effectiveness, existence or absence of whistleblower hotlines, engagement of senior management, due diligence prior to hiring, regular training, and in-house initiatives such as lectures, seminars, and workshops designed to promote a culture based on ethics and business integrity.
Companies will have 180 running days to implement a Compliance Program, counted from the date on which the contract with the government is signed. Companies that fail to do so will be subject to pay a penalty of 0.02% of the contract´s total amount per day.
The law will go into force on November 18, 2017 and Felsberg Advogados is ready to provide any additional information or advice on how to develop and implement or adjust a Compliance Program to ensure that all the provisions of the State Law No 7.753 are complied with.
Should you have any questions, please do not hesitate to contact: João Carlos A. C. de Mendonça (JoaoMendonca@felsberg.com.br), Luís Menezes (LuisMenezes@felsberg.com.br), Evy Marques (EvyMarques@felsberg.com.br) or Renato Brandão (RenatoBrandao@felsberg.com.br).
This article is of a solely informative nature, and does not contain any opinion, recommendation or legal advice from Felsberg Advogados concerning the subject matter covered.