New Law that Would Allow Unrestricted Participation of Foreign Capital in Brazilian Air Companies May Suffer a Presidential Veto
A new law enabling unrestricted participation of foreign capital in the aviation sector has been approved by the Brazilian Senate yesterday. However, due to political disputes, acting President Michel Temer is believed to veto the provision that would grant full flow of foreign capital into the Brazilian civil aviation sector.
The possibility of such veto has been received with great surprise by the industry, which was confident about the approval of the new legislation. Despite the assessment of the Brazilian civil aviation authorities, according to which the proposed changes would entail a greater competitiveness of the industry upon the attraction of new foreign players to the domestic market, many Congressmen argued that such liberalization would negatively affect regional operators.
Originally, the applicable Brazilian legislation limited the foreign participation in the voting stock of Brazilian air companies to a maximum of 20%. The first version of Provisional Measure No 714/2016 extended such limit to 49%, with the possibility of reaching up to 100% in case of bilateral agreements between Brazil and other countries, but the legal text that was voted yesterday by the Senate enabled unrestricted participation of foreign capital.
The official version of the proposed legislation that will be appreciated by the acting President Michel Temer has not been made publicly available yet and the final sanction is expected to take place in the coming days.
Furthermore, it is worth noting that a Bill of Law aiming at reviewing the Brazilian Aeronautical Code is currently going through the National Congress and may bring relevant changes to the sector in the future.
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.