Expanding business operations into Brazil or establishing commercial relationships with Brazilian partners involves strategic decisions concerning corporate structures, taxation, contractual arrangements and industry-specific regulatory requirements. Another important consideration should be addressed from the outset: compliance with Brazil’s corporate integrity framework.
Among the key statutes is Federal Law No. 12,846/2013, commonly referred to as Brazil’s Anti-Corruption Law. The law forms part of the legal framework applicable to companies operating in Brazil and plays an important role in the assessment of corporate legal risks.
For foreign companies intending to invest in Brazil, establish a subsidiary, acquire local businesses or engage with Brazilian public authorities, understanding the scope of the Act is an important aspect of legal risk management and corporate governance.
What is Brazil’s Anti-Corruption Law?
Federal Law No. 12,846/2013 introduced a specific legal framework governing the administrative and civil liability of legal entities for unlawful acts committed against the Brazilian or foreign public administration.
Before the law entered into force, liability for corruption-related conduct was primarily directed at the individuals involved. The legislation established that companies themselves may also be held liable when unlawful acts are committed in their interest or for their benefit.
This legislative framework brought Brazil closer to internationally recognised principles of corporate accountability while placing greater emphasis on business integrity, transparency and the adoption of effective compliance measures.
Why is the law relevant to foreign companies?
Brazil’s Anti-Corruption Law does not apply exclusively to Brazilian companies.
Its scope may extend to foreign companies that maintain a head office, branch, agency, representative office or any other form of business presence in Brazil, even on a temporary basis. Depending on the structure of the transaction and the activities carried out in the country, companies incorporated abroad may also fall within its scope.
The act is particularly relevant in transactions involving:
- foreign investment in Brazil;
- the establishment of subsidiaries or branches;
- acquisitions of Brazilian companies;
- participation in public procurement procedures or government contracts;
- commercial partnerships with public entities;
- infrastructure projects and concessions;
- joint ventures and corporate reorganisations.
In these circumstances, legal due diligence extends beyond corporate and tax matters. Corporate integrity and compliance considerations should also form part of the overall legal risk assessment.
What does strict liability mean?
One of the defining features of Brazil’s Anti-Corruption Law is the strict liability of legal entities.
For administrative and civil liability purposes, it is not necessary to demonstrate fault or intent on the part of the company. The analysis focuses on whether the conduct defined by law occurred, whether it was connected to the company’s activities and whether it was carried out in the company’s interest or for its benefit.
Is only the company liable?
No. The liability of the legal entity does not exclude the individual liability of directors, officers, employees or third parties involved in the unlawful conduct. Each individual’s responsibility is assessed according to their own participation in the relevant acts.
Does the Act deal only with bribery?
Despite its name, the Anti-Corruption Laaw has a broader scope.
The conduct covered by the legislation includes, among other matters, offering undue advantages to public officials, certain forms of fraud in public procurement and government contracts, using intermediaries to conceal interests or beneficiaries, and acts intended to obstruct investigations or regulatory inspections.
What are the main legal implications?
Brazil’s Anti-Corruption Law influences how companies structure their operations and manage legal risks in Brazil. The level of exposure varies according to the company’s industry, the nature of its business activities and the extent of its interaction with public authorities.
In certain circumstances, conduct carried out for the benefit of a company may result in legal consequences for the legal entity itself, regardless of the individual liability of its directors or officers.
Do corporate transactions eliminate previous liabilities?
Not necessarily.
Mergers, incorporations, corporate transformations and demergers do not automatically eliminate certain liabilities of the legal entity.
This issue is particularly relevant in acquisitions of Brazilian companies and corporate reorganisations involving assets or business operations located in Brazil.
The legal consequences depend on the structure of the transaction and the circumstances of each case. For this reason, assessing integrity-related risks before completing a transaction may play an important role in corporate acquisitions and reorganisations.
Can companies within the same corporate group be affected?
Yes. Brazil’s Anti-Corruption Law provides for joint liability in certain circumstances involving parent companies, subsidiaries, affiliated companies and consortium members, within the limits established by the legislation. In such cases, joint liability is limited to the payment of fines and the full compensation of damages caused.
What is the importance of compliance programmes?
The law recognises the importance of effective corporate integrity mechanisms.
Among the factors considered by the competent authorities are integrity programmes, internal audits, whistleblowing channels and effectively implemented codes of ethics.
The existence of a compliance programme does not, by itself, exempt a company from liability. Likewise, there is no single compliance model suitable for every organisation.
Nevertheless, integrity measures tailored to the company’s size, business sector and level of risk exposure can make a significant contribution to the prevention and management of legal and regulatory risks.
International operations require an integrated approach
Cross-border business activities may simultaneously involve international contracts, foreign investors, Brazilian subsidiaries, local suppliers and public authorities across different jurisdictions.
In this context, Brazil’s corporate integrity framework should not be considered in isolation. It forms part of a broader strategy of legal risk management, corporate governance and regulatory compliance.
Frequently Asked Questions
Can a foreign company be held liable even without a subsidiary in Brazil?
Depending on the nature of its activities in Brazil, the legislation may also apply to foreign companies that maintain operations, representation or other legally relevant connections within the country.
Do acquisitions of Brazilian companies require attention to the Anti-Corruption Law?
Yes. In mergers, incorporations, acquisitions and corporate reorganisations, issues relating to corporate integrity and the target company’s compliance history are typically an important part of the legal due diligence process.
Can the Anti-Corruption Law affect investors that have no direct dealings with public authorities?
Depending on the structure of the investment and the activities carried out in Brazil, corporate integrity considerations may be relevant even where the investor has no direct relationship with government authorities.
Final considerations
For foreign companies seeking to invest, expand their operations or establish commercial relationships in Brazil, the Anti-Corruption Act forms part of the country’s corporate legal framework.
Beyond its enforcement function, the Act reflects the importance placed on corporate integrity, transparency and sound governance in the relationship between businesses and the public administration.
Understanding this legal framework enables international investors to incorporate Brazilian corporate integrity requirements into their broader legal risk management and corporate governance strategies.
This article is provided for general informational purposes only. It does not constitute legal advice and should not be relied upon as a substitute for legal advice tailored to the specific circumstances of a particular case.
