Brazil Issues Regulations Implementing The Clean Companies Act

Keywords: Brazil, Clean Companies Act, bid-rigging, penalties

More than a year after Brazil enacted the Clean Companies Act (Law 12,846 of August 1, 2013) ("CCA"), President Dilma Rousseff signed Decree 8,420 (the "Decree") to regulate the Act. The regulations came on the heels of massive protests against corruption.

The CCA imposes strict liability on companies for bribery and offenses such as bid-rigging and collusion, and imposes severe sanctions on companies that fail to comply with the law. The potential penalties include administrative fines ranging from 0.1% to 20% of a company's annual gross revenues during the preceding year, or up to R$60 million if such revenues are difficult to determine. In addition, companies may face judicial sanctions, including dissolution, suspension, disgorgement of profits, loss of public contracts and prohibitions against obtaining incentives, subsidies, grants, donations or loans from public authorities.