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Brazil brings to an end the limitation on Foreign Capital Investments in Airlines

Brazil brings to an end the limitation on Foreign Capital Investments in Airlines

Brazil brings to an end the limitation on Foreign Capital Investments in Airlines

dez.2018

On Dec. 13, 2018, Brazilian President Michel Temer enacted Provisional Measure 863 bringing to an end restrictions for foreign investors and groups to hold a stake in Brazilian airlines.

Previously, foreign interest in airlines was subject to a 20% limitation. The companies also had to be managed by Brazilian citizens. The PM removed both constraints, allowing up to 100% foreign interest in airline companies’ capital stock and foreign management.

It is expected that removing such restrictions will increase investment in the Brazilian aviation sector, fostering competitivity and bring a greater availability of flights. It will be a good opportunity for foreign aviation companies that wish to expand their activities in Brazil.

The PM has immediate effect but only remains valid up to 120 days counted from publication (not including Congressional recess). Indeed, in order to be converted into law, the PM must first be approved by the Brazilian Congress, which may make amends to it. If not approved during such period, it will cease to be valid. Although it is hard to predict how Congress will react, it is fair to say that the intent to end with restrictions and encourage competition is aligned with the new Brazilian government free-market policy.

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