On March 2, 2016, the Brazilian government published the Provisional Measure No. 714/2016 ("MP No. 714/16"), which, among other matters, increased the limit of equity interest held by foreign investors in Brazilian airline companies for up to 49% of their voting capital, subject to the approval of the relevant aviation authority. Before the MP No. 714/16, the limit of equity interest allowed to foreign investors in Brazilian airline companies was only 20%.

According to the new measure, the participation of foreign investors in the voting capital can even exceed the 49% limit if there is reciprocity between Brazil and the country of the foreign investor, based on air services agreements executed by both countries.

The referred normative act had a very positive impact in the industry and is expected to boost foreign investments in the aviation market, attract new airline companies, allow the expansion of the international and domestic routes, as well as enable Brazilian companies to form strategic partnerships.

The MP No. 714/16 is considered promulgated as of March 2, 2016, being immediately effective since then but its enactment must be approved by the Brazilian Congress within a 60-day period, extendable for additional 60 days. During this period, the Congress may amend its wording or even reject it, determining the effects of the acts performed while the provisional measure was in force.

We will follow up on the enactment process of the provisional measure, remaining available in case any clarifications are required.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.