Brazil: The Brazilian Clean Companies Act – What You Need To Know

Last Updated: 11 December 2013
Article by Kevin Roberts, Ruti Smithline and Duncan Grieve

2014 is set to be Brazil's year. The FIFA World Cup is expected to bring 600,000 international visitors to 12 host cities, inject R$25 billion (£6.6 billion) into the economy and present Brazil's vibrant culture to more than 700 million viewers worldwide. With the eyes of the world on Brazil, 2014 will also be the year that the country signals its intention to get tough on corruption; a problem which is perceived to have historically restricted economic growth and inhibited foreign investment.

On January 29, 2014, the Brazilian Clean Companies Act (CCA) will enter into force. The CCA is an aggressive and broadly drafted piece of legislation which represents a firm statement of intent from the Brazilian government to align itself with global trends and tackle corruption head on. Brazil is an important trading partner for many UK companies and the reverse is also true.1 Companies doing business in Brazil should take note of the CCA and ensure that their existing compliance controls and procedures respond appropriately to its particular features. The good news is that the CCA shares several features of established anti-corruption legislation, the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act (UKBA).

The coming into force of the CCA in January 2014 serves as a timely reminder to international businesses to check that their existing compliance procedures accord with developing international standards.


The key features of the CCA were covered in our previous client alert dated August 6, 2013.2 In short the CCA:

  • applies to any legal entity, branch or office, whether domestic or foreign that does business in Brazil;
  • prohibits bribes to any official (domestic or foreign) – this is anticipated to cover an individual who holds an office in the government at any level;
  • prohibits other related acts such as fraud, data manipulation and the blocking of government investigations;
  • prohibits facilitation payments – there is no de minimis exception as in the FCPA;
  • implements strict liability for legal entities involved in corruption – proof that the punishable act wascaused by an act or omission on the part of the legal entity is sufficient to subject it to sanctions; and
  • introduces harsh administrative and civil sanctions that apply directly to legal entities' income and assets.3

The broad application of the CCA clearly echoes the international reach of the FCPA and the UKBA. The CCA applies to all legal entities that do business in Brazil and imposes liability for acts committed in Brazil or abroad. The CCA's focus on government officials recalls the FCPA whilst the prohibition of facilitation payments and strict liability for legal entities are familiar features from the UKBA. Although the potential sanctions under the CCA are severe, the key difference between the CCA, the FCPA and the UKBA is that the CCA does not impose criminal liability on legal entities for acts of bribery.


Unlike under the UKBA, a company cannot avoid liability under the CCA by proving that it had "adequate procedures" in place to prevent persons associated with it from committing bribery. The CCA does not a have a defence of "adequate procedures". The strict liability offence for legal entities under the CCA is just that: a company will have to prove that the fee was legal or that it was unrelated to the award of business to avoid sanction. The CCA does provide for the mitigation of fines based on cooperation with the Brazilian authorities and "effective" internal compliance procedures. The criteria for evaluating internal compliance procedures are yet to be established. Companies with a robust FCPA and UKBA compliance policies will be well equipped to respond to any extra requirements.


The CAA does not have retroactive effects and will only apply to conduct post January 29, 2014. However, there are other laws that Brazilian authorities can use to prosecute individuals. Developments in 2013 clearly show that they are responding to public sentiment in Brazil and stepping up anti-corruption enforcement efforts.


The Brazilian political corruption scandal known as the Mensalão (big monthly stipend) has caught the attention of the international press. Congressmen have been found guilty of participation in a systematic vote-rigging scheme involving serious offences including bribery and money-laundering.4 The case has been rumbling on since it was uncovered in 2005. However, on November 13, 2013, the Brazilian Supreme Court surprised many by dismissing "procrastinatory" appeals and ordering that sentences should be carried out immediately. Tolerance for corrupt activity is clearly waning in Brazil.


In early November 2013, details of the Brazilian authorities' investigation into Embraer S.A. emerged. The Brazilian conglomerate is the world's third largest aircraft manufacturer and the investigation shows that the authorities are not shying away from pursuing big, powerful targets. The current investigation appears to be focused on a bribe paid to an official in the Dominican Republic in return for a $90 million contract to build planes for the Dominican military.5


The construction sector is booming in preparation for the 2014 World Cup and the 2016 Olympic Games with many multinational companies involved. Construction companies are also in the firing line following allegations that many pay bribes to tax auditors. In response, Sao Paulo's mayor has indicated that he will report offenders for investigation purposes outside Brazil and set up a website in June which allows individuals to report cases of corruption.


For companies doing business in Brazil, the risks involved in sectors that require significant interaction with public officials have multiplied. As with many foreign jurisdictions, multinational companies frequently employ third party agents (despachantes in Brazil) to assist them in navigating complex regulatory requirements. Customs brokers, for example, are compulsory for those who seek to import goods to Brazil. Tax consultancy is also common, given Brazil's labyrinthine tax system. Where local agents are engaged, compliance risk is increased. As under the UKBA and the FCPA, companies can be held liable under the CCA for the acts of agents acting on their behalf.

With a current crackdown on corruption and strict liability offences being introduced into Brazil's legislation, effective oversight by corporations employing agents in Brazil is crucial. The first step is effective due diligence on the individual or organization being hired. Particular focus should fall on the professional history of agents. If the agent is a former government official, more stringent controls are needed. Unusual terms of engagement may raise further red flags. "Success fees" and other non-standard forms of remuneration should be avoided. Contractual provisions requiring compliance with local law are advisable; however they must be backed-up with management and accounting scrutiny of the activities of local agents to ensure that the required compliance standards are adhered to.


1 The UK ranks ninth as a source of Foreign Direct Investment in Brazil and Brazilian Foreign Direct Investment into the UK has been growing consistently and has been greater than British investment in Brazil in three of the past four years. See

2 See Timothy W. Blakely, Ruti Smithline, Jarod G. Taylor and Kendall L. Manlove, Brazil's New Clean Companies Act Continues Global Fight Against Corruption, Client Alert (August 6, 2013), available at Companies-Act.pdf

3 Under Administrative Proceedings, fines range from 0.1% to 20% of a companies' gross annual revenue and special public disclosure of the decision finding that the company was involved in corruption. Under Judicial Proceedings, legal entities may be compelled to forfeit assets and rights obtained by means of corrupt practices, their business activities may be suspended, they may be prohibited from receiving incentives, subsidies, subventions, donations or loans from public entities and they may even be compulsorily dissolved.

4 See

5 Embraer has been subject to an FCPA investigation by US authorities since 2011 and details of the Brazilian investigation emerged following a formal request for evidence from the US by Brazilian authorities.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Kevin Roberts
Duncan Grieve
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions