New provisions to attract foreign investment in airlines companies in Brazil

The Brazilian President has decided to issue a Provisional Measure No. 863/2018 (“MP”) to modify some important provisions of the Brazilian Aeronautical Code (“CBA”). The MP was published in the Brazilian Official Gazette on December 13, 2018, with immediate effects. It implements substantial changes to the national aviation market, as it allows up to 100% of foreign shareholding in Brazilian airlines companies.

According to the new wording of CBA’s article 181, airline services will be performed by airlines companies duly incorporated in Brazil, with headquarters and administration in the country, through concession or authorization. Paragraphs and items of this article were suppressed - as well as other articles that required previous governmental approval for incorporation and amendments to the bylaws of the airline companies - reducing the barriers for foreign investment, which were limited to 20% of the voting stocks of Brazilian airline companies.

There is a clear intention from the federal government to make acquisitions less bureaucratic and attract foreign investment in the sector, to strengthen competition in the market.

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