The amendment allowing 100% (one hundred percent) of the capital stock of airlines to be held by foreigners was sanctioned by President of the Republic Jair Bolsonaro in the form of Law 13,842 of June 17, 2019, which approved the text of Provisional Measure 863/2018. Until then, Brazilian legislation restricted the maximum limit of 20% (twenty percent) for foreign participation in the sector.
The Provisional Measure was initially signed at the end of last year by then-President Michel Temer, because of Avianca’s request for judicial reorganization. After its approval, the Provisional Measure was passed by Congress, which, within 120 days, confirmed the text and forwarded it to the presidency for sanction.
The sanctioned text amends the Brazilian Aeronautical Code with regard to the end of the restriction on foreign capital in the sector as well as the removal of the legal requirement for the company’s management to be “entrusted exclusively to Brazilians. This change allows foreign airlines to set up local subsidiaries in the country, and not just open branches, and thus enables them to provide domestic flights.
The highlight approved in Congress, about free luggage up to 23kg on domestic flights, was vetoed by the President of the Republic. However, according to the provisions of paragraph 4 of Article 66 of the Federal Constitution, the presidential veto will be considered in a joint session, within 30 (thirty) days of receipt, and can only be rejected by an absolute majority vote of Representatives and Senators
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Once the veto is overthrown, the President of the Republic himself will be responsible for promulgating the content he had previously vetoed, within 48 (forty-eight) hours, according to paragraph 7 of article 66 of the Federal Constitution. Should the President of the Republic remain inert, the assignment is passed to the President of the Senate, and then to the Vice-President of the Senate. Let’s follow the final stage of this issue.
The Aeronautical Law team at DDSA Advogados is available for further clarifications on the subject.