The corporate law bill was sent to Congress in 2023, in the wake of the accounting scandal at retailer Americanas, and is part of the Finance Ministry’s microeconomic agenda. It had stalled until March, when it was bundled with bills on public procurement and circular economy as a strategy to speed up a floor vote. The package briefly appeared on the voting agenda earlier this month but was not considered. Mounting opposition to provisions in the combined bill has now led the government to rethink its strategy and weigh splitting the proposals.

One point of contention involves the mechanism for collective lawsuits against administrators, controlling shareholders, or intermediaries accused of causing losses to companies or to the capital markets by violating rules set by Brazil’s securities regulator CVM. In a previous version of his report, Mr. Vieira had endorsed an “opt-out” model, in which all shareholders of a given class are automatically included in such collective actions. That approach was supported by the Finance Ministry.

But in his latest draft, the rapporteur reverted to an “opt-in” model, where only investors who formally sign on would be included in collective suits. Finance Ministry officials say they will not support the bill under this framework, arguing that it renders the proposal “ineffective,” since individual investors already have the right to file claims on their own.

Sources close to the ministry lamented the shift, noting that the earlier draft reflected a consensus with investors and companies. The reversal was also criticized by AMEC, the Capital Markets Investors Association. “The return to the opt-in model is a technical mistake. A collective protection mechanism is incompatible with selective protection of investors, because it leaves less organized groups, such as retail investors, without adequate safeguards,” said AMEC President Fábio Coelho.

While the Brazilian Association of Public Companies (ABRASCA) favors the opt-in model, it also expressed concerns. “We welcome the return to opt-in, which we see as the better option. But companies have increasingly flagged issues with sector-specific provisions inserted in this bill. We will meet next week to take a position on these additions, which were surprising,” said ABRASCA President Pablo Cesário.

On minority shareholders, the bill establishes civil liability for administrators and controlling shareholders in cases of violations of disclosure rules. It also explicitly provides for collective civil actions to compensate investors, in a model similar to U.S.-style class actions, and expands CVM’s investigative powers.

The circular economy provisions, however, are proving even more contentious. Mr. Vieira added sector-specific obligations and plans covering mining, agriculture, construction and infrastructure, automotive, oil and gas, and sanitation.

A report obtained by Valor from the National Confederation of Industry (CNI) argued that the proposed National Circular Economy Policy “directly impacts the entire productive sector, regardless of size, nature, or scale of operations.” According to CNI, passage of the bill would subject millions of industrial and agribusiness facilities, farms, and commercial and service establishments to more than 70 new legal obligations. CNI did not comment.

The coalition of congressional caucuses representing business interests issued a statement saying the original bill had been “completely distorted by a regulatory maze that ignores the country’s economic reality,” and that the bundling of dozens of other unrelated proposals had created “a legislative monster of more than 100 articles imposing unrealistic obligations and disproportionate penalties on the productive sector.”

The statement is backed by the Congressional Entrepreneurship Caucus and others representing free markets, commerce and services, agribusiness, sustainable mining, health, competitiveness, and biodiesel, among others. They argue that “the regulatory burden, indiscriminately affecting companies of all sizes and sectors, represents a serious risk to Brazil’s competitiveness, since many firms lack the technical or financial capacity to comply with such complex and costly requirements.”