The exposure of the Brazilian economy to international competition, starting from the Collor government, brought about as a necessary corollary the increasing migration, over the years, of Brazilian capital to other more secure currencies than those in forced circulation in the country. Today it is estimated that a reserve of not less than US$ 80 billion is maintained by Brazilians, individuals or legal entities, in currency of third party countries in the international financial system. This reserve, in great part, is not declared to the Brazilian fiscal and monetary authorities and when it does appear in judicial relations with Brazil, it has either the form of tax haven companies, of non-resident international funds, or even in increasing numbers of companies with headquarters in countries of normal tax jurisdictions.

Such capital makes some of the largest investors in Brazil to be tax havens jurisdictions, such as Panama, British Virgin Islands, Bahamas, Dutch Antilles, etc. They are similar to the foreign funds that operate as investors in the Brazilian financial market, which are, in great part, capitalised by internationalised Brazilian monetary resources. Very often, such investors are so well informed that they establish market trends, either in the entry or at exit. This situation dramatically changed the question of company relations in Brazil.

In fact, the migration of Brazilian capital has made possible for investors, enterprises and financial agents to take into consideration a menu of legal system options for their business in Brazil. To constitute a holding company regulating the relations between and majority and minority, even though the parties are Brazilian, domestic corporation is no longer necessary anymore. Depending on the case, a Delaware corporation or an English company can be used with advantage.

Attracting Capital Investment

In the same way, the opening of the capital of a company to obtain Brazilian capital resources does not need to be done in Brazil anymore. Many other structures can be equally set up abroad, as in the United States, Canada and England for later investment in Brazil. Such structures transfer the focus of complex relations between shareholders to more sophisticated jurisdictions, where not only the law but even the court system of the state are more reliable. Thus, in a globalised world, the legislative and judiciary powers compete in attracting capital. The financial and corporate activities represent a significant business activity joined in the service area, which actually makes up about 68% of the USA economy.

In comparison to other centres, the Brazilian company law in force is not very competitive. It is known that the profession of scribe has disappeared all over the world, except in Brazil, where the corporate minutes still must be laboriously copied in medieval books. The board of trade system is primitive, onerous and inefficient. The laws do not suitably protect the minorities and are casually modified by the governments, not always in the general interest. Legal institutes of major importance, such as the “class action” and the “stare decisis” doctrine do not exist in domestic law. The jurisprudence is botched and it has already pronounced itself favourable to the contracting of the majority by the company and that the company interest is best preserved by the minorities. Finally, the Internal Revenue Service uses non-transparent bureaucratic measures which hinder the registration of company acts in the Board of Trade, as a means of inducing the taxpayers to accept its rules.

As we saw, the situation does not appear to encourage the international competivity of the Brazilian legal system. In this way, all of us will surely lose. The economy due to the decrease in the service sector activities and the government because of the consequent drop in revenues. In comparative law, the question of the competitiveness of legal systems has become so important that the constant legislative revision has caused conduct codes known as corporation governance to be implemented. It is time for us to do the same.