Editor’s Note: This series of posts we’re calling “Around the World” come from a larger piece written by Shannon and published in the October 2014 edition of the International Bar Association’s International Franchising Newsletter. Updates were provided by speakers at the Annual IBA/IFA Joint Conference that took place in Chicago in May 2014.

Luciana Bassani of Dannemann Siemsen gave an update on Brazil’s new Anti-Corruption Act and its impact on franchising. The Act became effective on 28 January 2014 and allows for the imposition of civil liability on individuals, as well as entities for the corrupt acts of their employees. The Act imposes strict liability for legal entities regardless of intent or fault.

The ACA prohibits giving unjust advantage to domestic or foreign public officials or related third parties. Prohibited acts include actual payments or giving undue advantage to public officials or related third parties. The ACA imposes sanctions for violations including:

  • Fines of 0.1 percent to 20 percent of gross revenues;
  • Listing the company as a ‘punished company’;
  • Piercing of the corporate veil to implicate managing officers for punishment and fines;
  • Penalties may be reduced for self-reporting or cooperation (can reduce fine by up to two-thirds); and
  • Franchising companies should be aware and protect themselves with clear codes of conduct and training on correct conduct with public officials and include direct reference to compliance with local anticorruption laws in franchise and other distribution agreements.