After years of legislative limbo, and in response to growing social unrest, on Friday, August 2, 2013, President Dilma Rousseff signed into law the Clean Companies Act (the “Act”)—Brazil’s first sweeping anti-corruption law targeting corporations. The Act addresses both bribery of foreign government officials by Brazilian companies and bribery of local officials by any company. The law will take effect in 180 days. The Act is the latest development in the growing global trend of increasing legislation to combat corruption.

THE CLEAN COMPANIES ACT -

The Act establishes liability for companies that engage in bribery in Brazil or overseas. Prior to the new law, only individuals could be punished for corruption under Brazil law. The Act makes a company strictly liable for bribes paid on its behalf by its employees, without the need to establish: (1) the individual employee’s liability or (2) that the company’s management or directors had a corrupt intent. The Act follows Brazil’s long-held tradition of not recognizing criminal liability for corporate entities, imposing only civil and administrative liability.