A new anti-corruption law passed by the Brazilian Senate will for the first time impose civil liability on companies that bribe public officials.

The legislation, which was passed in July as Bill No. 6826/2010, covers bribery and attempted bribery of Brazilian and foreign public officials and fraud in relation to public tenders. It will apply to corporations and partnerships, including foreign companies operating in Brazil, Brazilian subsidiaries of foreign companies as well as Brazilian agents or other authorized representatives acting on behalf of foreign companies.

The new law will mean that foreign (re)insurers doing business in Brazil may be subject to civil and administrative sanctions if found in breach of the legislation. Civil penalties include suspension of activities, removal of any benefits obtained via corrupt means, or even dissolution of the company. Administrative penalties include a fine of up to 20% of the company’s gross revenue.

Evidence of an effective compliance program will be considered as a mitigating factor and may help reduce any sanctions imposed but this will not provide a full defense to any breach. Guidance on adequate compliance standards is expected to be published once the bill becomes law. The bill must be approved by Brazilian President Dilma Rousseff and will then come into force after six months, which is expected to be some time in early 2014.

The new law will bring Brazil into line with other important anti-bribery legislation such as the US FCPA and the UK Bribery Act. As with both these laws, effective compliance programs will be key to avoiding breaches of the legislation and ensuring sanctions are minimized in the event of a breach.