Publications

Category: Labor and employment

The Specialized Collective Dispute Division (SDC) of the Superior Labor Court (TST) authorized the Brazilian Post Office to collect from its employees’ monthly pay and co-share payment for their health plan (at the rate of 30%, provided that it does not exceed 5% of salary in the case of coinsurance payment and between 2.5% and 4.4% in the case of monthly pay, depending on the salary). In turn, spouses will pay 60% of the monthly fee. Until then, the Brazilian Post Office covered 90% of the costs of the health plan, as provided for in the collective bargaining agreements in force up to July 31, 2018.

The decision, issued on March 12, is of the utmost importance, as it raises the possibility for companies in general to undertake changes in the payment/use of health plans granted to their employees voluntarily, whether due to crises or insurers' demand, or simply due to increasing costs of the plan previously purchased (without contribution and/or co-participation by the workers).

Without specifically addressing the merits of the rules of the health plan in which postal workers were included pursuant to a collective bargaining agreement (which is not so common among private companies), the purpose of this article is to analyze the TST’s understanding (still pending publication in the Official Gazette) in authorizing changes in the form of payment and use of health plans in the event of evident economic and financial problems on the part of the companies.

Although there was no consensus, among the labor courts the understanding prevailed that any change in the rules governing the payment of health plans granted voluntarily by employers, and which could be interpreted as detrimental to workers to some extent, could not be implemented, as provided under article 468 of the Brazilian Labor Code (CLT).^[1]

This position taken by the labor courts ultimately discouraged companies from granting this type of benefit to workers or even granting different types of health plans to newly hired employees, based on the TST's Precedent No. 51,^[2] which allows the companies to take this path. In some situations, companies were unable to find health plans that were more competitive and had better coverage and service networks, since they would require co-share payments when the health plan previously granted was fully covered by the company.

With the entry into force of the Labor Reform (Law No. 13,467/17), renegotiation of health plan rules (although not provided for in collective bargaining agreements, but in internal rules) became possible in view of the predominance of the negotiated vs. legislated. Nonetheless, we find it very difficult for unions to agree to this kind of change, as in the case of the Brazilian Post Office.

We understand, however, that it is possible to argue that, although the Unions may not agree with changes in the rules governing the payment and use of health insurance, they may be considered by companies, depending on how they are implemented.

In view of all of the above, and in light of the recent decision issued by TST, the debate on possible changes in the rules governing the payment/use of health insurance plans is gaining new momentum. Nevertheless, caution and a case-by-case analysis are needed to avoid future labor contingencies.

1. Article 468 - In individual employment contracts, it is only permissible to change the respective conditions by mutual consent, and provided that the changes do not directly or indirectly result in prejudice to the employee, under penalty of nullity of the provision that infringes on this guarantee.

2. Precedent No. 51 of the Superior Labor Court. REGULATORY NORM. ADVANTAGES AND OPTION FOR NEW REGULATION. ARTICLE 468 OF THE CONSOLIDATED LABOR LAWS (incorporated into Jurisprudential Guidance No. 163 of the SBDI-1) - Res. 129/2005, Published in the Gazette of the Judiciary (DJ) on April 20, 22 and 25, 2005.

I - Regulatory clauses that revoke or alter previously granted advantages will only affect workers hired after the revocation or amendment of the benefit. (former Precedent No. 51 - RA 41/1973, published in the Gazette of the Judiciary on June 14, 1973)

II - In the event of the coexistence of two company benefit plans, the employee's selection of one of them has the legal effect of renouncing the rules of the other system. (former Jurisprudential Guideline No. 163 of the SBDI-1 - included on March 26, 1999)

Category: Real estate

In order to increase collection, the Federal Government decided to sell the 17% ownership it holds in emphyteutic real estate property. With this measure, individuals, who hold 83% of these properties (useful domain), will become their full owners.

Currently, the owners of these properties must pay the Federal Government an annual fee, called emphyteutic rent, corresponding to 0.6% of the market value of the land, excluding improvements. In addition, in the event of sale of the real estate property, a fee corresponding to 5% of the market value of the land is due, excluding improvements (laudemium). With the acquisition of the Federal Government’s portion (remission), the owners will have full ownership of the real property and will no longer be required to pay the annual emphyteutic rent and laudemium to the Federal Government.

The remission of the emphyteutic rent will be done for an amount corresponding to 17% of the market value of the land, excluding improvements. Those who opt for prompt payment will be granted a 25% discount. The legislation provides for the alternative of payment in installments, which may vary from case to case.

The remission process will begin with the publication of a decree authorizing the remission of the emphyteusis regime in regions where there is no longer any reason to apply it (lack of public interest). The remission can also occur at the request of the interested party who is duly registered and not in debt, a situation in which the analysis of the Federal Government Assets Secretariat (Secretaria de Patrimônio da União – SPU) is necessary.

The real estate properties under occupation regime may also be acquired by their occupants, who will no longer pay the Federal Government an annual occupancy fee of 2% of the market value of the property (excluding improvements), and laudemium, in the event of sale. Occupants who are regularly enrolled and not in debt may exercise their preemptive rights upon receipt of notice from the SPU regarding the sale or anticipate and offer a proposal to purchase the occupied real estate property.

The initiative is the result of federal legislation (Law 13,240/2015), which authorized the beginning of the process of selling Federal Government real estate properties. Since then, numerous properties have already been sold. Continuing with this initiative, in the first week of May, the SPU in São Paulo began the process of remission of emphyteutic real estate properties located in the Municipalities of Santana do Parnaíba and Barueri. The work will begin with a pilot project and should cover about 4,000 properties in the industrial area of ​​Alphaville. SPU technical staff will evaluate these areas to determine the market value of the real estate properties.

The expectation is that other SPU regional offices will begin similar processes soon. In Rio de Janeiro, for example, there are various real estate properties subject to the emphyteutic or occupation regime that could benefit from this initiative. Until a specific ordinance is not published listing which properties the SPU believes may be subject to remission, there is nothing that prevent owners of real estate properties subject to the emphyteutic or occupancy regime from initiating administrative procedures on their own to propose to the SPU the remission of the emphyteutic or occupation regime of their properties. In addition to the pecuniary advantages of not paying the annual emphyteutic rent, occupancy fee, and laudemium, the owners of real estate properties subject to the occupation regime will no longer have restrictions on the registration of real estate development and the granting of real estate guarantees, which can be a concrete benefit in certain cases.

Category: Infrastructure and energy

In all, there are three liquid bulk terminals in the port of Cabedelo-PB (AE-10, AE-11, and AI-01); two liquid bulk terminals in the port of Santos-SP (STS-13 and STS 13-A); and two terminals in the port of Suape-PE, one intended for the handling of containers (SUA-05) and the other for vehicles (SUA-XX).

In order to comply with the schedule provided, it will be necessary to conduct a public hearing and submit the projects for the review of the Auditing Court (TCU), which, in evaluating other similar projects, such as the port terminals for movement of vehicles in the port of Paranaguá (PAR 12) and general cargo, primarily paper and pulp, in the ports of Itaqui (IQI 18) and Paranaguá (PAR01), it did not stop any public procurement procedure, having limited itself to providing recommendations to federal entities.

Although the project schedule is very similar, the model for the STS-13 liquid bulk terminal, located in the port of Santos-SP, aside from having already been submitted for a public hearing, has already been approved by the TCU. The next step is the publication of the public notice, which is expected to occur in the second quarter. The model of the container terminal SUA-05, to be installed in the Port of Suape-PE, is still in the study phase, although the public notice is expected to be published in the third quarter.

During the public hearing phase, the Internal Rate of Return (IRR) is a relevant subject that can be commented on. In the case of other terminals, the rate was changed before the public notice was published.

The studies on the characteristics of the projects are being conducted by Empresa de Planejamento e Logística S.A. (EPL). Most of the terminals correspond to brownfield investments, but a greenfield project is also part of this investment package, in this case the SUA-05 container terminal, which will be installed in the port of Suape-PE.

According to the information provided by the CPPI, it is estimated that the total investment is in the order of R$ 1.2 billion, of which R$ 46.34 million is for the terminals located in the port of Cabedelo-PB; R$ 912.5 million for the terminals located in the port of Suape-PE; and R$ 309 million for the terminals located in the port of Santos-SP. The term of validity of the contracts varies between 25 and 30 years, depending on the case.

Following the model of the previous calls for bids, EPL will continue to apply the judging criteria of greater grant value, which tends to exclude adventurous bidders who do not have the economic and financial health to perform long-term contracts.

Considering that the projects can be modified after the public hearing phase, it will only be possible to conduct a more detailed analysis of their characteristics with the publication of the public notice.

Category: Labor and employment

According to Anamatra, by permitting Law No. 13,467/2017 to apply to employment contracts that were already in force, there was a violation of the principle of non-retroactivity of the law and of the principle of legal certainty and trust.

With due respect to the members of Anamatra, there is no way to agree with this understanding. From a technical and legal point of view, it is possible to say that the decision by Anamatra did not consider the principles and rules that guide the application of a new law in time, since, according to the constitutional rules and the Law of Introduction to the Rules of Brazilian Law (LIDB), it is possible that a new law has retroactive effects, provided that they respect perfected legal acts, accrued rights, and res judicata.

In addition, Anamatra's understanding seems to violate the provisions of article 912 of the Consolidated Labor Laws (CLT), which establishes immediate application of precepts of public policy.

The understanding of the members of Anamatra is also contrary to the understanding defended by the government itself, since the Ministry of Labor had already reaffirmed that the Labor Reform would be valid for all labor contracts, both new ones and ones already in force. Such an understanding was also embodied in Presidential Decree No. 808 (which became ineffective on April 23, 2018): Article 2 expressly mentioned that the provisions of Law No. 13,467/1207 would apply in full to employment contracts in force.

By applying the law only to new employment contracts, there will also be an express violation of the principle of legality and equal protection, since two employees working in the same branch of activity for the same company may have different rights (such as the right to receive hours in itinere).

Again, with the respect due to Anamatra, we understand that the goal of the legislator was to apply the law immediately to all employment contracts in force in Brazil in order to avoid the occurrence of disparate situations.

Upon understanding that Law No. 13,467/2017 was inapplicable to existing employment contracts, Anamatra also disregarded that the principle of protection continues to apply, which is why resistance to the application of the law to all employment contracts is unnecessary.

In any case, the theories approved are not binding and contradict the speeches and objectives of the government and the former president and current justice of the Superior Labor Court (TST), Ives Gandra Martins Filho, who always defended the application of Law 13,467/2017 to all employment contracts.

The debate on the subject is far from being over. Probably the understanding on the applicability of the Labor Reform will be modulated by the TST or even by the Federal Supreme Court (STF).

For practitioners of the Law, there will be a challenging work front for the defense of the apparently obvious and correct understanding that the application of Law No. 13,467/2017 also occurs for employment contracts that began before its enactment. Let us look at the scenes from the next chapters.

Category: Litigation

The new Code of Civil Procedure (CPC) prizes the parties' autonomy of will and values conciliation and the institution of a cooperative procedural model, principles embodied in the institute of procedural legal business (article 190). Fully capable parties may directly influence and participate in proceedings involving rights that admit self-resolution, with a provision regarding settlements on procedural encumbrances, powers, prerogatives, and duties.

The legislator's expectation was to ensure greater speed and effectiveness to proceedings since, in certain circumstances, the parties may adapt procedural rules to the specifics of the case.

Court reorganization, in turn, constitutes a proceeding subject to a special framework established by Law No. 11,101/2005 (Law on Bankruptcies and Corporate Reorganizations - LFR), in which the CPC finds secondary application to the extent it is fitting and where bankruptcy legislation is incomplete or contains omissions.

In view of this, considering that court reorganization involves a great deal of collective bargaining over eminently property rights, fundamentally between debtors and creditors, the possibility of adapting the deadlines set forth in the LFR to the reality of each case was debated, among other points, as was the possibility to use mediation between the debtor and creditors.

In other words, one conceives of applying procedural legal business to court reorganization in order to adapt the reorganization process to certain peculiarities. Some examples of this are: (i) insufficient term to hold a general meeting of creditors and present a robust court reorganization plan when it relates to a business group with a sophisticated debt profile and various stakeholders (OAS Group, OI Group, Abengoa Group); (ii) counting the time limits on the basis of business days and not calendar days, especially to present challenges to or registrations of debt claims, considering the new rules of the CPC; and (iii) the time limit for concluding the court reorganization (article 61, LFR), which may be very extensive, thereby exposing the debtor to reputational wear for a longer period than necessary.

In this sense, some judicial decisions issued by First Degree Courts have already modulated the procedural rules and the time limit for court reorganization according to the principles of procedural legal business. This is precisely the case of the companies Eneva (placed in Rio de Janeiro) and Zamin (placed in São Paulo), in which the judge of such cases ordered the conclusion of court reorganizations within a time period shorter than the two years provided for in article 61 of the LFR, on the grounds that the respective court reorganization plans provided for shorter obligations and that companies would remain in court reorganization for an extended period of time, thus facing known problems with credit restriction and creditworthiness on the market.

However, although the Rio de Janeiro Court of Appeals upheld the First Degree Court decision, this was not the understanding of the São Paulo Court of Appeals, which modified the decision in Zamin case, affirming that the rule of judicial supervision of two years is cogent and shortening it could cause harm to the community of creditors by imposing a restriction on the creditors’ guarantee, supported by the Judiciary, of the conversion into automatic bankruptcy due to breach of the court reorganization plan.

It will therefore be incumbent on the Superior Court of Justice (STJ) to settle the controversy and settle an understanding with respect to the limits of application of the CPC to court reorganizations. Although STJ has already positioned itself in relation to the counting of time limits in calendar days for a stay period and for the presentation of the plan (Special Appeal REsp 1.699.528/MG), there has still been no ruling by the STJ regarding the possibility of applying the institute of procedural legal business to court reorganizations.

In principle, we have a positive outlook for application of procedural legal business to court reorganizations, with the possibility that debtors and creditors may define, among other points, a specific procedural calendar.

Category: Corporate

To what extent may noncompliance with formal requirements provided for by the law, bylaws and shareholders’ agreements annul call notices for general meetings (GMs)? To find answers to this question, we analyze in this article the understandings of legal scholarship and case decisions related to the annullability of GMs convened in disagreement with established procedures.

The standard provisions for convening GMs are set forth in Law No. 6,404/76 (the Brazilian Corporations Law or LSA), but the company's bylaws and/or shareholders' agreements may change these rules, provided that they do not conflict with the LSA.

A fundamental requirement for a call notice for a GM to be valid is for the initiative to originate from a competent body or person.^[1] According to article 123 of the LSA, it is within the purview of the board of directors, if any, or the executive officers, subject to the provisions of the bylaws, to issue such a call notice.

Also in accordance with the LSA, whenever it is necessary to hold a GM, the members of the board must meet in advance, observing the proper formalities for the meetings of this body and respecting its collegial nature, to approve the proposal for a call notice. In practice, however, the call notice is often done by the chairman of the board or another member and, as a routine act, this should not result in any prejudice for the company. It must be emphasized, however, if any damage to the legitimate interest of the company or any shareholders is found, failure to comply with a formality may render the call notice invalid.^[2] Here, it is important to emphasize that the annullability of AGs convened with a procedural irregularity must take into account the actual damage caused to the company and/or its shareholders.

The importance of the shareholders’ interest

Following this line of thought, Erasmo Valladão Novaes França points out that “at a particular meeting, in which there was a disregard for the formalities set forth in the law or bylaws related to the call notice and call to order, nothing other than the interests of the shareholders themselves are at stake at the time in which the meeting is held."^[3] Therefore, one should not conceive of the annullability of a GM based on formal requirements when what is to be protected, which is the most relevant point here, is the interests of the shareholders. In the absence of actual damage or conflict in relation to such interests, nullity of the GM is not justified, and the act must therefore be preserved.

This understanding is corroborated by the following decision by the São Paulo Court of Appeals, in which a suit to annul a GM was denied because no actual harm to the applicant shareholder was found:

"Appeal - Action for Annulment - Questioning of acts of representation of the Estate of Guilherme Muller Filho - Allegation of defect in call notice for an ordinary general meeting and the resolution reached therein - Overcome by the spontaneous appearance of all shareholders - Absence, in addition, of the actual and effective indication of damages caused to the interests of the parties and/or of the company - Sufficiently grounded judgment - Ratification in the form of article 252 of the Internal Rules of Procedure of this Court - Appeal denied relief. “(Appeal No. 0104399-42.2007.8.26.0000, Opinion drafted by Beretta da Silveira, decided on February 7, 2012)

Call notice for GM prompted by shareholder

Another interesting point about the annullability of GMs called only by the board is the strict interpretation of the LSA that the chairman or any other member of the board would not individually have competence to attend to the request for a call notice made in accordance with letter (c), sole paragraph, of article 123 of the LSA.^[4] Fulfillment of the request for a call notice made by a shareholder holding shares representing 5% of the capital stock would also necessarily require the convening of a prior meeting of the board, only by means of which a decision should be reached by the board, if the call notice is to be made or not.

A contrary line of argumentation states that the request to convene a GM made by a shareholder representing 5% of the capital stock would generate a power and duty^[5] on the part of the officers and directors, to be interpreted as a prompted call notice,^[6] which would authorize the members of the board, in the strict fulfillment of their duties, to comply with the shareholder's request and, if necessary, contradict procedures established in the LSA and/or bylaws, in order to comply with the eight-day legal deadline established in article 123 of the law. In this manner, board members may take exceptional measures to obtain greater speed, which, of course, would require a case-by-case interpretation, considering the relevance of each act against the provisions of the LSA and/or bylaws and its actual prejudice to the other shareholders.^[7]

In this same sense, the Brazilian Securities and Exchange Commission (CVM) affirmed, upon analyzing the organizational function of bylaws, that "the improper use of this organizational function that bylaws have, and indeed it is legitimate that they have it, to prevent or curtail the rights of shareholders cannot be accepted. The organizational function of bylaws cannot serve as a pretext for producing bureaucratic rituals and formal whims that prevent shareholders (or board members) from exercising the right conferred by law."^[8]

One notes, again, an inclination to preserve the objectives sought by GMs, here interpreted broadly, over and against the formal and/or procedural aspects of lesser importance indicated in the LSA and/or bylaws.

And when the board is constituted in an irregular manner?

Another situation that may cause nullity is the convening of a GM done by a board constituted irregularly, in disagreement with the provisions of article 146 of the LSA and its paragraphs (for example, it is necessary to follow the registration and publication procedures indicated in the article for election of the board members and indicate the term of office for each board member elected).

In relation to this specific scenario, Modesto Carvalhosa pondered that: "it is clear that in this case there should be no nullity due to formal issues, that is, an irregular call notice. If, however, the resolutions reached are prejudicial to the corporate or individual interests of the partners, the defective origin of the call notice shall be a convincing issue supporting the nullity of such resolutions."^[9]

In this case, it was understood that the irregular call notice should be disregarded, always considering potential damages to the company's and the shareholders' corporate and individual interests, respectively, since the determination of nullity of all GMs convened by an irregularly composed board would represent a much greater problem for the company’s life than failure to comply with a simple formal requirement of a call notice, a situation that should be avoided.^[10]

In addition, it is understood that the fact that the LSA establishes a public call notice procedure for GMs (articles 124 and 289), in addition to the call notice procedure set forth in article 123 of the same law, safeguards the greater objective of giving adequate publicity to call notices, thereby correctly informing the shareholders that GMs will be held. In view of the supplementary nature of these two procedures, it is even more irrelevant that non-compliance with minor formalities is lacking.

Prevalence of relative nullity over absolute nullity

One should add to the above the fact that in legal scholarship and case decisions the prevailing understanding is that absolute nullity should be ruled out, and corporate acts should be preserved when it is possible to opt for the application of relative nullity. Again, the degree of non-compliance with legal norms and/or procedures and the effective harm to shareholders should be considered. This is, for example, the teaching of Nelson Eizirik when he affirms that: “In Corporate Law, one applies, with the adaptations necessary, the general regime of annullability of acts that are erroneous or defective (relative nullity), and not absolute nullity."^[11]

It is therefore verified that the Brazilian legal system, via both legal scholarship and case decisions,^[12] invokes the existence of a detachment from the nullity in corporate law under the classical theory of nullities. In addition, the tendency in Brazilian and comparative law is to understand nullities in the corporate context as relative, thereby relegating absolute nullity to only truly exceptional situations.^[13]

Conclusions

Thus, although it is important to observe the provisions of the law and/or bylaws regarding the regular calling of GMs (and it is recommended that this be done strictly to avoid questions), legal scholarship and case decisions tend to value preservation of the effects of call notices whenever possible, either by relativizing procedures of minor importance for convening GMs, or based on the understanding that the application of relative nullity should prevail over absolute nullity in the corporate law context. In order to consider the annullability of GMs convened via a call notice with procedural defect, therefore, it is always necessary to observe the relevance of the procedures not followed and the actual harm caused to the shareholders and/or the company as a result of this noncompliance.

1. Additional requirements for regular convening of a GM: (i) publication of the call notice (articles 124 and 289 of the LSA) and (ii) delimitation of the matters to be discussed (article 124 of the LSA). TEPEDINO, Ricardo. Direito das companhias [“The law of corporations”], 2nd v. / Coordinators: Alfredo Lamy Filho; José Luiz Bulhões Pedreira – Rio de Janeiro: Forense, 2009, p. 890.

2. COELHO, Fábio Ulhoa. Curso de direito comercial [“Commercial law course”], volume 2: direito de empresa [“company law”] - 15th ed. - São Paulo: Saraiva, 2011, p. 225.

3.  NOVAES FRANÇA, Erasmo Valladão. Invalidade das deliberações de assembleia das S/A e outros escritos sobre o tema da invalidade das deliberações sociais, [“Invalidity of resolutions at general meetings and other writings on the issue of invalidity of corporate resolutions”], 2nd ed. São Paulo: Malheiros Editores, p. 102.

4. “Article 123, sole paragraph: The general meeting may also be called: (...) (c) by shareholders representing at least five percent of the capital stock, when the directors do not attend to, within a period of eight days, a request for a call notice, duly substantiated, indicating the matters to be addressed (...)"

5. GUERREIRO, José Alexandre Tavares. Convocação de assembleia geral por acionista [“Calling of general meetings by a shareholder”]. Revista de Direito Mercantil [“Journal of Business Law”], n. 41. São Paulo: Revista dos Tribunais, Jan/Mar 1981, p. 154.

6. CARVALHOSA, Modesto. Comentários à lei de sociedades anônimas [“Comments on the Brazilian Corporations Law”]. 3rd ed. São Paulo: Saraiva, 2003. V. 2, p. 634.

7. CASTELLO BRANCO, Adriano. O Conselho de Administração nas Sociedades Anônimas [“The Board of Directors in Corporations”]. 2nd ed. – Rio de Janeiro: Forense Universitária, 2007, pp. 54-59.

8.  CVM/RJ - Administrative Proceeding No. 2005/3806 - Opinion by chief judge Marcelo Fernandez Trindade, dated July 21, 2005.

9.  CARVALHOSA, Modesto. Comentários à lei de sociedades anônimas [“Comments on the Brazilian Corporations Law”], 2nd volume: articles 75 to 137 - 6th ed. - São Paulo: Saraiva, 2014, p. 927.

10. TJSP – AI No. 2136380-06.2017.8.26.0000 – 1st Chamber of Business Law - Opinion drafted by Cesar Ciampolini – decided on October 18, 2017.

11.  EIZIRIK, Nelson. A lei das S/A comentada [“The Commented Brazilian Corporations Law”], volume III, São Paulo: Quartier Latin, 2011, pp. 591/592.

12.  STJ – Special Appeal REsp 1.330.021 – (2012/0025233-6) – 4th Panel – Opinion drafted by Justice Luis Felipe Salomão - Published in the Electronic Gazette of the Judiciary on April 22, 2016.

13.  BORBA, Gustavo Tavares. COELHO, Fábio Ulhoa (coord.). Tratado de direito comercial: tipos societários, sociedade limitada e sociedade anônima [“Treaty on Trade Law: corporate types, limited liability companies and corporations”]. São Paulo: Saraiva, 2015, pp. 371, 386 and 387.