Publications

Category: Capital markets

On November 29, 2022, the Brazilian Securities and Exchange Commission (CVM) announced the CVM Resolution 173, which will  become effective on January 2, 2023 and provides, among other topics, on the amendment of Article 25 of the CVM Resolution 80, regarding the registration and periodic and eventual provision of information of securities issuers, including relating to the reference form.

CVM Resolution 173 deals with the waiver of the resubmission of the reference form by publicly held companies, categories A and B, with the latest accounting information disclosed by the issuer, in case of a public offering for the distribution of securities that  follow the automatic registration procedure and is intended exclusively for professional investors, in accordance with CVM Resolution 160.

Released on July 13, 2022, CVM Resolution 160 comes into force on January 2, 2023 and set the standards for public offerings for primary or secondary distribution of securities and the trading of securities offered on regulated markets.

The amendment introduced by CVM Resolution 173 is of great relevance to the Brazilian capital market and represents a response of the CVM to the market's questions on the subject.

The measure will provide greater agility to such offers, in line with public offerings of distribution of securities with limited efforts, in accordance with the CVM Instruction 476 – which will be revoked as soon as CVM Resolution 160 takes effect.

To understand the changes brought by CVM Resolution 160, click here.

Category: Real estate

The Superior Court of Justice (STJ) recently set the thesis related to Theme 1,095 to assess whether, in case of default of contract for the purchase and sale of real estate property with guarantee of fiduciary disposal, it would be correct to apply specific law, the Law 9,514/97 – which provides for the Real Estate Financial System and instituted the fiduciary alienation of real estate property (Fiduciary Alienation Law) – or law of a general nature, the Law 8,078/90 – establishing the Consumer Protection Code (CDC).

The Second Section of STJ unanimity decided, on 26 October 2022, that "in the purchase and sale agreement of real estate property with guarantee of fiduciary alienation, duly registered, the resolution of the agreement, in the event of default of the debtor duly constituted in arrears, must observe the form provided in Law 9.514/97, the specific legislation, dismissing from the application of the Consumer Protection Code".

By affecting the Special Appeals 1,891,498 and 1.894.504 for the rite of repetitive appeals, STJ suspended the processing, throughout the national territory, of proceedings on identical legal issues, both in the first and second instances and the claims before STJ.

In one of these cases, the debtor claimed that there was illicit enrichment of the creditor, since, after being recovered by the creditor, the real estate property was disposed of at full value after only one year. On the other hand, the creditor reinforced the existence and the need to apply a specific rule regulating the contractual relationship in fiduciary alienation.

In practice, the STJ sought to resolve the controversy regarding the application of the Fiduciary Alienation Law or the CDC in purchase and sale agreements of real estate property in which the fiduciary alienation is constituted as a guarantee, duly registered in the competent real estate registry office, even due to a mistaken equivalence between separate legal businesses.

In purchase and sale agreements with guarantee of fiduciary alienation duly registered in the real estate registry office, until there is full compliance with the obligation contracted by the debtor, the resoluble property of the real estate property – the one that is not full and is tied to the resolution of a condition – is transferred to the creditor as a guarantee of the obligation assumed by the debtor.

In this way, the Fiduciary Alienation Law establishes that, once the debt is due without payment in full or in part of the agreed value, the property of the real estate property is consolidated on behalf of the fiduciary creditor, who shall promote the public auction of the real estate property within 30 days, with the aim of repaying the debt (pursuant to Articles 26 and 27 of the Fiduciary Disposal Law).

In case of default, the creditor seeks the satisfaction of the amounts spent for the financing of real estate property, guaranteed through the constitution of fiduciary alienation. Therefore, it should not be mentioned that the refund of amounts already paid by the buyer (the debtor), but rather satisfaction of the credit provided by the creditor, since it is a debt collection arising from the granting of credit.

In order to avoid illicit enrichment, the Fiduciary Alienation Law determines that, after the public auction, the debtor will be handed the excess amount obtained, if any, provided that the amounts related to the amount of the debt, expenses, insurance premiums, legal charges – including taxes – and condominium contributions are satisfied. In fact, the structure of the Fiduciary Alienation Law seeks to incite economic balance at the time of the foreclosure of the secured guarantee.

On the other hand, if the CDC’s impact on the purchase and sale agreements guaranteed by fiduciary alienation clause were considered, it would be mandatory to recognize the need to refund the amounts paid up to the time of default of the debtor (in accordance with Article 53 of the CDC), with the application of a fine (limited, including, by the STJ itself). This could be a shock to the legal certainty of real estate market operations and, in particular, the debtor's dismissal of a number of consequences of default.

The matter dealt with in Theme 1,095 was restricted to the form of refund of the parcels, and not to the legality of the foreclosure of the of the secured guarantee itself.

According to the recent understanding of STJ, because it is a specific rule and subsequent to the CDC, the application of the Fiduciary Alienation Law must prevail. The only requirement is that all legal requirements be present, which are: (i) the fiduciary alienation must be duly registered in the enrollment of the real estate property in the competent real estate registry office; and (ii) the debtor must be properly constituted in arrears.

In his decision, The Minister reporting judge Marco Buzzi alluded to the principle of specificity of legal norms, which determines the prevalence of the special rule over the general rule. As there is specific legislation regulating fiduciary guarantee, the CDC, as a more extensive legislation, could not be used to object it.

According to the Brazilian Association of Real Estate Developers, more than 90% of real estate financing was guaranteed by fiduciary alienation in 2020. This is the main form of guarantee used in Brazil since at least 2001.

This milestone is due to the fact that, in fiduciary alienation, there is security for the creditor as to the restitution of the amount borrowed, in addition to the ease of execution of the debt by extrajudicial and swift procedure.

Another risk mitigator is that the guarantee used for the payment of the amounts agreed between the parties is the real estate property, itself from which it intends to obtain full ownership, which would result, at least in theory, greater commitment and incentive of the debtor to fulfill the obligations assumed within the time limit.

In this context, and from the perspective of the STJ, the judgment of Theme 1,095 was relevant to the extent that it represents the guarantee of economic stability and legal security for the purchase and sale agreements entered into, especially with regard to the application of a specific rule of the Brazilian legal system.

After the due publication of the judgment, Theme 1,095 will have the erga omnes, i.e. it will apply to all suspended cases, as well as to those that have been supervened on an identical issue by the ordinary courts.

Category: Labor and employment

Created by the federal government with the edition of the Decree 8,373/14, eSocial is a system for collecting and storing information in a virtual environment. Any person who hires a service provider or individual and has some labor, social security or tax obligation, must send labor, social security and tax information to the federal government, depending on this legal relationship of work.

Approved by the Joint Ordinance SEPRT/RFB 33, of October 6 of this year – published in the Official Gazette of October 7 and rectified on December 2) – the new S-1.1 version of eSocial implemented four new events to be reported:

• S-2500 - Labor Lawsuits
• S-2501 - Information on Taxes Arising from Labor Lawsuits
• S-3500 - Exclusion of Events - Labor Lawsuits
• S-5501 - Consolidated Information on Taxes Arising from Labor Lawsuits
  
  

S-2500 - Labor Lawsuits

The registration and contractual information related to the employment relationship, as well as the calculation bases for the collection of the Service Time Guarantee Fund (FGTS) and the social security contribution of the General Social Security Regime (RGPS), by competence, arising from labor lawsuits, should be declared at the S-2500 event, regardless of the period covered by the decisions/agreements.

The deadline for sending the information shall be until the 15th of the month following the date:

• the final judgment of the net decision given in the labor lawsuits;
• ratification of the judicial agreement;
• the ratified decision of the calculations related to the settlement of the decision; or
• conclusion of the agreement in the Commission for Prior Conciliation (CCP) or the Interunion Nucleus (Ninter), even if there is no social security contribution, FGTS or Withholding Income Tax (IRRF) to be collected.

As a triggering event for the transmission of information arising from the ratification of an agreement or final transit of the decisions mentioned in items (i) to (iv), the date of January 1, 2023, onwards, should be considered.

The eSocial Guidance Manual provides that the S-2500 event has independent processing of other events, that is, eSocial events do not depend on the completion of the S-2500 event to be transmitted.

Events should not be used for information relating to labor lawsuits of workers linked to the RGPS or RPPS that fall within the jurisdiction of the Common Court or the Federal Court.

The person responsible for sending the information is the one who will pay the judgment against the defendant, whether or not the employer – such as in situations where there is secondary or joint liability.

S-2501 - Information Taxes Arising from Labor Proceedings

In event S-2501, the amounts of the (IRRF) and social security contributions, including those destined to Third Parties, will be declared on the calculation bases contained in the judgment against the defendant and in the ratification decisions of agreements that were informed in  event S-2500.

An S-2501 event should be sent for each labor lawsuit, regardless of the number of workers included as a party to the lawsuit. If the court decision or agreed authorizes the payment of the amounts due in installments, for each installment paid a S-2501 event must be transmitted. This will allow recording the information of the taxes that are being paid up with the payment of eachinstallment..

Unlike event S-2500, event S-2501 should not be sent if there is no social security contribution or IRRF to be collected. In cases where there is a judicial deposit that guarantees the full collection of taxes, it is not necessary to send this event, since the collection will be made by court order. However, if the judicial deposit does not guarantee the full collection of taxes, this event must be sent with the remaining amounts.

The deadline for sending the event will be no later than the 15th of the month following the payment stipulated in the decision/agreement made in the labor proceedings or in the agreement entered into with the CCP or Ninter.

S-3500 - Exclusion of Events - Labor Lawsuits

With respect to the S-3500 event, it should only be sent if there is a need to make an improperly submitted S-2500 or S-2501 event without effect.

S-5501 - Consolidated Information on Taxes Arising from Labor Lawsuits

Event S-5501 deals with a return of eSocial about event  S-2501, whose objective is to show the declarant, based on the information transmitted, the taxes calculated (social security contributions, contributions due to other entities and funds and the IRRF).

How to prepare?

It is essential that companies prepare to launch new information on eSocial from January 2023 (considering the triggering event of January 1, 2023).

For companies that use process management systems, one can evaluate the feasibility of creating specific fields to be filled out that correspond to the same data required by eSocial, which would facilitate the acquisition of the information. You can also create specific alerts for those responsible for the need to include certain legal lawsuit on eSocial.

For companies that do not use a specific process management system, it will be necessary to monitor lawsuits to identify the emergence of the obligation to insert information into the system, in order to meet the deadline stipulated for events S-2500 and S-2501.

For those who use payroll management tools, another option is to check with the tool provider the possibility of new technological solutions that extract information related to labor lawsuits and send them to eSocial.

In any case, it is important to create a flow for sending the information to eSocial in order to avoid missing the deadline for inserting the information.

Penalties

eSocial is not an obligation per se, but a way to send information about compliance with tax and labor obligations. Failure to comply with the sending of information entails the payment of administrative fines provided for in labor and social security legislation. As an example, we mention the following fines:

• labor legislation, by not sending relevant information about the working relationship, as provided for in Article 41, single paragraph, Labor Code (CLT) - R$ 600 per employee;
• social security legislation, by not sending information about social security contributions, as provided for in Article 283 of Decree 3,048/99 and MF 15/18 Ordinance – R$ 2,331.32 to R$ 233,130.50;
• in the FGTS Law, for not sending information about FGTS deposits, as provided for in Article 23, 1, VII, of Law 8,036/90 - R$ 100 to R$ 300 per employee affected; and
• in tax legislation, as provided for in the 2005 and 2110 Normative Instructions of the Internal Revenue Service (2005/21 IN RFB and 2110/22 IN RFB) – depending on the occurrence of omission of information, inaccuracies in the information submitted, lack of information or delay in the delivery of the information.

We will make new publications on the subject in the coming days.

Category: Capital markets

This ebook describes the improvements made by the Brazilian Securities and Exchange Commission (CVM) to harmonize, define, and make the regulations governing public offerings more objective.

They are included in CVM Resolution 160, which took effect on January 2, 2023, and was published on July 13 of this year. Since the publication of CVM Instruction 476/09, this is the most significant revision to Brazilian law on the subject.

Category: Banking, insurance and finance

Established in 2015 at the request of the G20, the Task Force on Climate-related Financial Disclosures (TCFD) has promoted recommendations for climate change-related disclosures. In line with the TCFD's objective of making available consistent, comparable, clear, and efficient information on climate change and the recommendation to promote climate risk management, the Central Bank of Brazil issued, on November 21st of this year, BCB Normative Instruction 325 to standardize the way financial institutions should recognize sustainability assets on their balance sheets.

Sustainability assets are defined as those related to socio-environmental and climate sustainability mechanisms, and include carbon credit and decarbonization credit (CBIO) certificates.

The instruction changes  account headings of the accounting standards of institutions regulated by the Central Bank of Brazil (Cosif). Sustainability assets" are classified as "other non-financial assets" and "stock assets", depending on the use by the financial institution.

When acquired for investment purposes, sustainability assets are classified as "other non-financial assets" and must be accounted for at their fair value, with gains and losses recognized in balance sheets and carried through in the income statement. When acquired for internal use, such as for achieving sustainability goals, they are classified as "stock assets" and recorded at the lower of cost or fair value.

BCB Normative Instruction 325 also provides that any liabilities arising from legal obligations or commitments to social-environmental and climate sustainability must be recognized in the accounting headings intended for recording the provision for contingencies. The measure is important because it obliges financial institutions to account for carbon reduction or offsetting pledges in financial statements, which contributes to mitigating green washing.

According to a note from the Central Bank, the new standard seeks to provide greater transparency in accounting records for assets related to socio-environmental and climate sustainability mechanisms in view of the potential growth of these operations in the financial market. The new instruction applies to accounting documents prepared as of the base date of January of 2023.

BCB Normative Instruction 325 therefore helps financial institutions to adopt standardization of sustainability assets. In addition to producing comparable information, the new standard stimulates increased trading of these assets in the financial market by requiring that provisions be made for sustainability goals.

Category: Compliance, investigations and corporate governance

The fight against corruption was highlighted in 2022, with the publication of relevant standards dedicated to the regulation of Law 12.846/13 (Anti-Corruption Law).

In July 2022, the federal government enacted the Decree 11,129/22, which revoked the old Decree 8,420/15 and significantly amended the regulation of the Anti-Corruption Law, drawing the attention of companies to the need to evaluate and improve compliance initiatives.

Also in July 2022, the Office of the Comptroller General (CGU) published the Normative Ordinance CGU 19/22, which established specific rules on early trial in the context of administrative accountability proceedings (PAR) established or called up by the CGU. In previous articles, we addressed what .

In addition to the two rules abovementioned, and shortly before the end of the year, on December 9, 2022, the CGU and the Attorney General’s Office (AGU) published the Interministerial Normative Ordinance CGU and AGU 36/22, which refers to the leniency agreement, specifically in relation to the criteria for the reduction of up to 2/3 of the amount of the applicable fine, as provided for in Section 16, §2 of the Anti-Corruption Law.

This ordinance is relevant because it is a regulation that lists objective, concrete, and minimally measurable criteria to limit the discretionary power of the authority in leniency agreement negotiations, allowing greater standardization in the guidelines and agreements.

In summary, the Interministerial Normative Ordinance CGU and AGU 36/22 indicates three criteria to be considered in reducing the fine: self-denunciation initiative, degree of collaboration and relevant conditions.

1. Self-reporting initiative: assesses the timing of self-denunciation and the unprecedented nature of the information submitted by the legal entity on the harmful acts practiced. Thus, the lenient authority will observe whether there was a timely adoption of investigative measures and reporting to the CGU and the AGU, culminating in the presentation of information and documents in the context of the collaboration.

The specific deadline set for self-disclosure to be timely is up to nine months, from the acknowledgement of the harmful act by the legal entity until its formal communication of interest in entering into a leniency agreement. For cases where the legal entity is aware of the existence of harmful acts before the normative ordinance, the deadline for the timing of the self-disclosure will be six months, counted from December 9, 2022, date of publication of the normative ordinance.

As part of this criterion, the lenient authority will also evaluate the unprecedented nature  of the facts or information reported by the legal entity comparing them with those already acknowledged by the public authorities , the CGU or the AGU, even if they do not refer to new facts.

2. Degree of collaboration: the authority will consider if the legal entity conducted internal investigation directed to gathering relevant information and documents, as well as evaluate the quantity, quality, scope, relevance and sufficiency of the information and documents delivered for the purpose of the leniency agreement.

In addition to the content, the second criterion also considers the form, that is, the authority will evaluate the speed in the treatment between the parties, whether the information provided is complete, in addition to the speed and accuracy of the reporting of harmful acts, highlighting as a criterion also the existence of responsibility by the legal entity and whether there was indication of the others involved.

It is worth noting that pursuant to Art. 16, I, of the Anti-Corruption Law, the indication of the others involved should be considered a criterion only when it fits. Depending on the specific case, there may not be other parties involved. Therefore, the authority should not consider the submission of other parties involved when it is not applicable in a specific case.

Furthermore, the authority will evaluate the promptness of the other actions necessary for the conclusion of the negotiation, such as timely translation of documents, availability for meetings, filling out requested documents, among other acts that are part of the negotiation itinerary.

3. Relevant conditions: the authority will observe the parameters of the terms of payment of the financial commitments assumed by the legal entity in the agreement, considering the speed of the payment condition of the value of the leniency agreement and, in case of installment payment, the payment profile outlined by the installments. For payments lasting more than six months, the authority shall assess the guaranty provided for payment as part of the criterion.

The fine reduction may be less in cases where the legal entity has previously given up a proposal for a leniency agreement or a memorandum of understanding in previous negotiation stems from the same harmful acts.

The Interministerial Normative Ordinance CGU and AGU 36/22 does not apply to cases where there is already final report submitted for signature of leniency agreement. On the contrary, the ordinance applies to any legal entity that identifies internally an act harmful against the public administration, as well as legal entities that are in the process of negotiating a leniency agreement (before sending a final report for signature).

Normative can be an important instrument to bring some predictability and limitation in negotiations for both parties, but will depend on its application under the facts of the case.