Publications

Category: Succession planning

Many are the concerns and arrangements that involve estate and succession planning, mostly related to the moments after death. However, a very important document, whose effects precede the death of its subscriber, has gained prominence in discussions about planning: the living will.

Originating in the United States, the document is nothing more than a declaration in which the person indicates the care and treatment he or she wishes or does not wish to receive, in the event of incurable/terminal illness.

Most legal scholars consider the expression "living will" to be incorrect, since it is not exactly a will, the provisions of which are fulfilled after the individual's death. The declaration is actually a set of directions for making decisions while still alive, which is why the correct reference would be "advance directive" or "vital or biological declaration".

Although the practice is gaining prominence, there is still no specific legislation on the subject in Brazil, therefore vital declarations are based on the constitutional principles of human dignity, private autonomy, and the prohibition on inhumane treatment (article 1, subsection II and III, and article 5, II, III, VI, VIII, and X, of the Federal Constitution).

In addition, the Federal Board of Medicine created, in 2012, Resolution 1,995/12, which deals with advance directives of the patient's will, indicating that it is a "(...) set of wishes, previously and expressly manifested by the patient, regarding care and treatment that he wants, or does not want, to receive at the time he is unable to express his will freely and autonomously."

Among the provisions contained in the declaration, it is possible to indicate the desire (or not) for the use of life-prolonging devices, blood transfusion, amputation, resuscitation, hemodialysis, and even the destination of the body itself (cremation/burial) and organ donation.

In addition, the resolution expressly states that the provisions contained in the vital declaration will be linked to the patient's medical chart and medical records and will take precedence over the wishes of family members, demonstrating the effectiveness of the document's preparation to ensure that the declarant's will is satisfied.

The living will, in addition to indicating the treatments to which the person wishes or does not wish to be submitted, may contain a designation of a "health care proxy", a person trusted by the declarant who will make any decisions and ensure that his will is observed.

The document, therefore, is a means of making the individual's will effective in extreme situations, in which he will probably not be able to express his wishes regarding the treatments he would or would not like to undergo. In addition, it saves close family members from making difficult decisions and carrying the weight of their consequences.

It is important to emphasize that euthanasia is forbidden by our legal system and is an unlawful act defined in the Penal Code. Thus, if the vital declaration contains a mandate to use techniques that actively and intentionally accelerate the person's death, it is possible that the document will be considered null and void.

On the other hand, provisions consistent with orthothanasia are allowed in a living will. This makes it possible for the person to determine that they do not wish to employ artificial techniques to prolong their life, but only to use palliative measures, a choice that aims to avoid perpetuating the patient's suffering, both physical and psychological.

It is also possible for the declarant to choose to transfer this decision to a trusted physician, who must certify the irreversibility of the health condition.

There are no formalities for preparation of the document, but it is recommended that it be done by means of a public deed, for greater legal security.

As an important mechanism to ensure a dignified death, living wills are a way to meet the wishes and desires of the person making the declaration, in addition to avoiding conflicts between family members and doctors, allowing an individual's passing to take place under the terms he defines, as long as they do not infringe on the legislation in force.

Sources:

GONÇALVES, Carlos R. Direito civil brasileiro v 7 – direito das sucessões [“Brazilian civil law v 7 - succession law”]. Editora Saraiva, 2021.

TARTUCE, Flávio. Direito Civil - Direito das Sucessões [“Civil Law - Succession Law”] - Vol. 6. Grupo GEN, 2021.

LÔBO, Paulo Luiz N. Direito Civil Volume 6 - Sucessões [“Civil Law Volume 6 - Successions”]. Editora Saraiva, 2022.

Category: Labor and employment

One of the most important issues related to collective labor law is the stability of those who are engaged in class representation, which covers not only employees linked to labor unions, but also those who are part of cooperatives.

Although the corporatist movement has its origins in the Industrial Revolution, it was only introduced in Brazil around the 1900s. The first law on the subject appeared in 1907, with Decree 1,637/1907, which regulated both labor unions and cooperatives.

The regulation of labor unions evolved over the years and, in 1943, was included in the Consolidated Labor Laws (CLT), whose provisions related to the topic aimed not only to regulate and thoroughly provide for the rules of labor union organization, but also to protect union employees, in order to guarantee the right to claim by workers.

As one of the measures (Article 543, paragraph 3, of the CLT), the dismissal of unionized employees is prohibited as of the moment of registration of their candidacy for a position of direction or representation of a union entity until one year after the end of their term of office.

Cooperatives, in turn, remained outside the CLT and were subject to few legislative changes in the following years. It was only in 1971, almost 30 years after the CLT came into effect, that Law 5,764/71 (Cooperative Law) was enacted, definitively bringing cooperativism into the Brazilian legal system. Article 55 of the law conferred to the officers of these companies the same guarantees assured to labor union leaders by article 543 of the CLT, among them, stability.

Although the wording of the law leaves no doubt regarding the prohibition on dismissal of officers of a cooperative, stating that the only requirement is that the cooperative be a cooperative set up by the officers themselves, the issue is quite controversial and has been widely discussed in the labor courts.

As already established by legal scholarship and case law, the purpose of the stability granted to union leaders is precisely to guarantee the effectiveness of union representation. This means enabling workers to run for and be elected freely by their peers to represent a category, in order to claim better working conditions without suffering any kind of retaliation from employers.

It so happens, however, that this premise cannot be applied indiscriminately to the officers of cooperatives of any kind, since not all of them are created with the same purpose of protecting and developing the category, like with labor unions.

According to the Anuário do Cooperativismo Brasileiro [“Yearbook of Brazilian Cooperativism”] published in 2021, Brazil had 4,868 cooperatives in 2020, of which only 685 were in the labor and employment segment, whose purpose is to promote courses for professional improvement and help workers relocate and search for vacancies.

In other words, only 14% of the existing cooperatives in 2020 had the purpose of promoting better conditions for the category. The other almost 86% were destined for the consumption of goods and services, transportation, and other activities unrelated to the protection of workers.

Thus, recognition of the stability of any and all cooperative officers indistinctly, without concern for the nature and purpose of the cooperative to which they are linked, completely distorts the objective of the rule, encouraging the fraudulent creation of entities solely and exclusively with the purpose of obtaining stability for their officers.

The issue is subject to divergence among courts. If previously the Labor Court's case law adopted, in its majority, a more conservative position on the granting of stability to cooperative leaders based solely on article 55 of Law 5,764/71, today there is a growing body of case law that recognizes the need for a more careful analysis of the institution's objectives before endorsing the stability of the officers. A recent decision issued by the 4th Panel of the Superior Labor Court was precisely to this effect.

In the case, the stability of an officer elected to a consumer cooperative was at issue. The Court of Appeals for the 17th Circuit had already rejected the request for recognition of stability of the former employee in view of the fact that the cooperative aimed to retail construction materials in general so that its members could get better prices on products. In other words, the actions of the entity's officers, including the plaintiff, were not intended to defend or represent the interests of the members of the professional category. Therefore, there was no justification for recognizing stability.

With the same understanding, the 4th Panel of the TST upheld the dismissal of the claim. According to the decision drafted by Justice Caputo Bastos, the "right to stability is not a personal guarantee of the cooperative officer or results from the mere fact that he occupies this position, but a prerogative granted to the professional category, so that the officer is able to defend the interests of the member workers.

Although some decisions have recognized stability on the argument that article 55 of the Cooperative Law does not restrict the stability to a certain type of cooperative, the law cannot be applied indistinctly, without any kind of interpretation, especially when we are facing a norm that establishes a restriction on a right legally provided for.

This is precisely the case with the rules that confer stability on certain types of employees. They restrict the employer's directive power, conferred by article 2 of the CLT, as well as the principle of economic freedom, preventing the company from exercising a basic prerogative of the employment relationship: contractual termination without cause.

This restriction is admitted in view of the fact that stability is usually granted in specific situations, in which the employee is in a position of extreme vulnerability in relation to the employer.

For this reason, it is vital that the Judiciary exercise moderation when analyzing the issue so that the stability granted to cooperative officers in an unrestricted manner does not end up violating the employer's directive power and trivializing the purpose of the rule, discrediting the legitimate holders of the right.

Category: Tax

By unanimous decision, the 2nd Panel of the Superior Court of Appeals (STJ) recognized the illegality of the early revocation of the tax incentive provided for in Law 11,196/05, known as the Asset Law. Through the Digital Inclusion Program, the law zeroed the PIS and Cofins rates levied on the revenues of retail companies in the sale of certain computer products. The decision was made on June 21, in the judgment of Special Appeal 1.987.675/SP.

The tax incentive had its validity extended until December 31, 2018, by Executive Order 656/14, converted into Law 13,097/15. However, months later, PM 690/15, converted into Law 13,241/15, prematurely revoked the tax exemption granted by the Asset Law, causing serious losses to taxpayers who had met the legal requirements to qualify for the benefit.

In the judgment, the justices found that premature revocation of the tax incentive violates article 178 of the CTN (National Tax Code), which prohibits modification or revocation of an exemption when granted for a certain period of time and under certain conditions.

The Asset Law conditioned enjoyment of the benefit on a series of counterparts to be observed by both industry and retail. Its early revocation is, therefore, illegal, in attention to the principles of legal security and good faith of the taxpayer who adhered to the tax policy.

The 2nd Panel's position is extremely important, since it consolidates the STJ's case law on the subject. In June of 2021, in judging analogous cases, the 1st Panel also accepted the taxpayers' claim, recognizing that the tax incentive granted by the Asset Law could not be revoked before the deadline determined by the law.

Although this is not a judgment submitted to the system of repetitive appeals, the STJ's uniform understanding should guide the judges in similar cases, especially in attention to article 926 of the CPC (Code of Civil Procedure), which imposes on the courts the duty to keep their case law stable, complete, and consistent.

Besides representing an important precedent for identical cases, this understanding reaffirms the traditional position of the STJ to the effect that the State must guarantee protection to the legitimately created expectation that the benefit will be maintained for a certain period. This ensures predictability and prevents taxpayers who have acted in good faith from being disadvantaged by legislative changes.

The Federal Supreme Court (STF) has been positioning itself to the effect that the competence to examine the issue lies with the STJ, since it would demand analysis of infra-constitutional legislation. Any offense against the Federal Constitution would be merely reflexive. In this scenario, the final decision on the matter must be made by the STJ.

Category: Tax

Can a normative instruction alter the calculation methodology prescribed by law for determining the transfer price in import and export operations involving goods, services, or rights? Must the taxpayer calculate the transfer price pursuant to article 18, II, of Law 9,430/96 or apply the criteria of article 12, paragraphs 10 and 11, of SRF Normative Instruction 243/02 to determine the CSLL and IRPJ calculation basis?

These are questions that multinational groups with subsidiaries or related companies in Brazil have been asking, since the adoption of the methodology provided for in the normative act increases the calculation basis of the IRPJ and CSLL, besides reducing the balances of tax losses and a negative basis.

The answer to the controversy may be about to be given by the Superior Court of Appeals (STJ), which has been receiving appeals to consider the matter.

The transfer pricing arrangement was established in Brazil with the enactment of Law 9,430/96, later amended by Law 9,959/00. Article 18,^[1] already with the new wording, contemplated methods for calculating the parameter price on imports:

• Compared Independent Prices (PIC) method;
• Production Cost Plus 20% Profit (CPL) method;
• Resale Price Less Profit (PRL) method with the 20% margin (PRL 20); and
• Resale Price Less Profit (SRP) method with a 60% margin (SRP 60).

With regard to PRL 60, Normative Instruction 113/00 was issued, later replaced by Normative Instruction 32/01, to regulate the calculation methodology. In its article 12,^[2] the instruction kept the system provided for in Law 9,430/96.

On November 11, 2002, the Federal Revenue Service issued Normative Instruction 243/02, revoking Normative Instruction 32/01 and significantly changing the calculation for determining the parameter price according to the PRL 60 method.

The difference between the way of calculating the PRL 60 provided for in Law 9,430/96 and in the (illegal) Normative Instruction 243/02 concerns mainly the way of calculating the profit margin to be deducted from the net (re)sale price, which will set the concept of the parameter price to be compared with the prices charged in the taxpayers' operations for the purpose of applying or not applying adjustments with tax effects.

As for the profit margin to be discounted from the resale price, Law 9,430/96 provides that it will be obtained by applying a percentage of 60% on the net sales price of the product, less the added value of the country. Normative Instruction 243/02, in turn, provides that the 60% margin must be applied on "the participation of the imported good, service, or right in the sales price of the good produced.

In summary, while Law 9,430/96 provides that the 60% percentage must be applied on the final value of the resale price, which incorporates the added value of the product, Normative Instruction 243/02 imposed the proportionalization criterion by weighting the average and by defining that the 60% percentage must be applied on the participation of the good, service, or right in the resale price. The difference between the parameter price calculations is therefore wide.

The matter was resolved by Law 12,715/12, which incorporated into its text the contents of Normative Instruction 243/02, as to the calculation method, while reducing the profit margin from 60% to the levels of 20% (general rule) to 40% (exceptions).

With this, it evidenced that the previous calculation criterion was based exclusively on the normative act, besides acknowledging the taxpayers' grounds, by demonstrating that the 60% margin is incompatible with the proportionalization criterion of Normative Instruction 234/02, which transforms, in practice, the 60% profit margin into a 150% percentage over cost, by disregarding the value added in the country.

Once the proportionalization criterion of Normative Instruction 243/02 was incorporated into law, the margins were reduced. In any case, the dispute is time-bound because it is limited to 2012, the year when Law 12,715/12 came into effect.

The divergence between the provisions of Normative Instruction 243/02 and Law 9,430/96 raises the discussion about what the limit of regulation of the normative act is and whether it is possible to create new content to clarify the terms of the law.

The Federal Court of Appeals for the 3rd Circuit has been addressing the issue. The 3rd and 6th panels have been in majority in the sense of the legality of the normative instruction for (supposedly) establishing rules to clarify the normative content. The 4th Panel, on the other hand, believes that the normative act is illegal due to its having exceeded its limits by modifying the legal system for determining the price parameter, with consequent implications for the calculation of the IRPJ and CSLL.

The STJ, on May 24, 2022, resumed the judgment of the Interlocutory Appeal in Special Appeal 511.736 in which the following is discussed:

• the (il)legality of Normative Instruction 243/02, which provided for a calculation formula for transfer pricing, for the purposes of identification of the IRPJ and CSLL tax bases, in light of the provisions of article 18, II, of Law 9,430/96; and
• whether the alteration of the methodology, promoted by Normative Instruction 243/02, in substitution for Normative Instruction 32/01, could only produce its effects for taxable events occurring as of the beginning of the 2003 fiscal year, in attention to article 104 of the National Tax Code.

Justice Benedito Gonçalves, the only one to vote so far, understood that the normative act is supported by Law 9,430/96, insofar as the resale price less profit method must be based on the price at which the imported product is resold, and not on the sale price of the product produced.

Although the judgment was suspended due to a new request for review of the record, this is the first time that the STJ has overcome precedential obstacles in order to examine the merits of the dispute. Although the appeal was not submitted to the system for handling repetitive appeals, this precedent will be highly important in guiding future decisions by the federal courts of appeals regarding the correction application of the calculation method and its affects on the IRPJ and CSLL calculation basis.

^[1] “Article 18. The costs, expenses, and charges related to goods, services, and rights, contained in the import or acquisition documents, in the operations carried out with an associated person, will only be deductible in determining the taxable income up to the amount that does not exceed the price determined by one of the following methods:

I - Compared Independent Price Method - PIC: defined as the arithmetic average of the prices of goods, services, or rights, identical or similar, ascertained in the Brazilian market or in other countries, in purchase and sale transactions, under similar conditions of payment; 

II - Resale Price Less Profit Method - PRL: defined as the arithmetic average of the resale prices of goods or rights, less: 

a) the unconditional discounts granted

b) taxes and contributions on sales; 

c) commissions and brokerage paid; 

d) the profit margin of          

1. sixty percent, calculated on the resale price after deducting the amounts mentioned in the previous paragraphs and the added value in the country, in the case of imported goods applied to production; (Text amended by Law No. 9,959, of 2000) 

2. twenty percent, calculated on the resale price, in the other cases. (As amended by Law No. 9,959, of 2000) 

III - Production Cost Plus Profit Method - CPL: defined as the average cost of production of goods, services, or rights, identical or similar, in the country where they were originally produced, plus the taxes and fees charged by that country on exportation and a profit margin of twenty percent, calculated on the cost ascertained. 

Paragraph 1. The arithmetic averages of the prices referred to in subsections I and II and the average production cost referred to in item III shall be calculated considering the prices charged and the costs incurred during the entire ascertainment period of the income tax basis to which the costs, expenses, or charges refer."  

^[2] “Article 12. The determination of the cost of goods, services, or rights, acquired abroad, deductible from the determination of the taxable income, may also be made by the Resale Price Less Profit (PRL) method, defined as the arithmetic average of the resale prices of the goods or rights, less:

I - the unconditional discounts granted;

II - the taxes and contributions levied on sales;

III - the commissions and brokerage paid;

IV - the profit margin of:

a) twenty percent, in the case of resale of goods;

b) sixty percent, in the case of imported goods applied to production.

(...)

Paragraph 10. The method referred to in letter "b" of the subsection IV of the head paragraph will be used in the case of goods applied to production.

Paragraph 11. In the case of the prior paragraph, the price to be used as a comparison parameter shall be the difference between the net sales price and the profit margin of sixty percent, considering, for this purpose:

I - net sales price, the arithmetic average of the sales prices of the goods produced, less unconditional discounts granted, taxes and contributions on sales, and commissions and brokerage paid;

II - profit margin, the result of applying a percentage of sixty percent on the arithmetic average of the sale prices of the goods produced, less unconditional discounts granted, taxes and contributions on sales, commissions and brokerage paid, and the value added to the goods produced in the country."

Category: Litigation

Understanding what the requirements used by the Federal Supreme Court (STF) are to grant reciprocal tax immunity to state-owned companies is certainly one of the most challenging tasks in the realm of academic research. Any attempt at systematization is insufficient due to the recent court decisions.

The Federal Constitution establishes in article 150, subsection VI, paragraph a, that the Federal Government, States, Federal District, and municipalities may not impose taxes on each other's assets, income, or services. This is the basis of what has come to be known generically as reciprocal tax immunity.

The second paragraph of article 150 extends the right of tax immunity to the municipalities and foundations created and maintained by the public power. There is no mention of state-owned enterprises in the Federal Constitution. The application of this right to them derives from case law of the STF.

In the beginning it was simple: the STF granted the right to tax immunity to government-owned companies that provide public services and economic activities considered a state monopoly, requirements that were met by the Post Office and Infraero, the first state-owned companies to be granted tax immunity.

Other public companies that provided public services and in practice acted as true instrumentalities, with loss-making operations and demanding budgetary resources, also obtained tax immunity.

After being prompted several times, the STF issued the understanding that governed-controlled companies would not be entitled to reciprocal tax immunity, even if their purpose was to provide a public service, because their activities are inherently focused on remunerating their shareholders.

In a previous case, when the possibility of granting tax immunity to Sabesp was analyzed (RE 600.867/SP, Topic 508), the STF held that reciprocal tax immunity would not apply to government-controlled companies whose shares are traded on stock exchanges. The trading of the state sanitation company's shares was said to be strong and irrefutable evidence that the company's goal was the remuneration of its investors.

Based on these precedents, requests for granting tax immunity to government-controlled companies are usually denied in the Judiciary.

However, the STF has been rendering decisions that, at first glance, seem to be relaxing the hitherto existing prohibition on extending reciprocal immunity to government-controlled companies. In April of 2022, another decision was handed down in this regard (Original Civil Action - ACO 3.410).

The Federal Supreme Court granted the lawsuit filed by Companhia de Saneamento de Sergipe (Deso) to recognize reciprocal immunity from federal taxes levied on the assets, income, and services provided by state-owned companies.

In the suit, despite being a government-controlled company, Deso contended that it is a company that provides essential public services and works on an exclusive basis for almost all the municipalities in the state (71 of the 75 municipalities in Sergipe). He also stressed that, although it is a government-controlled company, the majority shareholder is the state of Sergipe, which holds 99% of the shares.

Reporting Justice Luis Roberto Barroso found that the company met the requirements for extension of reciprocal tax immunity:

• provision of a public service;
• absence of intention to make a profit; and
• action on an exclusive basis.

The Justice pointed out that Deso, unlike other government-controlled companies, conducts activities that constitute a state public service, as per the terms of article 23, IX, of the Federal Constitution, that is, the supply of drinking water and collection and treatment of sanitary sewage.

The Justice also considered the fact that Deso has exclusive operations in 71 of Sergipe's 75 municipalities and that its capital stock belongs almost entirely to the state (99%).

This is not the first time that the STF has relaxed its own requirements for granting tax immunity. In 2018, reciprocal tax immunity was granted to Serpro, a public company operating in the data processing and technology service segment (ACO 2,658).

The understanding that prevailed in the constitutional court was that Serpro, by exclusively providing information processing and data processing services that aim to modernize and give agility to strategic sectors of the Public Administration, would be able to enjoy tax immunity.

Analyzing the STF's case law, one gets the impression that the requirements have been applied in a very flexible way. Criteria that were objective up to now have been made subjective in order to contemplate some specific and exceptional situations.

Take the case of Serpro, for example, where the criteria of "public service" and "exclusivity arrangement" have been flexed to the limit. Serpro did not meet either of the two criteria previously applied by the STF. The activity it performs is an economic activity that is free to any agent of private enterprise. There is no legal exclusivity. The Federal Government has no constitutional or legal mandate to provide these services.

What there is, in reality, is a merely circumstantial exclusivity. Serpro is systematically contracted by the bodies and entities of the Federal Public Administration based on the case of exemption from bidding provided for in Law 8,666/93.

These characteristics were enough for the STF to recognize that the company is entitled to tax immunity when it performs activities aimed at serving public customers.

The same loosening is observed in the "no profit objective" criterion.

Previously, government-controlled companies were denied the right to tax immunity because of their legal status. The mere fact that they were government-controlled companies was an indication that the company aimed at making profit and enriching its shareholders. The presumption was absolute if the government-controlled company traded its shares on the stock exchange.

However, after some dispute, the STF started to issue decisions establishing that government-controlled companies that had the State as majority and practically exclusive shareholder would be entitled to tax immunity.

This is, of course, a rather questionable assumption. It is possible that government-controlled companies, even if with almost exclusive state participation, carry out activities with the intention of profit and enriching the state's wealth, especially in the basic sanitation sector, where the company acts as a true contractor of the municipalities that hold exclusivity for the provision of sanitation services.

The STF's criteria, in the way they have been applied, could create two kinds of problems:

• The need for constant monitoring of the factual situation underlying the decision that conferred reciprocal tax immunity. The tax immunity should be revoked if, for example, Deso changes its shareholder composition or ceases to provide exclusive services in the municipalities. This need, in fact, was pointed out by Justice Roberto Barroso in his opinion in the constitutional action.
• The risk of creating situations of violation of equal protection and perpetuating economic distortions. Currently, government-owned companies or government-controlled companies with almost exclusive state participation that provide public services enjoy reciprocal tax immunity, regardless of the characteristics of their operations. Government-controlled companies with significant private participation, on the other hand, do not have the same benefit.

It is fully possible, therefore, for state-owned companies with consistently high profit margins to continue to enjoy tax immunity. The situation is even more worrying when these companies provide public services that do not belong to the public entity that created the company, as happens in the basic sanitation sector.

Category: Litigation

Since the accidents that occurred in Mariana (2015) and Brumadinho (2019), in the state of Minas Gerais, several topics related to accident prevention and its treatment have gained prominence and raised a debate about the effectiveness of existing legislation.

The Law 14.066/20, with important changes in the standard establishing the National Dam Safety Policy (Law 12.334/10), was enacted in this context. The new text made clear the concern to adopt preventive measures to safeguard human and material losses. Among the changes brought about by Law 14.066/20, the following stand out:

"Art. 4. The foundations of the National Dam Safety Policy (PNSB):

II – information and the stimulus to the direct or indirect participation of the population in preventive and emergency actions, including the preparation and implementation of the Emergency Action Plan (EAP) and access to its content, with the exception of personal information;

Art. 11. The preparation of the EAP is mandatory for all dams classified as:

I - medium and high associated potential damage; or

II - high risk, at the discretion of the supervisory body.

Single paragraph. Regardless of the classification of the associated potential damage and risk, the preparation of the EAP is mandatory for all dams intended for the accumulation or disposal of mining tailings. 

Art. 12.  The PaE shall establish the actions to be carried out by the dam entrepreneur in the event of an emergency situation, as well as identify the agents to be notified of this occurrence, and shall at least:

III - preventive and corrective procedures and actions to respond to emergency situations identified in accidental scenarios;  

• 2 - The entrepreneur must, before the beginning of the first filling of the dam reservoir, prepare, implement and operationalize the PAE and hold meetings with the communities for the presentation of the plan and the implementation of preventive measures provided for therein, in joint work with the municipal authorities and the protection and civil defense agencies.

Art. 15. The PNSB should establish an education and communication program on dam safety, with the objective of making society aware of the importance of dam safety and developing a culture of accident and disaster prevention, which should include the following measures:

Art. 18. [...]

• 3 - It is mandatory, for the entrepreneur or his successor, the monitoring of the safety conditions of the deactivated dams and the implementation of preventive measures of accidents or disasters until their complete mischaracterization."

One of the measures to increase preventive work was the obligation to develop the so-called Emergency Action Plan (EAP) – a preventive plan for cases of risk or disruption of dams. In the previous legal text, the measure was only mandatory for dams considered to have high potential associated damage.

In addition to the laws mentioned, the state of Minas Gerais, through the Law 23.291/19, regulated by the Decree 48,078/20, established rules and obligations for emergency action plans of companies with dams in the state.

The idea of creating an emergency plan observing the particularities of each company, regardless of sector and size, is a strategy that brings more agility, security and economy in coping with a crisis.

Recent air accidents, data leaks – increasingly frequent – complaints of slave-like labor, environmental damage, among other situations that forced companies to spend a lot of money and, mainly, time because they were not prepared to face a crisis, show the importance of having a plan.

Considering the trends of the most modern legal-legislative mechanisms, which aim at preventive and consensual solutions to face and solve crises, developing an emergency plan becomes essential for companies.

Knowing the importance of this feature, how can a company create it?

The first step is to structure committees, form groups for the preparation, monitoring and updating, as necessary, of an emergency plan.

After structuring the committees, it is important to define roles and responsibilities of the members, so that each of them knows exactly what to do in a possible crisis, saving time and money in solving the situation.

In a later step, governance procedures are outlined. Those responsible for conducting any crises are appointed and tasked with implementing and managing the plan.

It will also be necessary to develop business continuity plans focused basically on how the company will behave in the face of a crisis to reduce any impacts on its day-to-day life. This is one of the most important points of preventive work, since it establishes the direction to be followed by the entire organization to overcome the critical moment.

Another relevant point is the adequate flow of information: what data will be passed between the committees and, mainly, what the contact channel will be in case of crisis.

In general, after a serious event, public entities, press and affected parties contact the company to verify what occurred and obtain information about the measures taken. The organization of the flow of information is therefore fundamental.

In addition, periodically reviewing all these procedures is vital for them to stay up-to-date and adequate to the reality of the constantly evolving company.

Preventive planning is not only useful to save the company time and money in emergency situations. It also allows an analysis of the risks to which the organization is exposed. Having these risks scaled and an action plan ready to mitigate impacts can make all the difference in the face of a crisis and even ensure the survival of the company.