Publications

Category: Tax

The majority of the justices of the Federal Supreme Court (STF) dismissed Direct Action for Unconstitutionality (ADI) 4980, following the opinion of the reporting justice, Nunes Marques. The score was eight votes for dismissal of the action against one vote for partial dismissal, cast by Justice Alexandre de Moraes. Justice Dias Toffoli was absent and Justice Roberto Barroso recused himself.

In the lawsuit, the Federal Attorney General questioned the constitutionality of article 83 of Law 9,430/96, as amended by Law 12,350/10, specifically in the part in which the provision establishes the need to wait for a final decision in the administrative sphere before sending a tax representation for criminal purposes to the Public Prosecutor's Office (MP), with respect to the crimes of social security embezzlement.

The reporting judge found that the order to wait for the end of the administrative proceeding before the tax auditor sends the representation with criminal purposes to the Public Prosecutor's Office fulfills the principle of reasonableness, since the measure avoids unnecessarily activating a criminal prosecution, considering that the tax credit can be extinguished either by payment, by adherence to the installment plan, or by the taxpayer's victory in the administrative pathway.

For him, the rule of article 83 of Law 9,430/96 does not offer any risk to the assets of the social security system, and much less mitigates the actions of the Public Prosecutor's Office, because the statute of limitations does not run while the claim is being litigated in the administrative sphere and its enforceability is suspended.

In addition, the reporting judge pointed out that the STF, in ADI 1751, had already defined that article 83 of Law 9,430/96 is directed to the tax authorities and does not interfere with the actions of the Public Prosecutor's Office.

Justices André Mendonça, Edson Fachin, Rosa Weber, Cármen Lúcia, Ricardo Lewandowski, Gilmar Mendes, and Luiz Fux followed the reporting judge.

The divergence was opened by Justice Alexandre de Moraes, who voted for partial dismissal of the case, believing that social security embezzlement is a formal crime and that, therefore, for a prima facie case would not be necessary for there to be a final tax assessment by the administrative authorities.

Moraes made several comments on the risks of tax evasion in Brazil and about the weaknesses of Brazilian legislation in this regard. For him, it should be interpreted in accordance with the Federal Constitution, without reducing the text, to define that there is no need to exhaust the administrative instances in relation to formal crimes.

Thus, ADI 4980 was dismissed, leaving unchanged the rule that prevents the Federal Revenue Service of Brazil from sending tax representations for criminal purposes to the MPF with respect to crimes of social security embezzlement before the end of the administrative litigation.

Category: Litigation

In a decade marked by the proliferation of sustainable investments, the Green Rural Product Note (CPR) emerges as a potential source of financing for the Brazilian agricultural sector. It is an instrument that aims to raise financial resources to maintain farming operations and, at the same time, preserve biodiversity.

Recently, Law 8,929/94 (CPR Law) has undergone several changes through Law 13,986/20 (Agro Law). Among them, the inclusion of subsection II in paragraph 2 of article 1, which allowed the issuance of CPRs "related to the conservation of native forests and their respective biomes and to the management of native forests in the scope of the public forest concession program, or obtained from other forestry activities that may be defined by the Executive Branch as environmentally sustainable,” an operation recently regulated by Decree 10,828/21.

With the changes, the possibility arises for rural producers to be paid for an activity that they already perform in strict compliance with the law, namely maintenance and conservation of native forest, as is the case of legal reserves,^[1] and receive an incentive to expand this activity, which will help mitigate the environmental damage often attributed to rural production. Furthermore, the measure will contribute to improving the image of Brazilian agribusiness in the domestic and foreign market, which is often blamed for deforestation.

From a financing standpoint, there is no lack of interest in the application and diffusion of the instrument. Companies that, by force of their activity, release harmful gases into the environment will be able to use a mechanism capable of guaranteeing the carbon credits necessary to compensate for the damage they cause, regardless of whether they operate in Brazilian territory.

A factor that contributes and serves as an incentive for the diffusion of the document is the National Policy of Payments for Environmental Services (Law 14,119/21). This standard reinforces the more sustainable approach to the environmental issue and creates the perfect scenario for new investments in the sector, when added to the commitments made by Brazil at the recent COP 26, such as the pact to reduce methanol gas emissions by 30% by 2030 and the declaration to restore and protect the world's forests, which includes the Brazilian Amazon, with estimated investments of US$ 19.2 billion.

There are still issues to be overcome to popularize the security, such as who will be responsible for certifying the instrument, how the commitments signed will be monitored, the role of government institutions in their validation, and how the Brazilian carbon credit market will be regulated, among other issues.

Despite all this vagueness, there is no sign of stopping anyone who already wants to take advantage of the changes implemented. Environmental conservation, through the use of crop/product monitoring techniques known to the market, can be a conditioning factor or even a guarantee for the issuance of a traditional CPR. Those who see the changes implemented in the New Agribusiness Law as an opportunity for new business are already ahead of the curve to take advantage of the benefits provided by these legal innovations. With the Green CPR they can obtain financing and, at the same time, invest in sustainability, something that is currently very well regarded by the market.

^[1] Law 12,651/12, article 12.

Category: Litigation

At the end last year, the Superior Court of Appeals (STJ) changed its understanding on conflicts of jurisdiction presented by companies under judicial reorganization that have assets pledged in the scope of tax executions for payment of taxes.

The court began to hold that conflicts of jurisdiction should not even be considered in cases in which the judicial reorganization court has not yet ruled on the seizure of assets ordered by the tax foreclosure court. The change in understanding occurred after the 2nd Section of the STJ decided Conflict of Jurisdiction 181.190/AC (CC 181.190). Until then, the court accepted and decided all conflicts presented involving the courts of tax foreclosure and judicial reorganization, even if there was no actual conflict between these courts due to divergent decisions.

Companies under judicial reorganization frequently claimed conflicts of jurisdiction when they became aware of decisions handed down by a tax foreclosure court ordering attachment of their assets, without a prior ruling to the contrary from the judicial reorganization court. It was argued that the judicial reorganization court was the "universal court" that should decide on any and all issues related to the debtor company's assets.

According to the new position, in order for a conflict of jurisdiction between the judicial reorganization court and the tax foreclosure court to be cognizable and decided in the case of confiscation of essential assets of a company under judicial reorganization, it is necessary to have conflicting decisions handed down by the courts.

According to the reporting judge of CC 181.190, Justice Marco Aurélio Belizze, the reason why so many companies claimed a conflict of jurisdiction even before any ruling by the judicial reorganization court was lack of clarity regarding the delimitation of jurisdiction of the tax foreclosure court and the judicial reorganization court, a topic that was not clearly addressed by the Reorganization and Bankruptcy Law (LRF).

For the reporting Justice, however, the change brought about by Law 14,112/20, which included paragraph  7-B in article 6 of the LRF, seems to clarify the issue. The change establishes, on the one hand, the jurisdiction of the tax foreclosure court to order attachment of the debtor company's assets and, on the other hand, safeguards the jurisdiction of the judicial reorganization court to order substitution of the attachment acts that fall on the company's essential assets.

Law 14,112/20, however, according to the reporting Justice in his opinion, does not detail how these competencies are concretized in practice, and it is precisely the role of the STJ to give a direction so that conflict of jurisdiction stops being unduly used as a subterfuge for companies in crisis to suspend tax executions.

Given this situation, the reporting Justice determined that the tax foreclosure court can communicate the content of the decision on the seizure of assets directly to the judicial reorganization court, so that it has control over the assets considered essential to the seizure. The measure meets the principle of cooperation provided for in article 69 of the Code of Civil Procedure (CPC).

Thus, as highlighted in the opinion, for it to be possible to initiate a conflict of jurisdiction in situations such as the one dealt with in the decision, it is necessary that the tax foreclosure court have issued a decision that expressly opposes the decision issued by the judicial reorganization court on the matter.

The importance of the STJ's decision is indisputable because, besides guiding the behavior of companies under judicial reorganization with ongoing tax foreclosures, it directs the courts to act cooperatively, thus avoiding unnecessary conflicts of jurisdiction, which only burden the judicial system.

A search on the STJ website indicated that since 2005 (the year the LRF went into effect), more than seven thousand conflicts involving judicial reorganization and tax foreclosure judgments have been decided.

After the judgment of CC 181.190, several sole-judge decisions and judgments have already been rendered denying cognizance to the conflicts raised, when the absence of opposition by the tax foreclosure court to the order by the judicial reorganization court on the release of the seizure of an essential asset or substitution of the seizure for another asset is found.

Justice Marco Buzzi, when decided on February 24 of this year conflict of jurisdiction 186.196/RJ (CC 181.196), clearly clarified that:

"(...) to establish a conflict of jurisdiction before this Court of Appeals, it is necessary to demonstrate: i) an effective order for the constrictive act issued by the Tax Court to the detriment of the assets of the debtor in possession; ii) a decision by the Judicial Reorganization Court exercising the respective examination of control (maintenance and/or substitution) over the constrictive act issued by the Tax Court, making use of the judicial cooperation established in article 69 of the Code of Civil Procedure of 2015; iii) resolution of the Tax Enforcement Court opposing, concretely, the resolution of the Judicial Reorganization Court regarding the judicial constriction."

The idea of cooperation between different courts is already being applied by courts Brazil. In the judicial reorganization of the Oi Group, on September 13 of last year, for example, the judicial reorganization court created a mechanism to avoid the issuance of conflicting decisions and reduce the number of inquiries routinely addressed to it regarding constrictive acts originating in tax foreclosures.

Based on the principle of cooperation, it was ordered that a notice be sent to all federal regional court judges and state courts of appeal regarding the mechanism created, which allows in advance the attachment on certain Oi Group accounts for claims of up to R$20,000. Claims above this amount may be satisfied by attachment of assets that are not listed in the reorganization plan of the group under judicial reorganization.

However, even after the creation of this mechanism, it was found that it was necessary to instigate conflicts of jurisdiction (in total, we identified four), considering that the tax foreclosure courts were not following the system created by the judicial reorganization court for the Grupo Oi.

The first two conflicts of jurisdiction^[1] were heard before the judgment of CC 181.190, so that both were found cognizable. In CC 184.077/RJ, an injunction was granted to suspend the constrictive measures ordered by the tax foreclosure courts, while in CC 183.507/RJ there was a sole judge decision on the merits recognizing the jurisdiction of the judicial reorganization court, with the decision having already become final and unappealable.

The other two conflicts of jurisdiction^[2] identified were heard after the judgment of CC 181.190, and both were not found cognizable, as it was found that they did not meet the requirements set out in the judgment - the decision of the judicial reorganization court exercising control and the subsequent decision of the tax foreclosure court denying fulfillment of the control.

In one of the latter two cases, CC 186.196, a motion for clarification was filed against the decision to not recognize the aforementioned conflict, clarifying that:

• there was already a decision by the judicial reorganization court ordering the replacement of any and all encumbrances on the Oi Group in amounts exceeding R$ 20,000,000; and
• the tax foreclosure court was already aware of this decision.

Therefore, the system established by the STJ in the judgment of CC 181.190 was observed. A decision is currently pending on the motions for clarification filed in CC 186.196, which, in our opinion, should prevail in the face of the conflict expressed in the opposition of the tax foreclosure court to complying with the order of the judicial reorganization court.

It is expected that with the CC 181.190 decision other judicial reorganization courts will use their creativity, seeking solutions and mechanisms that effectively put into practice jurisdictional cooperation and assistance to unburden the judicial system. But it is also necessary for the STJ itself to mature in its understanding, detaching itself from excessive formalism, under penalty of making even access to justice unfeasible.  

^[1]Conflict of jurisdiction 183.507/RJ (CC 183.507), filed on October 13, 2021, of the authorship of Justice Marco Buzzi; and Conflict of Jurisdiction 184.077/RJ (CC 184.077), filed on November 3, 2021, of the authorship of Justice Marco Buzzi.

^[2] Conflict of jurisdiction 185.176/RJ (CC 185.176), of the authorship of Justice Marco Buzzi, decided on December 17, 2021; and CC 186.196.

Category: Tax

In line with the objective of bringing the tax authorities and taxpayers closer together, reducing tax litigation through the use of alternative or appropriate methods, PGE Resolutions 4826 and 4827, of March 16, 2022, were published in the Official Gazette of the State of Rio de Janeiro, regulating, respectively, procedural case settlements (NJP) and the procedure for voluntary settlement of disputes involving the State Public Authorities.

Procedural Case Settlements (NJP) - PGE Resolution 4,826/22

PGE Resolution 4,826/22 seeks to improve the execution of procedural case settlements within the Rio de Janeiro State Prosecutor's Office. It repeals Resolution 4,324/19, expanding the possibilities for negotiation and establishes a more detailed set of rules for the state and taxpayers to enter into NJPs.

The main goal of NJPs continues to be reduction of litigation, efficiency in the collection of outstanding debt, and stimulus to tax compliance, but the instrument also honors the autonomy of the parties' will, procedural cooperation, legal security, and the financial capacity of taxpayers with outstanding debts before the State Attorney's Office of Rio de Janeiro.

According to the new rule, all debt, whether or not registered as collectible debt (except amortization plans, in which case the debt must be registered), whether or not brought in court, are potentially subject to an NJP.

Among the various possibilities for entering into an NJP brought in by article 10 of Resolution 4,826, those that were not yet regulated draw attention:

• amortization plan;
• acceptance, evaluation, substitution, release, or execution of guarantees, including prior to the filing of a tax foreclosure;
• fiduciary guarantee from the officers and directors and/or partners of the debtor legal entity or third parties;
• extraordinary concurrent standing among managing partners;
• execution means;
• definition of the receiver in the attachment of billings, company, or establishment;
• inclusion, continuation, or exclusion of the right in credit protection networks or protest of outstanding debt certificate, when applicable, or submission of these acts to term or condition;
• scheduling of the case;
• new modalities of procedural communication, including by e-mail or messaging applications; and
• installment payment of fees for loss of suit.

Resolution 4,826 contains specific chapters dealing with the amortization plan, the timing of the proceeding, and acceleration of collateral.

For the execution of an NJP involving an amortization plan, the resolution states that only debts equal to or greater than 500 thousand UFIR-RJ can be negotiated, to be paid off within a maximum period of 120 months, with the mandatory provision of collateral.

There is the possibility of including non-judicial debts in the amortization plan, as long as the taxpayer expressly agrees with the filing of the tax foreclosure and the corresponding legal charges.

Without considering the peculiarities of each case, the taxpayer's duties are, in general terms: irrevocable and irreversible confession of the debts included in the NJP; commitment to guarantee or pay in installments, within 30 days, all the debts that may be recorded as collectible debt after the execution of the NJP; and the taxpayer's commitment to keep good standing with the State Treasury Department.

An NJP that deals with the debt repayment plan may also suspend constrictive acts in the corresponding execution proceedings, but it does not suspend the enforceability of tax debts. The concession of a tax regularity certificate is conditioned on fulfillment of the requirements set forth in articles 205 and 206 of the CTN^[1] and the offering of amortization plan clauses.

Scheduling of the case

Without further details on the subject, Resolution 4,826 only establishes that the parties may, by mutual agreement, establish a calendar for the performance of judicial procedural acts, pursuant to article 191 of the Code of Civil Procedure.^[2]

To enter into an NJP aiming at scheduling, the PGE should consider, besides the provisions of articles 2 and 3 of Resolution 4,826,^[3] the taxpayer's interest in reducing the costs spent with the maintenance of collateral, the impacts of the assumption of the burden provided for in article 191, paragraph 2, for administrative organization and the advantageousness arising from other provisions.

Acceleration of guarantee

Resolution 4826 also provides for the possibility of negotiation between the tax authorities and the taxpayer to offer a guarantee before the filing of a tax enforcement action or registration of the debt as outstanding.

In analyzing the guarantee offered, the PGE must consider the provisions of article 11 of Law 6,830/80 and article 835 of the Code of Civil Procedure, which establish the preferential order of attachment.

Voluntary settlement of disputes - PGE Resolution 4,827/22

PGE Resolution 4,827 regulates, within the State Attorney General's Office, the voluntary settlement procedure for disputes involving the State Public Administration and establishes measures for the reduction of administrative and judicial litigiousness.

With a very innovative text, the resolution presupposes the achievement of mutual benefits for those involved, obeying the constitutional principles (implicit and explicit) of legality, voluntariness, autonomy, verbal acknowledgement, good faith, cutting red tape, efficiency, and economy.

The definition of voluntary settlement is provided for in paragraph 3 of article 1 of the resolution as the “case in which the State presents a calculation memorandum, pursuant to article 509, paragraph 2, of the Code of Civil Procedure, and the creditor agrees to its terms in order to end the litigation, waiving any overpayment.”

Other interesting concepts addressed by the resolution are those of "negotiation" and "mediation". Negotiation is considered to be a "technique for solving disputes in or out of court, characterized by the search for voluntary settlement through direct dialogue between those involved, without any intervention by a third party as helper or facilitator.” The negotiation can be done in a preventive manner, as a way to avoid litigation that has not yet gone to court.

Mediation, in turn, is defined as a "consensual dispute resolution activity, in which the mediator, acting preferably in cases where there is a prior link between the parties, without decision-making power, will assist and encourage the interested parties to identify or develop, by themselves, consensual solutions to the dispute.

The resolution also provides for the possibility of reaching a court settlement, defined as any voluntary settlement signed when a lawsuit is in progress, at any procedural stage, including after the final and unappealable decision in the pre-trial phase, which can encompass the litigation in part or in full.

The execution of the terms of voluntary settlement with the objective of preventing or closing disputes will observe, among other criteria established in article 4 of the resolution, the probability of success of the arguments made by the parties, the legal feasibility, and the cost-effectiveness of the settlement for the state.

The procedure for signing the instruments of voluntary settlement must follow the rules established in PGE Resolution 4,710/21, which created the Voluntary Settlement Center of the State Attorney General's Office - NAC/PGE.

^[1] Article 205. The law may require that the proof of payment of a certain tax, when due, be made by means of a clearance certificate, issued upon request by the interested party, containing all the information necessary to identify his person, tax domicile, and branch of business or activity, and indicating the period to which the request refers.

Sole paragraph. The clearance certificate shall always be issued in the terms in which it was requested and shall be supplied within ten (10) days of the date the request is received at the office.

Article 206. The certificate stating the existence of debts not yet due, in the course of executive collection in which attachment has been performed, or whose enforceability is suspended, has the same effects as those provided for in the prior article.

^[2] Article 191. By mutual agreement, the judge and the parties may set a calendar for the performance of procedural acts, when applicable.

Paragraph 1. The calendar binds the parties and the judge, and the deadlines stated therein shall only be modified in exceptional, duly justified cases.

Paragraph 2. Notification of the parties for the performance of a procedural act or the holding of a hearing whose dates have been designated in the calendar is dispensed with.

^[3] Article 2. The execution of an NJP shall be oriented so as to promote:

I - reduction of litigiousness and less onerous collection instruments;

II - efficiency in the collection of outstanding debt;

III - stimulating tax compliance;

IV - the parties' autonomy of will;

V - procedural cooperation and legal security;

VI - adjustment of collection instruments to the financial capacity of the State's outstanding debt debt debtors;

VII - fair competition among debtors; and

VIII - publicity, impartiality, and public interest.

Article 3 - the execution of an NJP may be conditioned on a demonstration of interest of the public entity in the clauses of the deal, considering:

I - the economic and financial capacity of the debtor;

II - the debt profile;

III - the advantageousness to the Revenue Service, manifested, without prejudice to other cases, by means:

1. Of the provision of a fixed term for settlement of debts;
2. The offering of sufficient and liquid guarantees;
3. Comparison with the time, costs, and prospect of success with the usual administrative and judicial collection strategies; and
4. The prospect of the debtor's return to tax compliance including as to prior debts.

Category: M&A and private equity

Climate change and the growing concern of companies to foster sustainable practices and increasingly solid governance lead the financial and capital markets around the world to dedicate more and more attention to analysis and incorporation of ESG (environmental, social, and governance) aspects in risk assessment processes and/or investment opportunities.

The scenario is no different in Brazil. The Brazilian Association of Financial and Capital Markets Entities (Anbima), a self-regulatory entity and a spokesperson for the market, shows increasing concern with the topic, especially when applied to investment funds and their asset managers.

The first initiative in this direction is from January of 2020, when Anbima published the ESG Guide | Incorporation of ESG aspects in investment analysis. The publication governs ESG concepts and national and global performance indicators, outlined the panorama of the Brazilian and world industry, besides presenting recommendations of essential requirements to be observed in investment policies implemented by managers.

In this scenario, to prepare the ESG policy, Anbima recommends that managers observe, at least, the aspects below:

• The asset manager that wants to implement ESG aspects in its investment analysis must disclose, clearly and objectively, how the criteria are incorporated into the investment policy, containing the rules, procedures, and controls for the implementation and maintenance of this type of investment. It is recommended that the document contain at least the following information:

• list of funds that adhere to the ESG policy;
• total ESG assets under management;
• employees responsible for ESG analysis and management, as well as assignment of responsibilities;
• ESG factors that are considered relevant and are the focus of investments;
• indicators used to assess ESG issues;
• procedures adopted for the acquisition and monitoring of ESG assets;
• the governance adopted and procedures implemented, including the voting policy and the criteria for divestment of assets that do not meet the requirements of the ESG investment policy; and
• frequency of review of the manager's investment policy.

• Without prejudice to its responsibility, the asset manager may hire third parties to help in the evaluation or in the monitoring of the ESG issues of the assets under management.

• Also without prejudice to its responsibility, the asset manager may also set up a committee or body that is responsible for approving the acquisitions and monitoring of ESG assets for the investment funds under its management. In the event it is set up, the following is recommended:

• establish reporting, including hierarchy and authority;
• define the frequency with which the meetings will be held;
• document the decisions and resolutions passed; and
• file the documents on which the decisions were based.

• It is recommended that the institution responsible for implementing the ESG policy publish the document on its website and keep it updated, stating the effective date and the date of the last revision. In any case, the ESG policy should be reviewed periodically and, whenever the conditions, environment, and assumptions on which it is based change significantly and materially, its content should be readjusted.

Anbima recognized, however, that the investment strategies widespread in the market show that there is no specific pattern. Thus, the information listed in this first guide should serve only as a guideline. It is up to the manager to adapt them to its needs.

Rules for fixed income and equity funds published in January of 2022

On January 3 of this year, the self-regulatory body turned its attention to the investment fund industry specifically and issued the Rules and Procedures for Identifying Sustainable Investment Funds (SI) manual. The document establishes rules, criteria, and procedures to be mandatorily observed only by fixed income and equity funds, and their respective managers, that opt to:

• identify their funds as sustainable investment funds in Anbima's database (those that have sustainable investment as an objective); or

• disclose in publicity materials that the so-called "ESG Issues" are considered in their investment policies in achieving their various objectives (e.g. for better identification of risks in asset analysis).

The manual's determinations are effective as of the date of its publication and must be implemented by the participating institutions within 180 days.

In February of this year, Anbima published the ESG II Guide | ESG Aspects for Investment Fund Managers and for Investment Funds, with the double function of supplementing the first guide (with updated information on the market panorama and international references on the matter) and helping investment funds, from the equity and fixed income classes (at this first moment), identified or that intend to identify themselves as sustainable investment funds (and their respective managers) to interpret and comply with the determinations found within the rulebook.

The ESG II Guide emphasized that the manager's responsibility is given to the extent that the choice to work with sustainable products, or products that consider ESG issues, involves a process incorporated into management, unlike other types of funds whose characteristics are determined mainly by the asset classes that make up their portfolios. These criteria, however, are not related to the managers' (as companies) internal sustainability policies, but rather to their policies, procedures, and structure aimed at incorporating ESG factors into their investment analysis and management processes.

Anbima's second ESG guide also brings in specific rules applicable to the asset manager, such as the obligation to prepare and maintain on its website a document containing guidelines, rules, procedures, criteria, and controls that will be adopted by the institution (or, alternatively, by the entire conglomerate or economic group) on the integration of ESG and/or sustainable investment issues.

In addition to the criteria to be applied to the manager, the designation of a fund as sustainable (SI) depends on a set of requirements explained in the rulebook (to be checked with the fund itself), as detailed below:

• Regarding the fund's commitment to sustainable investment:

• include in its name the suffix “SI" (sustainable investment);
• make explicit in its bylaws a summary of the fund's sustainable investment objective; and
• demonstrate the alignment of the portfolio to the SI fund's sustainable investment objective and that the remaining or temporary investments "do no harm" to that purpose.

It is important to emphasize that Anbima has not determined prescriptive criteria, such as minimum percentages of composition or indication of acceptable methodology, because it understands that various combinations of portfolio and management can produce similar results in achieving a sustainable investment objective. In any case, the manager should establish parameters for assessing portfolio alignment and potential damage to the IS Fund's objective.

• Regarding the continued actions taken:

• adopt and disclose an investment strategy that includes, at a minimum: the methodology used to achieve the sustainable investment objective(s) of the SI fund; the reference source(s) of information used in accordance with that methodology and the manner in which it is processed; and other tools employed that complement or support that strategy;
• identify possible limitations in the methodologies used with a view to the SI fund's objectives, including those related to data processing and the tools used;
• adopt and disclose due diligence actions to ensure the investment objective(s) of the SI fund in relation to the constraints identified (e.g., the manager can explain how it protects itself against potentially damaging, or unaudited, information, and should disclose how it ensures conflict management in hiring ESG rating agencies, which may also provide advisory services to the companies or funds it targets for assessment);
• present what material actions, metrics, and/or indicators are used to monitor the SI fund's investment objective(s);
• adopt and disclose systematic engagement processes with the issuers of the assets comprising the portfolio on relevant issues, in order to achieve the SI fund's objective(s); depending on the strategy chosen, the manager may be required to play a prominent role as a driver of best social and environmental practices and governance in the investee companies (engagement that can be practiced by both equity investors and debt security holders); and
• if the asset manager has voting power in an investee's decision-making body, follow the "Rules and Procedures for Exercising Voting Rights at Meetings No. 02", of May 23, 2019, and adopt voting practices that are in harmony with the SI fund's objective(s) (proxy voting), remembering that Anbima's Third Party Asset Management Code has rules in this regard.

• In any case, the indicators and/or metrics defined for the purpose of verifying the performance of the SI fund regarding its sustainability objective, the limitations of its methodology, and/or the data used, and the verification of the "do no harm" principle on the allocation of resources of the portfolio must be registered and monitored over time.

• Disclose, in a clear, objective, and up-to-date manner, in the SI fund's advertising material, its sustainable investment objective(s), and the strategies and actions used to pursue and monitor that objective(s) to provide transparency to the investor.

• Ensure, if an index is used as a reference, that it is also aligned with the sustainable investment objective(s) of the SI fund. The manager may replicate indexes that incorporate sustainability criteria, refine an existing indicator, build a proprietary index, or actively engage with the companies in the index around sustainability issues. The methodology of the indicator or the one adopted must be formalized, and the performance of the index in relation to the fund's objective must be monitored, as well as the limitations previously identified.

• Have a resource manager that complies with the rules of the manual. The sustainable investment objectives of the SI manager and the SI fund, as well as the strategies and actions used to pursue and monitor this purpose, should be reported in a clear, objective, and up-to-date manner in the SI fund's documents.

Although the manual of Rules and Procedures for the Identification of Sustainable Investment Funds (SI) is intended only for fixed income and equity funds, it is possible that similar criteria will be published and applied by Anbima for other types of funds, such as multimarket and structured funds (equity investment funds - FIPs, credit rights investment funds - FIDCs, and real estate investment funds - FIIs), helping the segment and investors to advance in this agenda.

Category: Labor and employment

Decree 50,308/22 published on March 7 by the municipality of Rio de Janeiro removed the requirement to wear face masks to protect against covid-19 for access to and remaining in closed environments, extending the loosening started by the municipality in October of 2021, when the removal of this protection in open environments was authorized.

However, the change authorized by the city of Rio de Janeiro, the first capital to adopt the measure, does not necessarily mean the end of the obligation to wear protective masks in the workplace.

This is because the interministerial ordinance MTP/MS 14/22, which governs the use of face masks against covid-19 by employees in the work environment, remains in effect. Considering the Federal Government's exclusive competence to legislate on labor matters, and the Ministry of Labor and Employment's competence to regulate such matters, a municipal standard cannot override and alter a labor rule promulgated by the Federal Government, under penalty of direct violation of the Constitution.

It should be noted that the STF decided, in the analysis of a direct action of unconstitutionality, that the competence to take measures against covid-19 is concurrent, and the most restrictive measure must always prevail.

Considering the competence over labor issues and the prevalence of restrictive measures, we understand that employers should, until the states are aligned on the issue, maintain the use of masks in the workplace.

We also remind you that the costs related to the masks cannot be passed on. It is necessary to provide them to employees.