Publications

Category: Real estate

Fatima Tadea Rombola Fonseca, Vagner Araujo and Luiza Indio

Published in 2017, Law No. 13,465 established an important instrument and legal framework in the context of public policies aimed at land regularization of consolidated informal urban centers, the Reurb (Urban Land Regularization). This regularization can be total or partial and aims at providing ownership title to the occupants of these spaces, granting legal certainty through the individualization of real estate certificates of title and the updating of the property before the registry office of real estate.

Although the legislation is relatively recent, it is noticed that Reurb already has examples of practical application in several regions, such as the state of Minas Gerais (MG) and the Federal District (DF). Only in the region of Planaltina (DF), there are 72 Projects of Reurb, among which stands out the project of the urban nucleus Estancia Mestre D'armas I, which describes the regularization of an area of 271,743 hectares, benefiting 40,761 inhabitants of up to 3,267 residential lots and 927 residential and/or commercial lots, among others. In the city of Coronel Fabriciano (MG), the Reurb project developed by the municipality reached the registration of 247 units, of the 2,000 plots planned, in just 23 days.

The promotion of a Reurb begins with the request of the interested party to the municipality where the urban nucleus that is to be regularized is located. This protocol can be done by individuals, legal entities (including developers and allotment companies), entities of the Federation, the Public Defender's Office (on behalf of hyposufficient beneficiaries) and the Public Prosecutor's Office. The process is conducted by the municipality, who will be responsible for the relocation and resettlement of occupants whenever necessary, such as in case of irregular occupations of degraded areas or risk areas.

This instrument can be used by both the government and the private sector, considering that, as said before, allotment companiesand real estate developers can request the Reurb directly to the municipality, presenting the respective project and the documents required by law. The Reurb project, however, must comply with certain legal criteria to be approved, under penalty of rejection.

In practice, the law creates two modalities of operationalization of Reurb: one specific for informal urban centers occupied predominantly by low-income population (Reurb-S) and another for other situations of specific social interest (Reurb-E). The economic criterion of the Reurb-S is fixed by municipal law and may undergo variations to suit the territorial reality of which Reurb will be operated. On the other hand, The Reurb-E will be proposed in cases where the economic criterion adopted in the previous modality is not applied.

Reurb's application must be accompanied by specific documentation for its evaluation to be feasible, such as: preliminary study of non-conformities and the legal, urban and environmental situation of the area to be regularized; urban project and physical schedule of services and implementation of essential infrastructure works; and urban, environmental and other compensations, when any, defined at the time of the approval of the land regularization project. The last item reinforces the mixed objective of Reurb, which involves not only land regularization for the occupants of the area, but also the proposition of solutions for non-conformities and environmental and urban issues affecting the informal nucleus analyzed, which, in the end, should be funded by the municipality itself or by the applicant, depending on the modality of Reurb.

It will be up to the municipal government to approve, or not, land regularization project. In cases of approval, it will take place by formal and public act, which will matter in the issuance of the certificate of land regularization. The last stage of the project consists in the formalization of the real right of the owners of the properties, which will take place through the registration in the registry of real estate, through the presentation of the certificate of land regularization and the land regularization project.

For effective approval, the Reurb project must necessarily include a very well-structured technical and legal documentation and, mainly, serve the purpose of urban regularization provided for in the legislation. After four years of validity, the instrument still has high potential for application in the national territory by public and private entities. It is up to the real estate market to identify business development opportunities that can, at the same time, target profit and have enormous social impact.

Category: Infrastructure and energy

Alberto Faro, Laura Souza, Felipe Baracat and Fernanda Quiroga

Green hydrogen is a market with an estimated value of $2.5 trillion by 2030. An opportunity is open up for Brazil, which is one of the countries with the highest potential for renewable electricity generation in the world and with one of the lowest marginal production costs. To take advantage of it, it will be necessary to create national strategies to foster the development of this market.

In this e-book, we present the main characteristics and perspectives of the green hydrogen sector in Brazil. Machado Meyer's Infrastructure team has been actively working in this market and is proposing a series of initiatives that may be adopted in Brazil with the aim of fostering the sector. With this publication, we begin a series of articles, which will be published on the subject on a weekly basis. 

Category: Tax

Due to the severe and persistent financial difficulties faced by the Economy of Rio de Janeiro in 2017, the state of Rio de Janeiro signed the Fiscal Recovery Regime (RRF) with the federal government. Approved by Complementary Law No. 159/17, the RRF was established to give states in severe financial imbalance instruments to adjust their accounts. Thus, the state of Rio de Janeiro could have access to instruments such as:

• Rfull deduction of benefits related to debt contracts administered by the National Treasury for up to 36 months;
• Temporary suspension of legal requirements for the contracting of credit operations, as well as the limits and determinations applied when non-compliance with the limits established for personnel expenses and consolidated debt. In relation to personnel expenses, the deadline for the state to recomply with the legal limits becomes that of the RRF;
• Suspension of the need for proof, for voluntary transfers, that the state is up to date with the payment of taxes, loans and financing due to the Union, with the accountability of resources received and compliance with the limits of consolidated and furnished debts, credit operations, including in anticipation of revenue, registration in Leftovers payable and total expenditure on personnel; and
• Possibility of contracting credit operations with Union guarantee aimed at financing a voluntary staff shutdown program.

In order to have their tax recovery plans approved, states must make a commitment to restrict the increase in expenses and fulfill their obligations in accordance with the conditions established in Complementary Law No. 159/17, among which are the impossibility of:

a) granting adjustments to civil servants and public and military employees in addition to the annual review provided by the Federal Constitution;

b) creation of a position, employment or function involving an increase in expenditure;

c) change in career structure involving increased expenditure;

d) admission or hiring of personnel, subject to the repositions of management positions that do not result in increased expenditure and those resulting from vacancy of effective or lifetime position;

e) conducting a public tender, with the possibility of vacancy;

f) creation or the increase of aid, advantages, bonuses, allowances, representation funds or benefits of any kind to civil servants and civil servants and military personnel;

(g) the creation of compulsory expenditure of a continuing nature;

h) adjustment of mandatory expenditure above the IPCA or the annual change in net current revenue;

i) granting or expanding an incentive or benefit of a tax nature from which revenue waiver sits, with the exception of those granted pursuant to Art. 155, §2º, item XII,(g) of the Federal Constitution.

The postulant state has to present its Fiscal Recovery Plan, which, once approved, formalizes the program's support. The purpose of the presentation of the document is to seek the rebalancing of public accounts to meet the guidelines of the Fiscal Responsibility Law.

In the specific case of the Tax Recovery Plan signed by the state of Rio de Janeiro, the request was made in 2017 for three years, extendable for the same period. To increase revenues and reduce expenditure, the state forced itself to authorize the privatization of companies in the financial, energy and sanitation sectors; establish supplementary pension scheme; reform of pensions; review tax benefits; and limit expenditure growth, among other measures.

Even before the edition of Complementary Law No. 159/17, which instituted the RRF, the states had already signed, within the scope of Confaz, the ICMS Agreement No. 42/16, which authorizes bothsuch as the Federal District to create conditions to take advantage of incentives and benefits related to ICMS or reduce its amount.

Based on this agreement, the state of Rio de Janeiro issued Law No. 7,659/17 to impose on Rio de Janeiro taxpayers to enjoy tax benefit a deposit equivalent to 10% of the benefit to the State Fiscal Balance Fund (FEEF).

Expired the deadline (31/12/2020) provided to allocate 10% of the tax benefits to the FEEF and in due to the intense tax litigation filed by taxpayers against this requirement, the state of Rio de Janeiro, based on Complementary Law No. 159/17, issued Law No. 8,645/19 and created the Temporary Budget Fund (FOT) which, in reality, is basically the FEEF with some changes.

According to Article 10 of Law No. 8,645/19, the need to contribute to the FOT will persist while the Fiscal Recovery Regime of the State of Rio de Janeiro is in force:

"Art. 10 This law comes into force:

I - from January 1, 2020 and will take effect while the Tax Recovery Regime is in force - RRF"

However, in spite of its participation in the RRF and due to the systematic difficulty in fulfilling the considerations assumed in its plan, the state of Rio de Janeiro requested to the Supreme Court (STF), in mid-December 2020, the suspension of its RRF, which came to be deferred by the then President Justice of the Supreme Court, Luiz Fux.

Due to the widespread difficulty of states that had their fiscal recovery plans accepted by the federal government to comply with severe constraints, the National Congress issued Complementary Law No. 178/21, which implemented adjustments in the regulation of the RRF.

In April 2021, the state of Rio de Janeiro requested the Supreme Court that its Tax Recovery Regime remain suspended until there was effective regulation of the new RRF being drafted in the federal government, as established by Complementary Law No. 178/21.

The rapporteur designated was Justice Dias Toffoli, who, based on cooperative federalism, authorized the state to suspend the payment of debt to the federal government until the new RRF is effectively regulated:

"I have that the current scenario of the national economy needs an even greater effort among the entities of the federation. The so-called 'cooperative federalism' has never been more in vogue, and since the Union is competent to regulate the provisions brought by Complementary Law No. 178/21, it should not shie away from fulfilling its role in order that the recovery plans and programs offered to state entities are effective and possible, thus avoiding the collapse of the states of the federation." (Original Civil Action No. 3,457).

In June 2021, the state of Rio de Janeiro announced that it has joined the new RRF and, with it, until six months to submit a new Tax Recovery Plan, which will have to be duration of ten years. With the joining, the state will no longer pay debts with the Union and guaranteed by the federal government in the first 12 months. In the following nine years, the installments will be gradually resumed until the return of the full amount at the end of the plan.

That is, since December 2020, the state of Rio de Janeiro has its RRF suspended. Nevertheless, the contribution to the FOT continues to be demanded monthly, which we understand is not consistent with the principles of purpose, morality and transparency, since deposits for the FOT are intended for fiscal balance and should only be required as long as the RRF is in full force.

How well highlights Fernando Facury Scaff, the taxes that have linked collection, such as the deposit for the FOT, whose collection is related to the fiscal balance, must observe the link between their revenues and corresponding expenses: "Linking stems from the existence of a legal link between revenue and expenditure, so that there is a specific relationship between what is collected and what is spent the amount collected."

It is valid to clarify that we are not arguing the illegitimacy of the collection of the deposit to the FOT due to the untying of the proceeds of its collection. We know the decision of the Supreme Court in Theme 846 by the constitucionality of the maintenance of a given social contribution when the object for which it was instituted persists.

The point is, since the deposit for the FOT is linked to the fiscal recovery of the state, while the determining reason of its institution - the existence of the RRF in progress - is suspended, either by force of court order issued by the Supreme Court or the lack provided by the new RRF, there is no legal basis or reason that justifies the collection of the deposit. The imposition of the FOT, therefore, should be equally suspended, because only in this way will the principles of purpose, linkage, morality, transparency and good faith with rio's taxpayers be observed.

Category: Banking, insurance and finance

The Climate-Related Financial Disclosures Task Force (TCFD), an institution created in 2015 at the G20 request to promote recommendations for disclosures related to climate change, issued in 2017 recommendations to financial and non-financial companies seeking to make consistent, comparable, clear and efficient some voluntary disclosure information.

TCFD's work aims to provide more transparency to risks and opportunities related to climate change to enable better investment, credit and insurance procurement decisions, and to improve understanding of the concentration of carbon-related assets in the financial sector.

After becoming a supporting institution of TCFD in September 2020, the Central Bank of Brazil launched its sustainability agenda, with even greater scope than the recommendations of the task force, because, in addition to contemplating the management of climate risks, it addresses the management of social and environmental risks, the promotion of sustainable finance and the integration of sustainable variables in the decision-making process of the Central Bank.

The initiative of the federal authority is very welcome, for integrating in its strategy rules of risk management and social and environmental responsibility. In this sense, Central Bank's policy also seems to embrace the acronym of order at the moment: ESG (Environmental, Social and Governance), which reflects the need for an analysis capable of integrating, in addition to financial return, issues of environmental, social and governance character.

For example, the Central Bank has put proposals in public this year on:

• sustainability criteria applicable in the granting of rural credit and ban access to rural credit for socio-environmental issues (Rural Credit Consultation);
• definitions of social risk, environmental risk and climate risk and requirements for its management (Risk Management Consultation); and
• disclosure of social, environmental and climate risk and opportunity reporting by financial institutions (Consultation Risk and Opportunity Report).

With regard to the Rural Credit Consultation, the proposed standards divide transaction into three segments:

• those that can be considered sustainable according to the list (pointed out as very comprehensive because it can include practices far from sustainability);
• those that cannot receive rural credit (which includes only areas enbared in the Amazon biome); and
• intermediaries, who can receive rural credit, but with warning to financial institutions that the transaction represents environmental risk (easing past restrictions and generating legal uncertainty for the financier).

A novelty already expected by the market in the proposal of the Rural Credit Consultation is the integration of government databases and the creation of the Bureau of Sustainable Rural Credit, whose information can be provided by authorization of the borrower, within the principles of open banking.

The Risk Management Consultation provides that social, environmental and climate risks should be considered in the risk management structure of financial institutions and updates the Social and Environmental Responsibility Policy.

Social risk includes the possibility of losses generated, directly or indirectly, by events associated with practices of violations of fundamental rights and guarantees or acts harmful to collective interests, such as acts of harassment, prejudice, discrimination, child labor, work in conditions analogous to slavery, among others.

Environmental risk includes the possibility of losses to institutions caused, directly or indirectly, by events associated with environmental degradation acts or activities, including excessive use of natural resources, or environmental disasters resulting from human intervention – including air, water or soil pollution, large-scale environmental destruction , deforestation, forest fire or forest fire.

In turn, climate risk is divided into:

• resulting from the possibility of losses to the institution caused, directly or indirectly, by events linked to the transition process to a low-carbon economy, in which greenhouse gas emissions are reduced or offset (changes in legislation, technological innovations, negative perceptions of any Stakeholder on the institution's contribution to a low-carbon economy); and
• physical, possibility of losses by events associated with extreme environmental conditions caused by changes in weather patterns (weather, long-term environmental changes, human migration by such events).

The Risk and Opportunity Report Consultation proposes mandatory disclosure of the report by financial institutions addressing qualitative aspects of TCFD's recommendations with a focus on governance, institutions' strategies and social, environmental and climate risk management. In a second moment, Central Bank intends to require quantitative aspects focused on goals and metrics.

Even if some of the proposals contained in the public consultations can be improved, it is certain that the standards that may be implemented should contribute to the financial market in general to take more environmentally, socially and governance-responsible practices. This applies both to the granting of credit and to the channeling of investments and is another important step in addressing the great socio-environmental and climate challenges of the coming years.

Category: Litigation

The need for proof of bad faith for double refund of collection carried out improperly against consumers (popularly referred to in the legal universe as double repetition) is the subject of controversy in the Superior Court of Justice (STJ) for a long time.

The debate was based on the distinct interpretations that the First Section and the Second Section of the Superior Court gave to the theme, based both on the wording of the single paragraph of Article 42 of the Consumer Protection Code^[1] (CDC) as to the consolidated understanding that such a requirement is necessary for cases governed by Article 940 of the Civil Code^[2] (CC).

For the First Section, whose jurisdiction encompasses the relations of public law and, consequently, the consumer relations involving the State and public service concessionaires, it was not necessary to prove bad faith to apply the penalty provided for in the sole paragraph of above mentioned Article 42, because the provision "unless there is justifiable deception" was interpreted as "when it does not arise from intentionality (bad faith) or guilt in the conduct of the service provider".^[3] Thus, considering that it is a consumer relationship, the First Section understood that the penalty provided for in the CDC would apply, with consequent refund in double the amounts charged, when the intention (intentional or intentional omissive conduct) or when the fault (commissive or omissive conduct resulting from malpractice, recklessness or negligence) of the service provider is identified.

On the contrary, the Second Section of the Superior Court, whose competence encompasses relations of private law – consequently influenced, therefore, by the long understanding of the need to demonstrate bad faith to apply the same sanction in the relations governed by the CC (Article 940, reproduced above) – had an understanding by the requirement of demonstration of bad faith of the supplier for double repetition in consumer relations. In this case, it would not be enough to blame the supplier who charges a debt improperly, since "the dominant understanding in this Superior Court is to admit the repetition of the refund of collection in the simple form, and not twice, unless proof of bad faith".^[4]

Given the divergent interpretation between the two sections of the STJ, the question was submitted to Theme 929/STJ for solution: Discussion on the hypotheses of application of double repetition provided for in art. 42, paragraph, single paragraph, of the CDC.

Initially, the dispute would be represented by Special Appeal No. 1,517,888/RN, which was later replaced by Special Appeal No. 1,585,736/RS. However, in a trial session held on 02/20/2019, the Superior Court decided to disapprove this second appeal as representative of the controversy of Theme 929, thanks to the understanding of the STJ Grand Chamber that it would be more appropriate to proceed with the judgment of the Motion to Resolve Divergence No. 1.413.523/RS, which was on the same subject and was already guided by decision.

Thus, in judging the Motion, on 10/21/2020, the Grand Chamber stated the following thesis:

With these considerations, it is known from the Embargoes of Divergence in order, on the merits, to establish the following thesis: THE DOUBLE REPETITION, PROVIDED FOR IN THE SOLE PARAGRAPH OF ART. 42 OF THE CDC, IS IT APPROPRIATE WHEN IMPROPER COLLECTION CONSTITUTES CONDUCT CONTRARY TO OBJECTIVE GOOD FAITH, I.E., IT MUST OCCUR INDEPENDENTLY OF THE NATURE OF THE VOLITION ELEMENT.

This judgment of the Motion to Resolve the Divergence by the Special Court would already represent a binding precedent, pursuant to Article 927, item V, of the Code of Civil Procedure, being sufficient to consolidate the understanding on the subject both in the Superior Court Sections and in the lower courts.

Despite this, in order to give greater legal certainty to the issue, Minister Paulo de Tarso Severino, in a decision given on May 14 of this year, voted for the allocation of Special Appeal No. 1,823,218 as representative of the controversy of Theme 929, referring it to trial by the Grand Chamber.

In practice, the sedimentation of understanding should benefit consumers. This is because, with the previous understanding, depending on the service whose debt was sought to complain, it was necessary to prove the bad faith of the supplier so that the double refund was due (the simple refund, that is, only the amount charged, already depended on mere demonstration that the collection was undue). With this new understanding, however, it will be enough to prove the agent's guilt to obtain the refund in double undue charges made in consumer relations.

Even if confirmed, the dispensation of proof of bad faith will be exclusive to consumerist relations. In the undue collections occurred in relationships governed by the CC, it will continue to be necessary to prove the existence of bad faith, which is supported by judgments of repetitive appeals by the STJ^[5] and Precedent no. 159 of the Supreme Court.^[6]

With the imminent sedimentation of this understanding, it will become even more relevant for organizations and people who appear as defendants in lawsuits on the subject the presentation of technical and detailed defenses. Such defenses can succeed in demonstrating, for example:

• the non-application of the CDC, but of the CC - either because it is not a consumer relationship (according to the theories most used for defining consumers and suppliers), or because the requirements for application of the CDC by equality are not present.
• the existence of evidence that the collection was due, or that it falls within the exception provided for in the CDC, resulting from a justifiable error that does not constitute a fault or guilt.
• that the legal nature of the claim sought by the plaintiff in the judicial proceedings is not improper debt collection, but of damages or restitution for unjust enrichment, for example.

The acceptance of any of these arguments could lead to the conviction for simple restitution of the amount charged (and not double) or even the dismissal of the claim, hence the relevance of the theme.

^[1] Art. 42. In the collection of debts, the defaulting consumer will not be exposed to ridicule, nor will he be subjected to any kind of embarrassment or threat. Single paragraph. The consumer charged in an undue amount is entitled to a repetition of the default, for an amount equal to twice what he has paid in excess, plus monetary correction and legal interest, unless justifiable deception is inplace.

^[2] Art. 940. He who demands debt already paid, in whole or in part, without repaying the amounts received or asking for more than is due, will be obliged to pay the debtor, in the first case, double what has been charged and, in the second, the equivalent of what requires it, unless there is a prescription.

^[3]Brazil. Superior Court of Justice. Special Appeal No. 1,084,815/SP - São Paulo. Rapporteur: Min. Denise Arruda. Available in: <https://processo.stj.jus.br/processo/pesquisa/>. Access: 06 Jun. 2021.

^[4] Brazil. superior court from justice. Regimental Interlocutory Appeal Injury No. 570.214/Mg – Minas Gerais. rapporteur: Min. Nancy Andrighi. Available in: <https://processo.stj.jus.br/processo/pesquisa/>. Access in: 06 Jun. 2021.

^[5] Brazil. superior court from justice. Special Feature No. 1.111.270/Pr – Paraná. rapporteur: Min. Mark Buzzi. Available in: <https://processo.stj.jus.br/processo/pesquisa/>. Access in: 06 Jun. 2021.

^[6] Brazil. Supreme Court. Summary No. 159. Excessive collection, but in good faith, does not give way to the sanctions of Art. 1,531 of the Civil Code. Brasília, DF: Supreme Federal Court. Available in: <http://www.stf.jus.br/portal/jurisprudencia/menuSumarioSumulas.asp?sumula=4195>. Access: 06. Jun. 2021.

Category: Corporate

Brazil descended 15 positions in the ranking Doing Business in 2020, taking 124th place in a list of 190 countries.^[1] In its annual survey, the World Bank analyzes and classifies several aspects related to the regulation of business activity and the business environment of these nations. The downfall of Brazil was a cause for concern and prompted the issuance of the Provisional Measure No. 1,040/21, of March 29. Known as MP of the Business Environment, the text aims to improve the position of the country, raising its score in certain indicators, such as opening companies, obtaining electricity, protecting minorities, paying taxes and international trade.

Among the measures to protect minority shareholders, the following changes are highlighted in Law No. 6,404/76:

• need for resolution at a general meeting on disposal or contribution to another asset company, if the value of the transaction corresponds to more than 50% of the value of the total assets of the company contained in the last approved balance sheet, and the conclusion of transactions with related parties that meet the criteria of relevance to be defined by the CVM;
• amendment of the minimum period for the convening of general meetings in publicly held companies, which is now 30 days;
• prohibition of the accumulation of positions of chairman of the board of directors and chief executive officer of the company; and
• participation of independent directors in the composition of the boards of directors of publicly held companies.

Hundreds of amendments were submitted to the MP, among which is the amendment No. 17, which suggests the inclusion of provisions in Law No. 6,404/76 to allow plural voting, a matter that was not provided for in the original wording of the MP. Plural voting consists of the allocation of more than one vote per share of a given class of the share capital of a corporation. Currently, plural voting is expressly prohibited in Brazilian law, which provides for the rule of "one share, one vote", according to Article 110 of Law No. 6,404/76. This provision ensures a certain proportion between the participation in the share capital and the political rights linked to it.

In general, plural voting is a much discussed and controversial topic in corporate law. Through it, the holder is assured an influence on the company's decisions greater than its effective contribution to capital. It should be recognized, however, that this instrument can be important to reconcile the exercise of control of the company with the raising of funds for the development of activities, especially in newer companies, in which the figure of the founding and controlling shareholder is closely linked to the company’s market value. In addition, the prohibition of plural voting in Brazil is considered one of the reasons why some companies decide going public in other markets that allow the plural voting. Therefore, its adoption could lead to retention of investments in the country and greater competitiveness of our stock exchange. 

With regard to amendment No 17, we highlight the following provisions on plural voting:

• General features: it is now allowed to create one or more classes of common shares with plural vote, subject to the limitation of ten votes per share, both in the closed company and in publicly held companies, provided that the creation of the class occurs before the negotiation of shares and securities in an organized market. That is, plural voting will not be allowed to companies that already have registered as publicly held companies before CVM.

• Quorum for the creation of shares with plural vote and right of withdraw: the creation of shares with a plural vote would depend on the favorable vote of shareholders representing at least half of the votes (a) of the voting shares and (b) of preferred shares without or with restricted vote, at a special meeting. Dissenting shareholders are guaranteed the right to withdraw upon reimbursement of their shares.

• Deadline (sunset clause): the plural vote would have a maximum limit of seven years, extendable only once for a period equal to or lower, with the approval of shareholders. The quorum of the extension would be the same as the creation of shares with plural vote, provided that the holders of the shares whose plural vote is intended to be extended should not vote.

• Conversion of shares with plural vote into common shares without plural vote: a hypothesis applicable in the event of transfer of shares to third parties, except in cases where (a) there is an agreement with such third parties with respect to the joint exercise of voting rights, (b) the transferor remains as indirect holder of the shares and in control of political rights, (c) the third party owns the same class of shares with plural vote or (d) the transfer takes place in the fiduciary title regime.

• Prohibited transactions: (a) incorporation, incorporation of shares and merger of a publicly-based company that does not adopt a plural vote in a company that adheres to the plural voting and (b) the partial spin-off of a publicly-held company without a plural vote for the incorporation of a company with a plural vote or incorporation of the spun-off portion into a company with a plural vote.

• Resolutions in which plural voting will not be adopted: remuneration of directors and conclusion of transactions with related parties, according to criteria established by CVM.

The reports delivered by Congressman Marco Bertaiolli welcomed suggestions of the amendments to ensure greater transparency to minorities, including:

• Permission to replace books in closed companies with mechanized or electronic systems (amendment no. 5);
• Reduction of the deadline for convening a general meeting from 30 to 21 days, in first call (amendment no. 163); and
• Inclusion of CvM as authorized person to propose public civil actions claiming damages to investors (amendment no. 211).

In addition, the drafting incorporated the plural vote, substantially in the terms of amendment No. 17, including the limitations of ten votes per share and the rule that allows publicly held companies to create plural-voting shares only before the capital opening. According to the reports, the plural vote would have an initial term of seven years, and could be extended for any period, subject to approval by the same quorum required for the creation of shares with plural vote, excluding the holders of the shares whose plural vote is intended to be extended. The right of withdrawal would also be guaranteed to shareholders who deviate from the resolution of a deadline extension.

The provisions on plural voting would not apply to public companies, mixed economy corporations, their subsidiaries and controlled companies.

The opinion was approved by the Chamber of Deputies (Câmara dos Deputados) on the night of June 23,2021 and proceeds for consideration by the Senate.

Without the intention of detailing the discussions on the advantages and disadvantages of the adoption of plural voting in Brazilian law and the other changes proposed in the wording of MP 1,040, it is necessary to reflect whether:

• corporate law should be changed exclusively to improve the country's ranking in the ranking Doing Business;
• such changes, in particular those of a structural nature, should be implemented via provisional measure, without a broad debate with market players and
• in the specific case of plural voting, it would be up to the law to regulate issues such as the number of votes allowed per share, the duration period and their intransferability.

^[1] The issues examined by the report include data on the degree of difficulty in (i) opening companies, including hiring employees; (ii) installation of the company in a given location (in addition to access to applicable licenses, registration of ownership and obtaining electricity); (iii) access to financial resources, including obtaining credit and protecting minority shareholders; (iv) day-to-day operation, such as tax payment, international trade and government contracting; and (v) business operation, including the Enforcement contract procedures and the handling of insolvency situations.