Publications

Category: Litigation

After a long journey,[1] Law No. 13,709/18, the General Personal Data Protection Law or simply the LGPD, as it is popularly known, entered into force in the Brazilian legal system.[2] Its approval represents a paradigmatic change in the logic of personal data protection in Brazil, with the main purpose of giving broad protection to the informational self-determination of individuals, covering the security and predictability of the treatment given to their data.[3]

The data processing agents,[4] from both public and private spheres, then mobilized to comply with the new legal provisions, especially while the penalties for non-compliance are still under the regime of vacatio legis.[5] In this context, compliance professionals, more precisely those responsible for conducting so-called "internal corporate investigations", fear that their professional scope of action will be somewhat "hindered" by the enforcement power of the LGPD's own rights and principles, namely, the right to access, explain, rectify, delete, and explain data collected, as well as the principles of transparency, security, and accountability.

In fact, the performance of extensive analysis and data collection by private entities on various fronts is of the essence of the investigative activity, such as corporate e-mails, background checks, documentary analysis, assessment of the life style of the investigated party, exploratory and/or confirmatory interviews, among others, and even, during the investigation, sensitive data may be collected.[6] Depending on the interpretation of the law, one can conclude that the LGPD has created obstacles to conducting internal investigations carried out by the organizations. This is because paragraph 2 of article 4 of the law provides that "processing of the data referred to in section III of the head paragraph (processing of data for the purposes of public security, national defense, State security, or the investigation and prosecution of criminal offenses) by a person governed by private law is prohibited, except in proceedings under the supervision of a legal entity governed by public law.”

However, this interpretation would be inappropriate for two reasons. On the one hand, because today there are numerous private, serious, and responsible entities that provide investigative services collecting personal data and information within their clients or publicly available, with the objective of preventing, mitigating, or solving incompatible and/or unlawful conduct engaged in by members of an organization. On the other hand, due to the fact that, in certain situations, this action even results from a legal imposition.[7]

In addition, there are some understandings provided for in the European Personal Data Protection Regulation on the subject of "corporate investigations vs. processing of personal data.” Article 29 WP, in its Opinion 2/2017,[8] has consolidated understandings on corporate investigations in the workplace, providing that the legitimate interest of employers may be invoked as a legal basis for such processing, provided that, among other requirements, the processing is strictly necessary for a legitimate purpose and respects the principles of proportionality and subsidiarity.[9] Along the same lines, recital 47[10] of the European General Data Protection Regulation (GDPR), which expressly states that “the processing of personal data strictly necessary for the purposes of fraud prevention and control also constitutes a legitimate interest of the person responsible for processing such data", should be noted.

It turns out that, according to European understandings on the issue, there is nothing to be said of a prohibition on the processing of data for corporate research purposes. What is discussed there is how these data are processed within the organization and on what legal basis such processing should be rely.

Considering the notable influence that the GDPR exerts on the Brazilian data protection law,[11] nothing allows us to say that internal corporate investigations can no longer be conducted by private legal entities, in obedience to article 4, paragraph 2 described above. On the other hand, it is indisputable that such activities must respect the new law.

Thus, the work of the corporate investigator, specifically regarding the LGPD, must be exercised in good faith and, above all, the principles determined by law, such as transparency, necessity, prevention, and security.

In addition, depending on the type of investigation, it is necessary to choose the most appropriate legal basis for the processing. In most cases, it will be the one provided for in subsection IX of article 7 – “legitimate interest”. But it is possible to envision other scenarios, such as an investigation based on an accusation of committing sexual harassment, made through the entity's reporting channel. In this case, the legal basis provided for in subsection VII of article 7, “for the protection of the life or physical safety of the owner or a third party”, could be properly invoked.

Another example is the processing of data necessary for the controller to comply with a legal or regulatory obligation, as mentioned above. Even sensitive data could be handled in the context of a corporate investigation, as in the case of an investigation initiated based on the suspicion of presenting a false medical report by an employee in order to obtain leave from work. Whatever the legal basis used, however, it is of paramount importance to have documented all data processing records used during the investigation through the preparation of a personal data protection impact report (RIPD).[12] The RIPD has the objective of mitigating risks to civil liberties and fundamental rights of investigated persons and shall contain, at a minimum, a description of the types of data collected, the methodology used to collect and to guarantee the security of the information and the controller's analysis of the measures, safeguards, and risk mitigation mechanisms adopted.[13][14]

Another relevant point is the finding that corporate fraud, at some point, is committed in the digital environment of the organization. Thus, it is essential that some technical care be used to preserve the traces and integrity of the data extracted from the digital environment, in order for the result of investigations to not be questioned in the courts.[15]

In fact, during the process of internal corporate investigations, various kinds of personal data can be accessed and analyzed by a legal entity, in apparent conflict with the provisions of paragraph 2 of article 4 of the LGPD. However, investigating ethical violations and illegal acts proves to be not only an organization's compliance duty but also a legitimate interest in detecting and stopping illegal conduct by the agents involved. The objective is to allow any recovery of damages and losses caused to the organization and to mitigate risks of liability in the criminal, labor, competition, corporate, and other spheres.

In summary, the entry into force of the LGPD appeared at first sight to have created substantial limitations to internal corporate investigations. In truth, however, the law has not brought in limitations, but normative parameters capable of giving legitimacy to the conduct of these activities. Principles such as transparency ensure that investigated parties have clear and accurate information about the data being processed in the course of the investigation. However, the provision and granting of access to such information and data may undoubtedly be delayed if, and for as long as, it is necessary and proportionate to avoid prejudicing the investigations.

In short, it is all a question of adapting and adapting to the new reality. In view of this, the adoption of good practice and governance mechanisms by the organizations is crucial to avoid the risks arising from the massive processing of data carried out during the corporate investigation procedure.

[1] The public and legislative process began in 2010, with the opening of a public consultation on the subject, promoted by the Ministry of Justice, which subsequently resulted in the proposal of PL 5,276/16, annexed to PL 4,060/12, to the House of Representatives.

[2] The LGPD entered into force on September 18, 2020, 24 months after the date of its publication (article 65, as amended by Law No. 13,853/19).

[3] BIONI, Bruno et al (Coords.) Tratado de Proteção de Dados Pessoais [“Treaty on Personal Data Protection”], Rio de Janeiro: Forense, 2021. See p. 327.

[4] According to the law, agents are (i) the controller: the competent authority responsible for decisions concerning the processing of personal data; and (ii) the operator: an individual or legal entity, whether governed by public or private law, who carries out the processing of personal data on behalf of the controller; (article 5, subsections VIII and IX).

[5] The date set for application of the sanctions provided for in the law for companies that fail to comply with the rules, ranging from a warning to a fine of up to R$ 50 million, remains the same as in the original text of the LGPD: August of 2021.

[6] "Article 5. For the purposes of this law, the following definitions shall apply:

[...]

II - sensitive personal data: personal data on racial or ethnic origin, religious beliefs, political opinion, membership in a trade union or organization of a religious, philosophical, or political nature, data on health or sexual life, genetic or biometric data, when linked to an individual;”

[7] As an example, we may cite the provisions contained in article 7, subsection VIII, of Law No. 12,846/13 (the Anti-Corruption Law) and in article 10 of Law No. 9,613/98 (the Anti-Money Laundering Law).

[8]Data Protection Working Party is an advisory body consisting of a representative of the data protection authority of each Member State of the European Union, the European Data Protection Supervisor and the European Commission.

[9] Available at: https://ec.europa.eu/newsroom/article29/item-detail.cfm?item_id=610169

[10] Available at: https://gdpr-text.com/read/recital-47/

[11] The influence of the GDPR on the LGPD is evident. Both texts converge on the limitation of data processing to restricted scenarios, the assertion of data subjects' rights to anonymization and deletion of their data and the strict legal framework of processing possibilities.

[12] According to article 5, XVII, of the LGPD, the personal data protection impact report is the "controller's documentation which contains a description of the personal data processing processes that may generate risks to civil liberties and fundamental rights, as well as measures, safeguards, and risk mitigation mechanisms.

[13] Article 38, sole paragraph, of the LGPD.

[14] In the GDPR, the minimum compulsory elements, as per article 35 (7), are:

• a systematic description of the processing operations intended and the purpose of the processing, including, where appropriate, the legitimate interests of the controller;
• an assessment of the necessity and proportionality of processing operations in relation to the objectives; an assessment of the risks to the rights and freedoms of holders of rights;
• an assessment of the measures envisaged to address the risks, including safeguards, security measures, and procedures to ensure the protection of personal data and to demonstrate compliance with the Regulation, taking into account the rights and legitimate interests of the data subjects and other interested persons.

[15] According to the ISO/IEC 27037:2013 standard, the classification of digital/cibernetic traces must be done through identification, isolation, recording, collection, and preservation of digital evidence.

Category: Tax

The São Paulo state government has issued five decrees that amend the ICMS Regulation (RICMS / SP) and re-establish some of the tax benefits listed in Annex I of the RICMS / SP, as described below:

• Decree nº 65.469 / 21 - Alters item I of article 29 of Annex I of the RICMS, in order to remove the monthly limit for the enjoyment of the exemption on electric energy consumed by the rural establishment, which would come into force on 1/15/2021, thus maintaining the same conditions as the benefit in effect until that date.

• Decree nº 65.470 / 21 - Amends § 7 of article 54 of the RICMS, which aims to maintain the tax burden on internal operations with generic drugs, so that such operations are subject to the rate of 12%, without the application of the supplement of 1.3%.

• Decree No. 65.472 / 21 - Repeals Paragraph 6 of Article 36 and Paragraph 2 of Article 104, both of Annex I of the RICMS, to maintain the full exemption from ICMS in internal operations with natural fruit and vegetables.

• Decree nº 65.473 / 21 - Repeals § 6 of art. 41 of Annex I of the RICMS, to maintain the full exemption granted to internal operations with agricultural inputs.

Decree nº 65.471 / 21 does not refer to tax benefits, but changed article 265 of the RICMS, in order to provide for the mandatory payment of the supplement of the withholding tax for tax substitution for all forms of fixing the calculation basis.

This is an important point because, although the discussion on the legality of the institution of this complementation by ordinary law remains - Law nº 17.293 / 20, which added article 66-H to Law nº 6.374 / 89 - this decree makes it clear that “currently, the RICMS provides for the payment of the supplement only in the event that the calculation basis is the final consumer price, single or maximum, authorized or fixed by the competent authority, and therefore does not apply in situations where the tax is calculated using application of the added value margin or average price surveyed to the consumer ”.

In view of the changes, taxpayers must review the tax rules for their products.

Category: Infrastructure and energy

Maria Fernanda Soares e Victor Hugo Machado

On December 28th, the Public Services Regulatory Agency of the State of São Paulo (Arsesp) published Resolution No. 1,105/20, which establishes the conditions and criteria for the swap of natural gas and biomethane between the piped gas distribution networks in the state.

According to the Arsesp Regulatory Agenda, the regulation of swaps between the local distribution companies was expected to be completed in the second half of 2019. After several submissions by private and public entities in Arsesp Public Consultation No. 17/19 (CP 17/19), the text of the resolution was considered completed and published.

Arsesp Technical Note G 11/19 (NT 11/19) of CP 17/19 divides gas swap into two main types: commercial and operational. NT 11/19 explains that: “A commercial swap is a purely commercial service, defined in contractual agreements in which there are financial transactions generated by different infrastructure assets (networks) and without physical interconnection. [...] An operational swap, on the other hand, differs from a commercial swap in that there are common infrastructure assets or assets physically interconnected between the parties involved. This type of swap allows, for example, the delivery of gas to be done in a virtual counterflow (backhaul), where a user purchases the gas from a supplier that is downstream from the network flow that interconnects them."

According to article 2, XXVIII, of Arsesp Resolution No. 105/20, the operational swap of gas or swap is defined as "use of the distribution system, in which the physical and contractual flows differ, in whole or in part, contributing to the efficient operation of the distribution system", a concept very similar to that adopted by the ANP for the operational swap of gas in the transportation system, provided for in ANP Resolution No. 11/16.

The resolution follows the expansion of the Natural Gas Free Market in the state of São Paulo and arises from particularities of the local gas market. After the restructuring of the 1990s, with the privatization of the piped gas distribution services, the infrastructure of this activity began to be managed by three new concessionaires - GBD, Comgás, and GNSPS - each with different capacity and infrastructure size. Thus, the swap regulation was considered useful by Arsesp to enable the expansion of the capacity utilization of the distribution infrastructure.

The structure of the resolution is mainly practical. The only principle provision of the procedure is presented in article 3 on the "principle of non-discriminatory access of third parties to the concessionaires' distribution systems."

From this point on, the resolution may be summarized as follows: (i) explanation of the procedure; (ii) possibility of operational interconnection of distribution pipelines between different concession areas; (iii) coordinated public request for gas swap; and (iv) possibility of assignment of contracted capacity in the transportation pipelines.

Procedure

In articles 4 to 6, the regulated procedure for gas swap is presented. It begins with the presentation of the "Letter of intent for the use of the distribution system for swaps" to the concessionaires. Within a maximum period of 30 days, the concessionaires must submit their response in a document called a "Swap Proposal" or refuse to fulfill the gas swap, based on technical and economic parameters, in addition to presenting possible alternatives to make the activity viable.

The reply must be sent to Arsesp no later than 15 days after sending to the interested parties. The agency shall calculate, on a case-by-case basis, the swap rate applicable to the parties concerned, triggering the negotiations arising from the swap proposal.

After the negotiations, the concessionaires must submit the "Contract for use of the distribution network to swap gas", in accordance with article 5 of the resolution. The swap tariff applied, together with the characteristics of the gas swap, will be published by means of a specific Arsesp resolution.

Interconnection

In articles 7 and 8, the resolution provides for the interconnection of distribution pipelines between the concession areas in order to make gas swaps feasible, with a view to eliminating contract barriers and boosting the use of distribution capacities.

To this end, concessionaires must submit an "Interconnection Agreement" to Arsesp containing the applicable distribution tariffs and other terms and conditions relating to third party access to the distribution system. This agreement depends on an analysis by Arsesp on the viability of the interconnection, based on the economic and financial grounds presented by the interested parties. Any conflicts concerning these interconnections would be mediated by the regulatory agency.

Coordinated public solicitation

In article 9, the possibility is presented of Arsesp requesting that concessionaires carry out a process of "coordinated open-seasons for gas swap", with the condition that several free and/or partially free-market users demonstrate the intention to carry out a swap.

This is a procedure made by concessionaires, with guaranteed access to all free-market users, partially free-market users, producers, self-producers, self-importers, traders, or potential interested parties. Its purpose is to verify possibilities for gas swap by contracting distribution capacity.

The request seems to follow the pattern of a typical open-season, in which a public notice issued by the press would present the requirements for declaration of interest. It would also contain the available capacity of the distribution systems, accompanied by the physical flows and technical and operational characteristics of the system and the main commercial conditions of the future "Contract for use of the distribution network for gas swap."

This request would aim to detect not only possibilities of gas swap in the state, but also the possibility of interconnecting distribution pipelines in different concession areas. The open-season process must be carried out in a coordinated manner by the three concessionaires. After completion, the concessionaires should generate a database of users interested in the gas swap and, from the information extracted from this database, present the swap proposal to whomever expresses interest.

Capacity assignment

Article 10 regulates the transfer of the concessionaires’ contracted transport capacity in the transportion system, maintaining the contractual rights with the transporter with whom they have a firm gas transportation agreement in force. This provision would make possible the swap of gas between different areas by means of transportation pipelines, respecting ANP’s rules.

Possible impacts

In view of the unprecedented and recent nature of the resolution, we can only await the verification of its practical effects for the market. In the public consultation that led to the resolution, various entities in the gas sector had spoken out against the regulation. Issues of overlap between state and federal jurisdictions, with regard to transport systems, for example, have come to be raised as relevant points of concern by important players in the sector.

Category: Tax

The Brazilian Internal Revenue Service (RFB) clarified, through the Cosit Consultation Solution No. 148, of December 21, 2020, the limit of the application of the tax benefit instituted by article 5 of Law no. 13,982/20, which allowed deducting from the transfer of contributions to Social Security wages paid in the first 15 days to employees on leave due to contamination with the new coronavirus (Covid-19), up to the contribution salary ceiling to the General Social Security Policy (RGPS), pursuant to article 60, paragraph 3, of Law No. 8,213/91. Launched in April of 2020, the benefit was one of the exceptional social protection measures adopted to confront covid-19.

In the case at issue, the consulting firm questioned the possibility of deducting the amount paid to a pregnant employee who submitted a medical certificate for leave from work for 14 days, a period which did not give rise to the granting of the sick benefit.

In answering the question, the RFB took the view that the deduction of wages paid during the first 15 days of absence from work was restricted to cases in which the sick benefit was subsequently granted by the INSS. To support this understanding, the body claims that this was the intention of the rule when making express reference to article 60, paragraph 3, of Law No. 8,213/91, which disciplines the granting of sick benefits due to work disabilities.

The RFB argued that, if this had not been the intention, the rule would have allowed deduction of the amount owed by the company during the employee's leave due to the contamination by covid-19 without any mention of the legal provision dealing with the granting of sick benefits.

Thus, the understanding that the payment of wages in the first 15 days of the employee's leave with covid-19 is the responsibility of the employer, who will only be authorized to deduct it from the transfer of contributions to Social Security "as long as the employee has been granted sick benefits.”

Given the binding effect of consultation solutions (article 9 of IN No. 1,396/13), this indicates that the RFB must charge companies that avail themselves of the tax benefit in cases in which an employee contaminated by covid-19 has been on leave from work for less than 15 days or has sick benefits denied by the INSS. The amount of the tax due will be required plus penalty and interest.

In our understanding, the interpretation manifested in the consultation solution does not align with the legislation in force, as article 5 of Law No. 13,982/20 did not condition the benefit of the deduction on the granting of sick benefits to the employee on leave due to covid-19. The mention of article 60, paragraph 3, of Law 8,213/91, which imposes the employer's obligation to pay wages in the first 15 days of the employee’leave, was intended to clarify the portion of the wages that could be deducted from the transfer of contributions to Social Security, and the RFB's claim to restrict legally established benefits is illegitimate.

We believe that this is the interpretation that fits the purpose for which Law No. 13,982/20 was issued, which established exceptional social protection measures to be adopted to confront covid-19, and there are good legal grounds against the interpretation adopted by the RFB. In view of this scenario, it is advisable for the companies to evaluate the treatment given to cases of leave linked to covid-19 in order to confirm the existence of exposure or evnet overpayments, which requires adjustment of procedures or the use of preventive measures.

Category: Tax

An old and even somewhat forgotten discussion has come to the fore again in recent years. It is the limitation on the taxable base for contributions intended for other entities and funds, commonly called third-party contributions, including Sesi, Senai, Sesc, Senac, Sebrae, Incra, Sescoop, Sest, Senat, and FNDE (education allowance).

The object of the discussion is the validity (or lack thereof) of article 4, sole paragraph, of Law No 6,950/81 - a provision that imposed a limitation on the taxable base for social security contributions and third-party contributions, stipulating that the contribution salary could not exceed the limit of 20 times the highest minimum wage in Brazil.

This is because article 3 of Decree-Law No. 2,318/86 prescribed that the "company's contribution to social security" would not be subject to "the limit of twenty times the minimum wage provided for by article 4 of Law No. 6,950/81."

Taxpayers argue that this decree revoked the application of the limit only for Social Security contributions (the employer's contribution of 20% on payroll) and not for third party contributions (intended for other entities and funds), mentioned in the sole paragraph of article 4 of Law No. 6,950/81.

Considering that article 3 of Decree-Law No. 2,318/86 prohibited application of the limitation only to the company's contribution to Social Security, the theory that the limitation continues to be applied to "quasi tax contributions" destined to other entities and funds is defended.

In our view, article 3 of Decree-Law No. 2,318/86 was not intended to revoke article 4. We explain: the rule did not simply repeal article 4 of Law No 6,950/1981, which could lead to the conclusion that the entire provision - including the single paragraph dealing with the limit on third-party contributions - was repealed.

Article 3 of Decree-Law No. 2,318/86 prescribed that the calculation of the contribution due to Social Security (defined in the head paragraph of article 4 of Law No. 6,950/81) "is not subject to the limit of twenty times the minimum wage." In our opinion, with the promulgation of this article, the limit corresponding to 20 times the highest minimum wage in force in Brazil is no longer applicable to contributions due to Social Security (employer contributions).

We also believe that Decree-Law No. 2,318/86 did not prohibit application of the limit of 20 minimum wages for third party contributions, since it did not provide for the revocation of such limit, as provided for in the sole paragraph of article 4 of Law No. 6,950/81.

In other words, the limitation provided for in the sole paragraph of article 4 of Law No. 6,950/81 remained unchanged: the taxable base for contributions due to other entities and (quasi tax) funds linked to compliance with the limit of 20 minimum wages was maintained.

According to the General Theory of Law, a law is valid, in force, and effective until it is repealed or modified by another, which, as it seems to us, did not occur in the present case. Repeal by a subsequent law may occur in the following manners: (i) express revocation (by express declaration) or (ii) tacit revocation (when the new law is not compatible with the content of the old law dealing with the same matter or when it entirely regulates the matter dealt with in the prior law).

However, none of these situations seems to have occurred in relation to the sole paragraph of article 4 of Law No. 6,950/81, since: (i) there was no provision for temporary validity for the sole paragraph of article 4 of Law No. 6,950/81; (ii) no law was published that expressly repealed the sole paragraph of article 4 of Law No. 6,950/81; (iii) there has been no publication of a law incompatible with the determination contained in the sole paragraph of article 4 of Law No. 6,950/81; and (iv) there was no publication of a law fully regulating the matter disciplined by the sole paragraph of article 4 of Law No. 6,950/81.

The Federal Government, for its part, has argued that the repeal of the limit for social security contributions was extended to the taxable base for social contributions for other entities and funds (third party contributions). According to the Federal Government, one could not be allowed to repeal only the head paragraph of article 4, keeping its sole paragraph isolated. For the Federal Government, the repeal of the head paragraph of article 4 would entail automatic repeal of its sole paragraph.

An analysis of the precedents on the matter shows that, within the Superior Court of Courts (STJ), the issue was reviewed in REsp No. 953.742 in 2008. The appeal was decided in favor of taxpayers by the 1st Panel of the STJ's 1st Section. After this judgment, it is also possible to find sole judge decisions handed down by STJ in the same direction favoring taxpayers in 2014, 2017, and 2019. In these decisions, the STJ seems to concur with the taxpayers' arguments, showing that it adheres to the understanding that Decree-Law No. 2,318/86 repealed only the limitation on social security contributions (employer's payroll contribution at the rate of 20%) and not on third-party contributions, mentioned in the sole paragraph of article 4 of Law No. 6,950/1981.

More recently, the First Panel of the STJ reaffirmed this understanding in the judgment of AgInt no REsp 1.570.980/SP, causing positive expectations among taxpayers, especially after the Federal Supreme Court (STF) decided, in the context of an appeal heard due to general repercussion, on the constitutionality of the contribution to INCRA, in accordance with Constitutional Amendment No. 33/01 - another issue related to the legitimacy of assessment of third-party contributions.

But even with the precedents handed down thus far by the STJ, which are mostly favorable to taxpayers, it is not yet possible to state that there is firm case law in their favor, either because of the small number of precedents or because there is no precedent derived from a judgment of a binding nature.

Sensitive to the need for unification of precedents, and also because of the considerable increase in cases involving the matter, the Superior Court of Appeals, on the eve of the judicial recess, bound Special Appeal No. 1,898,532[1] to the system for repetitive appeals (repetitive topic No. 1,079).

This means that the 1st Section of the STJ, the body that brings together the Justices of the 1st and 2nd panels and that deals with tax matters, will review the issue and, in a judgment that will be binding in nature, must definitively resolve the discussion.

In any event, in view of the not yet definitive scenario of the case law on the limitation imposed by article 4, sole paragraph, of Law No. 6,950/81 for determining the taxable base for third-party contributions and while Special Appeal No. 1.898.532 has not been ruled on, there is a high chance of questioning by the tax authorities if the taxpayer, on its own account and without the support of judicial authorization, calculates such contributions based on said limit and/or appropriates credits in connection with any past indebtedness.

The adoption of a more conservative stance - the filing of a lawsuit, for example - deserves to be evaluated, especially considering that the precedents handed down thus far by the STJ seem to be favorable to taxpayers.

In our opinion, this may be relevant to any decision by the bodies of the Judiciary to grant provisional judicial authorization to the taxpayer (via emergency relief or preliminary injunctive relief in an application for mandamus) to ascertain and collect the contributions of third parties based on the application of the limit of the taxable base to the value of 20 minimum wages.

The filing of a lawsuit would also allow interruption of the statute of limitations, such that, at the end of the lawsuit and in the event of success, the taxpayer could achieve recognition of the right to offset/refund of the undue payment made as of the fifth year prior to the filing date.

[1] Civil procedure. Special appeal. Code of civil procedure of 2015. Applicability. Proposal of binding effect as representative of the controversy. Tax. "Quasi tax contributions." Taxable base. Ascertainment. Application of the ceiling of twenty (20) minimum wages. Law No. 6,950/1981 and Decree-Law No. 2,318/1986.1. Delimitation of the question of law at issue: to define whether the limit of twenty (20) minimum wages is applicable to the taxable base of "quasi tax contributions collected on behalf of third parties," in accordance with article 4 of Law No. 6,950/1981, as its text was amended by articles 1 and 3 of Decree-Law No. 2,318/1986. 2. Special appeal submitted to the repetitive appeals system, in joint assignment with REsp n. 1.905.870/PR. (ProAfR no REsp 1898532/CE, opinion drafted by Justice Regina Helena Costa, first section, decided on December 15, 2020, DJe December 18, 2020).

Category: Litigation

Law No. 11211/20, signed on December 24, introduced various changes in the Bankruptcy and Judicial Reorganization Law (Law No. 11,101/05 or the LRF). Among the main ones are those related to the role of the judicial trustee, whose main functions are to assist the court, caring for the good progress of the case, and to supervise the debtor's acts and compliance with the judicial reorganization plan.

The duties of the judicial trustee were expanded, notably due to the other innovations of the LRF, such as the possibility for creditors to present an alternative judicial reorganization plan, the express provision for the use of conciliation and mediation mechanisms, and the regulation of transnational bankruptcy.

The judicial trustee's duties may be divided among those (i) common to judicial reorganization and bankruptcy; (ii) exclusive to judicial reorganization; and (iii) exclusive to bankruptcy.

With regard to the common attributions, the LRF charged the judicial trustee with stimulating alternative methods of dispute resolution, such as conciliation and mediation. Although this provision is a novelty in the LRF, in practice, based on the Mediation Law, Resolution No. 125/2010 of the Judicial Review Board (CNJ) and an ordinance issued by state courts, mediation has long been applied in various cases of judicial reorganization, such as those of Oi and Saraiva, for which mediation was used to resolve various conflicts during the proceeding regarding the reorganization plan, debt claims, and bilateral disputes.

In addition, keeping in line with the digital era, it is now up to the judicial trustee, per provision of law, to maintain an electronic address on the Internet, through which updated information on the proceedings should be made available and requests for qualification and divergences of debt claims should be sent, which facilitates the monitoring of the judicial reorganization by creditors.

In the scope of the judicial reorganization, the judicial trustee also had the scope of its functions extended, mainly in relation to:

• inspecting the veracity and conformity of the information provided by the debtor to prepare the monthly activity report, the negotiations between debtors and creditors (ensuring that the parties not adopt dilatory or prejudicial arrangements) and the decisions of the general meetings passed by means of a consent form, electronic voting, or some other suitable mechanism (article 39, paragraph 5); 
• submitting for a vote, in a general meeting of creditors rejecting the judicial reorganization plan proposed by the debtor, the granting of a 30-day period for the creditors to present their judicial reorganization plan (article 56, paragraph 4);
• submitting within 48 hours a report of the creditors' responses regarding the holding of a general meeting to resolve on the sale of assets, therein requesting the convening thereof.

The new powers of the judicial trustee in bankruptcy include:

• presenting, within 60 days of their investiture, a detailed plan for realization of the assets;
• selling all the assets of the bankrupt estate within a maximum period of 180 days, counted from the date of the filing of the notice of collection, under penalty of dismissal, except for reasoned impossibility, recognized by a judicial decision;
• in the event of insufficiency of the assets for the costs of the proceedings, promote sale of the assets collected within a maximum period of 30 days (for personal property) and 60 days (for real property), if the creditors do not request continuation of the bankruptcy; and
• collecting the amounts of deposits made in administrative or judicial proceedings in which the bankrupt is a party and which arise from attachments, freezes, seizures, auctions, judicial sales, and other cases of judicial constriction, with the exception of deposits of federal taxes.

One of the LRF's greatest innovations is the regulation of transnational bankruptcy proceedings, in which the performance of the judicial trustee is very relevant. It has authorization to appear in foreign judicial proceedings in the capacity of representative of the Brazilian judicial proceedings, in the event of bankruptcy, and obligation to cooperate and communicate with the foreign authority and with the foreign representatives.

The purpose of the changes in the judicial trustee's duties is to increase the participation of the court clerk’s office and allow it to act in a timely manner, which will end up increasing its responsibilities and its work. Although the novelties are beneficial to the system as a whole, because they increase legal certainty and speed up bankruptcy proceedings, they may discourage those interested in filling this position, especially because of the obligation to confirm the veracity of the debtor company's information.

In any event, it is expected that the actions of the judicial trustees will be under greater scrutiny, and it is up to the Judiciary, the creditors, the debtor, and the company as a whole to demand smoothness, speed, and commitment from the clerks of course in the performance of their duties.