Publications

Category: Infrastructure and energy

Definition of eligible projects, possibility of investment in imported equipment, coverage for future investments, and establishment of simplified procedures are the main innovations.

Alberto Faro, Vitor Fernandes de Araújo and Felipe Baracat

On September 3, the Ministry of Communications published Ordinance 502 to regulate the procedures for approval and monitoring of priority infrastructure projects in the telecommunications sector eligible for financing through the issuance of incentivized debentures, under the terms of Law No. 12,431/11.

Scheduled to enter into force on October 1 of this year, Ordinance 502 comes at a good time, as it enables infrastructure debentures to be issued by companies in the communications sector, broadening the range of funding in a branch with high potential for innovation and, in many cases, capital-intensive needs.

Since 2016, the incentivized debentures have played an important role in financing infrastructure projects, reaching a total of R$ 34 billion in issuances in 2019 alone.

The urgent need to modernize Brazil's telecommunications infrastructure, including to support new Internet of Things (IoT) and 5G connection technologies, which will bring greater competitiveness to the Brazilian economy, and the remaining difficulties in universalizing broadband telecommunications service can be largely met with the access of companies in the sector to diversified financing structures, often more robust and cheaper, especially in the capital market.

The ministry's expectation is to attract financing for the expansion of telecommunications infrastructure through debentures worth at least R$1 billion over the next two years.

Under Law No. 12,431/11, only infrastructure projects considered to have priority may be financed through the issuance of incentivized debentures and enjoy the applicable tax benefits. The process of classifying projects as priorities is regulated by ministerial ordinances issued by the relevant ministries.

Ordinance 502 amends Ordinance 330 (of July 5, 2012), which governs only the approval of priority projects in the broadcasting segment. Ordinance 502, in turn, establishes the rules applicable to the approval of priority projects in the telecommunications sector. The main innovations it brings in are presented below.

Expansion of eligible projects

Investments in data center initiatives, Internet of Things (IoT), 5G connection, and underwater cables are now possible with Ordinance 502. Another important novelty is the coverage of projects aimed at recovery, adaptation, or modernization of infrastructure, in addition to implementation, expansion, and maintenance. Each investment project may include more than one initiative eligible to be classified as a priority under Ministerial Ordinance 502.

Projects aimed at implementation, expansion, maintenance, recovery, adaptation, or modernization of infrastructure will be eligible for designation as priorities:

• transport networks;

• fixed or mobile access networks;

• satellite communication systems;

• wireless local area networks, based on IEEE 802.11 standards, in locations with public access;

• submarine cable for data communications;

• data centers;

• machine to machine communication networks, including Internet of Things - IoT;

• 5G networks or higher;

• underwater cables;

• network infrastructure for telecommunications; and

• infrastructure for telecommunications network virtualization.

Project expenditures

• Possibility of reimbursement. Costs, expenses, or debts incurred in a period equal to or less than 24 months from the date of closing of the public offer may be reimbursed with the funds arising from the issuance of incentivized debentures.

• Future investments. The funds raised through the issuance of incentivized debentures may be allocated to the future payment of costs, expenses, or debts related to the project, fostering the development of projects of high complexity and long term implementation.

• Reimbursement of expenses with grants. Expenses for grants for communications infrastructure projects are part of the investment project. Thus, the costs disbursed to obtain concessions, authorizations, and licenses to operate the project may be reimbursed with the funds raised through the issuance of incentivized debentures, which enables project finance structures (with their leverage components) starting in the preliminary stages of the project. Such expenses for grants may include, without limitation, the acquisition of Brazilian technology assets, network coverage and service quality obligations, and payment of a public price for authorization to provide telecommunications services, among others.

• Support system. Capital expenditures associated with operation support systems (OSS) and business support systems (BSS), understood as software toolkits that allow one to manage and automate the collection, integration, and processing of information, may also be included in the investment project.

Financing for imported goods

Ordinance 330 prevented the use of funds obtained from the issuance of incentivized debentures for the financing of imported machinery and equipment. This restriction hindered the competitiveness and economic viability of projects in a sector that demands the use of state-of-the-art technology and in which often no affordable components can be found in the domestic market.

Just as an example, renewable energy projects, historically those with greater access to financing from incentivized debenture issuances (representing about 74% of the total in the domestic market), are not subject to similar restrictions in sector regulation.

The restriction on the financing of imported goods did not appear expressly in the articles of Ordinance 330, but was in the tables in Exhibits III and IV - Tables of Sources and Uses. The ministry, based on such exhibits, believed that it was not possible to classified expenditures disbursed for imported machinery and equipment as items that could be financed. The new Exhibit III - Table of Uses and Sources, contained in Ordinance 502, does not contain a similar provision, making clearer the possibility of using the funds raised for the acquisition of imported goods.

Simplification of procedures and duration

Ordinance 502 considerably simplifies the approval process for projects to be classified as priorities, which is essentially based on corporate and registration documents, on the identification of the applicants for approval, and on the description of the project, pursuant to article 4 and the exhibits of Ordinance 502. Similarly, the procedures for monitoring the implementation and progress of projects have been made more flexible and clarified. They should be carried out by means of a project report, a table of uses and sources, a list of goods acquired and services hired, and the geographic location of the relevant goods acquired. These documents should be submitted annually to the Ministry of Communications pursuant to article 7 of Ordinance 502.

Category: Real estate

The governor of Rio de Janeiro signed Law No. 8,953/20, which regulates, at the state level, the Economic Freedom Law (Federal Law No. 13,874/19) and classifies low risk activities that individuals or legal entities may perform in the state of Rio de Janeiro without the need for any public act of release.

A public act of release, as determined by paragraph 6 of article 1 of Federal Law No. 13,874/19, is the licensing, authorization, concession, registration, permitting, notification, accreditation, study, planning, recording, and the other acts required, under any denomination, by an agency or entity of the Public Administration in the application of legislation, as a condition for the exercise of economic activity, including the beginning, continuation, and ending for installation, construction, operation, production, management, use, exercise, or realization, in the public or private sphere, of an activity, service, establishment, profession, installation, operation, product, equipment, vehicle, or building, and others.

The legal text lists 289 low-risk economic activities that will not require any public act of release, such as issuance of operating licenses, including: legal services, real estate management and administration, consulting in information technology, rental and purchase and sale of owned real estate, retailing of jewelry, optics, stationery, watchmaking, and food services for events and receptions (buffet).

The list of activities is exemplary, that is, the Public Administration may waive the need for public acts to release other activities, either ex officio or upon request, except for those enterprises and activities that use environmental resources, potentially or effectively, causing significant environmental impact, subject to environmental licensing by the state, which continue to be subject to the state environmental legislation in force.

Municipalities may also create their own laws on the subject, observing as minimum parameters those defined in Federal Law No. 13,874/19, the new state law, and Resolution No. 51/19 of the Committee for the Management of the National Network for the Simplification of Registration and Legalization of Companies and Businesses (CGSIM).

The law reduces bureaucracy and provides more legal certainty at the state level for the development of these economic activities.

Category: Corporate

On September 2, the Rio de Janeiro Court of Appeals confirmed a judgment by the business court of that state that had granted a request for judicial reorganization filed by the Cândido Mendes Institute, a civil association that maintains the Cândido Mendes University, which has over 12,000 students and 1,000 professors and employees.

The request for judicial reorganization of the Candido Mendes Institute reignited legal scholars’ debate on the subject, raising two important questions:

• Can a non-profit association be treated as a "company" in certain circumstances?

• As a company, can it resort to judicial reorganization under the Business Reorganization Law (Law No. 11,101/05), even though it is not registered as a business company with the competent commercial boards?

In a literal interpretation of article 1 of the Business Reorganization Law, the concepts of judicial, extrajudicial, and bankruptcy reorganization are applied only for the benefit of businessmen and business companies. In this line of reasoning, cooperatives, foundations, non-profit associations, and all other economic agents are excluded from the protection provided by the Business Reorganization Law, no matter the activity performed.

It so happens that, often, these economic agents organize themselves as companies, coordinating production factors and placing goods and services on the market. What would be the situation of some charitable hospitals, non-profit educational entities, or football clubs that adopt the legal structure of non-profit associations, but are in fact true companies from the economic point of view, seeking profit, economic sustainability, and asset growth, even if they do not share the profit among partners?

Initially, to understand the contours of a "company", we need to resort to article 966 of the Civil Code, according to which a businessman is one who exercises professionally an organized economic activity for the production or circulation of goods or services. In this sense, a “business" is an economic phenomenon, for which, to be established, three essential elements are necessary: (i) exercise of economic activity for the production or circulation of goods or services; (ii) organized activity, with the coordination of production factors (capital, labor, and goods); and (iii) activity carried out in a professional manner, that is, with habituality and aiming at profit or financial return.

In the case of the Cândido Mendes Institute and so many other business associations, the first two elements are easy to identify, lacking only the profitable nature of the business in order be to characterized as a business entity. However, these entities could be seen as associations with economic purposes: although they are prohibited from distributing profits to partners, they act as economic agents that compete in the market to generate financial gains and expand their assets. Thus, it is possible to distinguish two types of associations: (i) those that carry out business and operate in the market aiming at enlargement of their asset, generating financial gains to be fully reverted to the entity itself, without distribution of profits to the partners, and (ii) those that aim at providing advantages to their members, without a monetary nature (such as a neighborhood association or a parents' and students' association at a school). The first type of association may, under certain circumstances, engage in business activity.

Thus, although there are important voices to the contrary,[1] according to some legal scholars,[2] it would be possible to follow a broad reading of article 1 of the Business Reorganization Law, to extend the application of said law to cooperatives and associations with economic purposes, which carry out activities of production or circulation of goods or services, with clear generation of wealth (economic motive). This broad reading is said to be justified on the basis of a systematic interpretation of the Business Reorganization Law, since its article 47 establishes the objectives and guiding principles of judicial reorganization: “to make it possible to overcome a situation of economic and financial crisis on the part of the debtor, in order to allow maintenance of the source of production, employment of workers, and the interests of creditors , thus promoting the preservation of the company, its social function, and the stimulus to economic activity.”

In requesting its judicial reorganization, the Cândido Mendes Institute has set important precedents for granting application of the Business Reorganization Law and judicial reorganization to the following non-profit associations: in Rio Grande do Sul, the University of Cruz Alta (2005) and the Lutheran Association of Brazil (2019), and in Rio de Janeiro, the Casa de Portugal Hospital (2006).

We know that certainty and legal certainty are two fundamental pillars for business law. Economic agents depend on clear rules, applied in a predictable and uniform manner by the Judiciary, so that they can calculate their risks and make their economic decisions. In this sense, it does not seem prudent to us that the system of bankruptcy and judicial reorganization should be applied to business associations simply on the basis of an extensive interpretation of article 1 of the Business Reorganization Law, causing divergences among the legal scholars and case law. That would bring about a lot of instability to the system.

Taking advantage of the fact that the issue is being debated in the Brazilian Congress, it seems advisable that the Business Reorganization Law be amended to clearly provide for the applicability (or not) of the system of bankruptcy and judicial reorganization for other economic agents that have business activity, even if they do not fit within the classification of business companies. Without such a change, broad interpretations can create legal uncertainty in the market, especially for lenders in the credit market, which can ultimately raise the cost of capital for third sector entities.

[1] TOLEDO, Paulo Fernando Campos Salles de; ABRÃO, Carlos Henrique (Coords.). Comentários à Lei de recuperação de empresas e falência [“Comments on the business reorganization and bankruptcy law”]. 4th ed. São Paulo: Saraiva, 2010. p. 56; PENTEADO, Mauro Rodrigues, in SOUZA JUNIOR, Francisco Satiro; PITOMBO, Antônio Sérgio A. de Moraes (Coords.). Comentários à lei de recuperação de empresas e falência [“Comments on the business reorganization and bankruptcy Law”]: Law No. 11,101/2005. São Paulo: RT, 2005. p. 110; FAZZIO JÚNIOR, Waldo. Lei de falências e de recuperação de empresas [“Business bankruptcy and reorganization law”]. 4th ed. São Paulo: Atlas, 2008; BURANELLO, Renato M. Sistema privado de financiamento do agronegócio – regime jurídico. [“Private agribusiness financing system - legal framework”]. 2nd ed. São Paulo: Quartier Latin, 2011. p. 229/230; MELLO FRANCO, Vera Helena de e SZTAJN, Rachel. Falência e recuperação da empresa em crise [“Bankruptcy and reorganization of companies in crisis”]. Rio de Janeiro: Elsevier, 2008. p. 20.

[2] We cite: (i) VERÇOSA, Haroldo Malheiros Duclerc. Das pessoas sujeitas e não sujeitas aos regimes de recuperação de empresas e ao da falência [“Persons subject and not subject to company reorganization and bankruptcy arrangements”]. In: PAIVA, Luiz Fernando Valente de (coord.). Direito falimentar e a nova lei de falências e de recuperação de empresas [“Bankruptcy law and the new business bankruptcy and reorganization law”]. São Paulo: Quartier Latin, 2005. p. 109-110 (arguing for the possibility of bankruptcy and judicial reorganization of cooperatives); (ii) WAISBERG, Ivo and RIBEIRO, José Horácio Halfeld Rezende. A ultrapassada teoria da empresa e o direito das empresas em dificuldades [“The outdated theory of the company and the law of companies in difficulty”]. In: Temas de direito da insolvência Estudos em homenagem ao Professor Manoel Justino [“Topics in Bankruptcy Law: Studies in homage to Professor Justino Bezerra Filho”]. São Paulo: Instituto dos Advogados de São Paulo, 2017, p. 708 (arguing for the need for a broad reading of article 1 of the Business Reorganization Law); and (iii) BEZERRA FILHO, Manoel Justino and CAMPINHO, Sérgio (in opinions arguing for the application of the Judicial Reorganization Law to the Cândido Mendes Institute).

Category: Environmental

The National Solid Waste Policy (PNRS), set forth by Law No. 12,305/10, defined as one of the guidelines applicable to solid waste the order of priority that must be considered for its management and handling. According to the PNRS, priority should be given to not generating solid waste, followed by reduction, reuse, recycling, and treatment. Last in the order of priority, therefore, is environmentally sound final disposal of waste, which in most cases corresponds to disposal in landfills.

Aiming at avoiding prioritization of waste destination in this last category and in order to take advantage of waste that cannot be recycled, the Bureau of Infrastructure and Environment (SIMA) of São Paulo has established guidelines and conditions for the licensing of units involved both in the preparation of Refuse Derived Fuel (RDF) and in the recovery of energy from the use of RDF.

For this purpose, Resolution No. 47/2020 was published on August 6, revoking the prior rule, SIMA Resolution No. 38/2017, which only regulated the use of fuel derived from urban solid waste in clinker furnaces (cement kilns). The new standard broadens the range of waste that can be used in preparing RDF, as well as the types of enterprises in which RDF can be used.

RDF may be prepared from the following wastes, provided they are not classified as hazardous:

• Solid urban and similar waste from trade, industry, services, and construction, as well as post-consumption;

• Industrial waste, agricultural waste, petroleum waste, refining waste, etc., as listed in Exhibit I of the resolution; and

• Waste generated in effluent and water treatment plants.

Only solid urban wastes that are not technically or economically feasible for recycling, as well as those that, after sorting carried out by a refuse collector cooperative, are considered waste, may be used for RDF purposes. This legal provision reflects the order of priority established by the PNRS, in which recycling should be prioritized in the chain of activities related to waste management. In this respect, the resolution itself establishes that the use of RDF is a form of final disposal of solid waste of lower priority than recycling and higher priority than treatment.

Resolution 47/2020 provides that the RDF preparation unit and the unit where the energy contained in the RDF is recovered will require prior environmental licensing. From this perspective, the environmental license of the unit in which preparation of the RDC takes place must contain the list of wastes authorized for receipt, and it is incumbent on the interested party to implement control and registration of the types of waste to be received, types of RDC produced, and their destinations.

For the use of RDF in industrial boilers and furnaces, a license must be requested from São Paulo State Environmental Agency (Companhia Ambiental do Estado de São Paulo - Cetesb), including the presentation of a specific feasibility study and a conformity test plan.

Cetesb Board Decision No. 73/2020/P, also published on August 6, provides that environmental licensing, both for the RDF preparation units and for enterprises that use the RDF in their boilers and furnaces, will be conducted, in all its phases, by Cetesb's environmental agencies.

These innovations brought in by the São Paulo resolution are welcome, as they provide an environmental gain by allowing the use of waste within the production chains themselves, thus contributing to the extension of the useful life of landfills and reducing the need to open new landfills.

On the other hand, there is criticism of waste-to-energy incineration, such as the fact that, with the burning of materials, much of the energy needed to produce them is lost. In addition, a lot of energy is consumed by the incinerator, and burning generates vaporized water and waste in the form of ashes, only part of which is actually incinerated.

In any case, it is possible to see an opportunity in this regulation of RDF: waste that thus far represented expenses for companies, forced to hire a consignee to send it to the landfill, can, for example, be sold now as raw material for RDF, a possibility to obtain revenue from waste that, for management, represents a cost for the entrepreneur.

Category: Real estate

Almost three decades after their creation in the Brazilian legal system in 1993, Real Estate Investment Funds (Fundos de Investimento Imobiliário - FIIs) have multiplied and gained new uses, formats, and characteristics, especially in recent years, when their number has more than doubled[1] and their use as a form of financing has consolidated and continues to mature.

In this article, we discuss the possibility for FIIs to appear as developers and subdividers of the real estate developments that make up their corporate purpose. Typically, "brick" FIIs, intended for the construction of real estate, develop their ventures indirectly, using a special purpose entity (SPE), in which they hold an equity interest, to exercise the position of developer.

The question is: would it be possible for the FII to develop real estate ventures directly, without the use of an SPE as a vehicle? We believe that yes, and the answer presented here is constructed according to a real estate and registry perspective and part of the consolidated concepts adopted by the law, by the normative instructions (IN) of the Brazilian Securities and Exchange Commission (CVM), and by the domestic case law.[2]

The FII Law and the CVM's understanding regarding IN 472/2008

 The first point to be assessed is the fact that the law regulating FIIs (Law No. 8,668/93 - the FII Law) procies for the investment of funds of FIIs in real estate developments.[3]

By “investment", however, one does not infer "direct development" of real estate ventures, and the CVM is in charge of providing for and regulating this scenario in its Instruction No. 472, of October 31, 2008 (IN 472). Article 45, paragraph 1, of this Instruction expressly authorizes FIIs to develop construction projects. In this case, the FII trustee should exercise effective and direct control over the development of the project.[4] It is also the role of the trustee to represent the FII broadly in all actions necessary to achieve the purpose and investment policy of the FII.

This provision is led by a guiding principle, reflected in various other provisions of IN 472,[5] and is designed to grant the trustee autonomy and full powers to carry out and manage the projects that make up the FII's assets.

The underlying legal logic is that the FII does not have legal personality. Therefore, it is incumbent on its trustee to exercise the attributes inherent to personality. This logic is the result of a discussion regarding the very legal nature of the FII, at the end of which, in a legislative exegesis, the understanding prevailed that the assets are fiduciarily held by the trustee of the FII.

If, on the one hand, the CVM is aligned with the understanding that it is fully possible for the trustee to carry out the development constituting the FII's purpose, the situation is uncertain in the Real Estate Registries.

The IRIB (Brazilian Real Estate Registration Institute) has already been consulted on the subject[6] and has taken a position advocating for the impossibility for FIIs to procure real estate development directly. Some Real Estate Registries occasionally align with this understanding, alleging two reasons: that FIIs do not have legal personality and that there is an incompatibility between the corporate purposes of the trustee[7] and the real estate subdivider and/or developer. In other words, it is argued that FIIs could not be subject to the rights and obligations arising from devleopments and subdivisions. Even if the title were recognized as being that of the trustee instead of the FII, the trustee's actions would not be valid, since the FII trustee's corporate purpose would be incompatible with the activity of a real estate developer.

We believe that this position may be revised in light of the considerations already made regarding the legislator's choice to draw in the concept of FIIs closer to that of the fiduciary business. We will address each point individually to clarify the reasons why we believe that the alleged obstacles do not continue.

Absence of legal personality of the FII and sufficient fiduciary title to the IFI's assets for the trustee to perform the development

 One of the practical consequences of the FII's lack of legal personality is that it is not possible for it to directly own its real estate. [8]

The legal abstraction from which one departs is that ownership of real estate assets comprising the FII's assets is held by the fund’s trustee on a fiduciary basis, in a binding arrangement, which segregates the FII's assets from the trustee's assets and allocates them for an exclusive purpose.[9]

Thus, the trustee will now concentrate, in a secure and legitimate manner, in its name, the assets and liabilities emerging from the complex of obligations necessary to satisfy the corporate purpose, enjoying all the attributes inherent to ownership.

Recognizing the trustee as fiduciary owner, it is certain that the law itself, in this regard, in addition to not generating obstacles to assumption of the position of real estate developer by the trustee, expressly encourages and mandates it, as provided for in the first paragraph of article 45 of IN CVM 472 (mentioned above), in order to ensure the fund's success, providing the necessary security for FIIs to remain attractive to investors.

Absence of compatibility between the corporate purposes of the trustee and the real estate developer and absence of legal prohibition in the laws and regulations on the development of real estate ventures

The possibility of developing ventures must have authorization on two levels: legal and contractual.

From a legal point of view, article 5 of the FIIs provides that FIIs shall be managed by a multiservice bank with an investment portfolio or a real estate credit portfolio, an investment bank, a real estate credit company, a brokerage house, or a securities distribution company, or other legally equivalent entities, provided that they have proper authorization from the CVM to exercise such activity.

The Real Estate Development Law (Federal Law No. 4,591/64), in turn, provides that a developer is considered to be “an individual or legal entity, whether or not a merchant, that, although not carrying out the construction, compromised or effected the sale of ideal fractions of land [...] coordinating and carrying out the development and being responsible, as the case may be, for the delivery, at a certain time, a certain price and conditions, of the completed works." It may be the owner or promissory purchaser of the property on which the real estate development will take place. In turn, the Urban Land Parceling Law (Federal Law No. 6,766/79) believes that the subdivider must be the owner of the property for such purpose, except for the cases of popular parceling in which this proof of ownership is waived.

As is extracted from a review of the laws and regulations applicable to the development of real estate projects, there is, in fact, no real estate development or urban land parceling, a prohibition on having the FII appear as a developer or subdivider. Since the FII may directly acquire ownership of the property on which it seeks to develop the venture via a fiduciary transaction, in which the FII's trustee lends it its legal personality, the requirement of the Real Estate Development Law and the Land Parceling Law would be respected.

In addition, we do not see any incompatibility between the corporate purpose of the FII’s trustee and the activity of a real estate developer. This is because the subject to be reviewed is that provided for in the FII's bylaws and its investment policy. In this respect, it is worth noting once again that the law recognizes the lawfulness of the management of FIIs by various agents, with the trustee being charged with the duty of assuming direct completion of the venture to be developed by the FII.

Final Considerations

 In view of the above, the legal construction seems to us to be coherent and cohesive to the same effect: that of guaranteeing security for investors and purchasers of real estate products.

The FII Law and IN CVM 472, by expressly encouraging and mandating the direct achievement of the purpose of the FII by the trustee, impute to it not only the choice, but also the duty, to perform acts of development of the purpose in a direct manner, ensuring to investors greater predictability of investments. Purchasers of FII products, especially autonomous units, will have a legal guarantee of segregation of assets, generally absent from other development formats, and a guarantee of development by entities with consolidated expertise and reputation, which will be subject to strict control by a regulatory agency, which mitigates the social risk associated with the failure of the development.

However, few institutions have provided management services to FIIs that have as their purpose activities involving real estate development or land subdivision. In addition to the uncertainty mentioned above regarding the possibility of implementing the applicable registrations in the Real Estate Registries, experience shows us that the risk for investors and FIIs trustee linked to the activity, especially in a structure that does not have the limited liability for obligations conferred by a structure that has SPEs, has decreased the appetite of the institutions for this type of product.[10]

For those who wish to explore the evident possibility of direct development, it is advisable to take into consideration the specificities of the specific case and analyze the tax and regulatory issues in order to be sure that the format of direct real estate development by the FII is the most appropriate. It is also necessary to evaluate the risks inherent to the activity of developers and real estate subdividers that would be assumed directly by the FIIs and not by the vehicle (SPE) in which the FII holds an equity interest.

[1] In March of 2015, the number of FIIs registered with the CVM was 249, rising to 540 in March of 2020. Source: Real Estate Market Bulletin, B3, No. 89, of March 19, 2020. Available at: http://www.b3.com.br/data/files/2B/92/A2/B0/B5991710CF51CE07AC094EA8/Boletim%2 0Mercado%20Imobiliario%20-%202020%2003.pdf.

[2] The historical construction of the legal nature of FIIs, at the Brazilian and international levels, has taken place under the debate of several theories, defended by revered legal scholars, conceiving of FIIs either as condominiums or as unincorporated companies. Law No. 8,668/93, in its literal provisions, aligned itself with the so-called "fiduciary property theory" and established as positive law the understanding that FIIs are a commonality of resources under the trustee's ownership. Considering that the Real Estate Registries incline to the latter theory, we have adopted it to achieve the objective proposed. This controversy over the legal nature of the investment funds has currently been overcome due to the enactment of Law No. 13,874/19, which, upon including the new article 1,386-C in the Civil Code, establishes that "investment funds are a commnoality of resources, organized in the form of a condominium of a special nature, intended for investment in financial assets, goods, and rights of any nature."

[3] Law No. 8,668/93. Article 1. Real Estate Investment Funds are established, without legal personality, characterized by commonality of the funds raised through the Securities Distribution System, in the manner set forth in Law No. 6,385, of December 7, 1976, intended for investment to real estate ventures. (emphasis added)

[4] IN CVM 472. Article 45. The fund's participation in real estate projects may occur through acquisition of the following assets: I - any rights in rem in real estate; [...] § 1 When the FII's investment is in construction projects, the trustee shall, irrespective of the hiring of specialized third parties, exercise effective control over the development of the project.

[5] IN CVM 472. Article 30. It is incumbent on the trustee, in compliance with the rules: [...] I - to carry out all operations and perform all acts that relate to the purpose of the fund. and IN CVM 472. Article 32. The fund trustee must: [...] IV - enter into legal transactions and carry out all operations necessary for the execution of the fund's investment policy, exercising, or endeavoring to exercise, all rights related to the assets and activities of the fund. (emphasis added)

[6] Search filed under No. 9.441, of August 28, 2012.

[7] Article 5 of Law No. 8,668/93 provides that FIIs shall be managed by a multiservice bank with an investment portfolio or a real estate credit portfolio, an investment bank, a real estate credit company, a brokerage house, or a securities distribution company, or other legally equivalent entities.

[8]Such restriction does not apply to other types of assets, such as securities.

[9] Article 7: "The assets and rights that are part of the assets of the Real Estate Investment Fund, in particular real estate held under the fiduciary ownership of the trustee institution, as well as profit and income therefrom, are not mixed with the assets of the latter [...]."

[10]As they do not have legal personality, investment funds do not currently confer limited liability on the investment made by their unitholders. Law No. 13,874/19 established that an investment fund’s bylaws may establish: (a) limitation on the liability of each investor to the value of its units; and (b) limitation of the liability, as well as the parameters for its assessment, of the service providers of the investment fund, vis-à-vis the condominium and among themselves, for fulfilment of the particular duties of each one, without joint and several liability. However, this limitation of liability is still pending regulation by the CVM. After the CVM issues rules to this effect, it is possible that the institutions will have more comfort in managing FIIs that have as their purpose activities involving real estate development or subdivision, due to the possible limitation of liability to the investor and to the trustee itself as service provider.

Category: Infrastructure and energy

Ana Karina E. de Souza, Fabio Komatsu Falkenburger, Carolina de Souza Tuon and Luisa Andrade Costa e Silva Rodrigues

On August 11, the Anvisa board (National Health Surveillance Agency) unanimously approved the opening of public consultation on a proposed resolution that will regulate the new health security protocol in aircraft and airports in Brazil, with the aim of strengthening the fight against Covid-19. Public Consultation No. 894/20 will be open to receive contributions between August 26 and September 9, 2020.

The debate on this issue, which was already provided for in the 2017-2020 regulatory agenda, had its urgency accentuated with the declaration of a global public health emergency, which led to the need to improve health control methods at ports, airports, and borders.

Even though it has already presented measures to reduce the transmission of coronavirus in Brazil, such as divulging general guidelines for entry into the country through airports, assigning health inspection teams, and maintaining medical stations to detect suspicious cases, the federal government had to strengthen existing public health measures and establish others.

This was the objective of Law No. 13,979, published on February 6, 2020, to provide for actions that authorities may take to address the health emergency. In order to protect the public, subsection VI of article 3 of the law also authorizes Anvisa to adopt exceptional and temporary restrictions on entry and exit from Brazil via highways, ports, and airports to deal with the health crisis.

Interministerial Ordinance No. 1, published on July 29 with the participation of the Office of the President of Brazil, the Ministry of Infrastructure, the Ministry of Justice, and the Ministry of Health, regulated exceptional and temporary restriction on the entry of foreigners into Brazil indicated above via land and water transportation, but did not prevent the entry of persons of any nationality by air. Therefore, foreigners can still enter Brazil through airports, as long as they meet the migration requirements. For stays of up to 90 days, it is also necessary to prove before boarding the acquisition of health insurance valid in Brazil for the entire duration of the trip. Otherwise, entry may be prevented by the migration authority, prompted by the health authority.

On May 19, Anvisa also published Technical Note No. 101/20 to update the health measures to be adopted in airports and aircraft with recommendations to combat SARS-CoV-2, including limiting the capacity of bus rental to travel between terminals, organizing the movement of people in terminals, suspending on-board services on domestic flights, and following the guidelines of the World Health Organization (WHO).

To date, there is no regulation by Anvisa giving airport health inspectors the option of requiring conduct  from passengers, commercial facilities, or persons responsible for means of transport to control the spread of Covid-19.

The establishment of Public Consultation No. 894/20 seeks precisely to support the actions of these inspectors and contemplate the recommendations established by the WHO with more efficiency, reinforcing measures to combat the pandemic, such as the use of masks, adoption of social distancing, hand hygiene, among others.

Following the technical guidance of epidemiological surveillance and the Ministry of Health, the proposal aims to implement health measures in airports and aircraft after analyzing comments and suggestions from the general public and, especially, from actors directly impacted, such as airport terminal managers, transport operators, service providers, and companies operating in airports.

The text of the public consultation with the draft resolution was released by Anvisa and reiterates all the measures adopted so far. They should be adopted by all travellers, airport terminals, airlines, service providers, and companies in operation. The text also provides for denial of boarding to travellers who have a diagnosis or symptoms of Covid-19.