Publications

Category: Tax

On February 19, the Joint Commission for Executive Order No. 899/19 approved the text of the bill to convert the Executive Order (MP) in law, which is now to be voted in the Chamber of Deputies. The so-called Taxable Person MP was published on October 17, 2019, with the purpose of regulating tax transactions, which has been admitted by the National Tax Code for over 50 years. The measure aims to reduce tax litigation and to fill the public coffers for debts deemed irrecoverable or difficult to recover.

The original text of the MP received 220 parliamentary amendments and was discussed at a public hearing held on the 13th, attended by representatives of the government and taxpayers.

According to the report approved by the commission, the approval of the MP meets the constitutional requirements of urgency and relevance, especially due to the fact that the debt portfolio under judicial discussion that could be subject to settlement would be in the order of R$ 1.4 trillion, an amount higher than half of the Federal Government's outstanding debt inventory. In the administrative sphere, R$ 600 billion was said to be linked to about 120,000 lawsuits in progress before the Administrative Tax Appeals Board (Carf).

The high degree of litigation between taxpayers and the tax authorities, associated with significant volume of potential funds to be collected, was said to justify the relevance of the measure.

The Joint Committee opted to forward the matter in the form of a conversion bill because it believes that this is the best alternative in order to organize the amendments accepted and to give the text the structure recommended by the legislative technique. The 61 amendments approved aim, according to the proposition report, to rule out potential errors of unconstitutionality and illegality and to mitigate the risk of objections.

The main aspects of the new proposal:

• Three types of transactions are provided for: (a) debts, whether or not tax in nature, enrolled as outstanding federal tax debt; (b) tax debts in judicial or administrative litigation, involving a widespread and relevant legal controversy; and (c) tax debts in administrative litigation of low value.

• In the first type, the transaction may be proposed by the Attorney General of the National Treasury (PGFN) or by the debtor, on an individual basis or by adherence based on a public notice. The proposal may relate to: (i) the granting of discounts in penalties, late fees, and charges relating to debts classified by as irrecoverable or difficult to recover; (ii) the term or method of payment, including deferral and default fines; and (iii) offering, substituting, or disposing of guarantees or freezes.

• For companies in general, the principal amount of the tax debt does not allow for a reduction. A reduction of more than 50% in the total value of the debts transacted is also forbidden. Payment of the debt must occur within 84 months. For individuals, small businesses, and microenterprises, reduction of the debt principal is not allowed, but reduction of the total amount may reach 70% and have a payment term of up to 100 months.

• In the bill, the discretion of the revenue authorities in classifying what should be considered irrecoverable or difficult to recover has been reduced: this classification is no longer exclusively assigned to the revenue authority, and the PGFN must act to establish the objective criteria for this classification.

• The proposed settlement will not suspend the enforceability of tax debts or the progress of the respective tax foreclosures, which does not prevent a stay in proceedings by agreement of the parties, until the debts are extinguished.

• In the second type, the settlement proposal is made by the public authorities, with a view to closing customs and tax disputes arising from "relevant and widespread legal controversy." The taxable person must adhere to the conditions and requirements laid down in the public notice. In this case, there is no provision for a settlement on an individual basis.

• A legal controversy involving a considerable number of taxpayers, going beyond the subjective interests of the cause, is considered relevant and widespread.

• Reductions and concessions in this case are also limited to a discount of 50% of the debt, with a maximum term for payment of 84 months.

• The taxpayer that adheres to the settlement will be subject, with respect to future and uncompleted taxable events, to the understanding given by the tax authorities to the matter in dispute, with the exception of prospective termination of the settlement resulting from binding precedents (STF decisions in concentrated control of constitutionality, binding precedents, appellate decisions in proceedings of assumption of jurisdiction, or resolution of repetitive claims and repetitive appeals) or with respect to a matter that is the subject of an opinion, in force and approved by the PGFN, that reaches a conclusion to a different effect, and in the other cases of dismissal by the PGFN to challenge and appeal, as provided for in article 19 of Law No. 10,522/02.

• Still in the second type: (i) the adherence will cover all litigation related to the theory at issue in the settlement existing on the date of the request, not yet definitively ruled on; (ii) the application for adherence suspends the processing of administrative proceedings as long as the review thereof lasts; and (iii) adherence that does not entail extinguishment of the administrative or judicial litigation will not be admitted, except in the event that it is possible to segregate subject matter of the debate, under the terms of a public notice to be published by the public authority.

• Special attention should be given to the scope of the waiver that this type of settlement by adherence should entail in practice, since the rule imposes on the taxpayer relinquishment of discussion in all proceedings involving the same legal theory, in accordance with the criteria to be defined in the public notice. In principle, it would not be possible to select specific cases for relinquishment, which could render the settlement inviable.

• In turn, in the third type, the transaction falls exclusively on tax debts under administrative litigation whose value does not exceed 60 minimum wages and that have as the taxpayer an individual, microenterprise, or small company. The granting of discounts may not exceed the maximum limit of 50% of the total value of the debt, in which case a reduction in the value of the principal is authorized.

  In all types:

• Although it expressly prohibits the settlement of debts by repeatedly delinquent debtors, the proposition does not define what should be understood as being a “repeatedly delinquent debtor", assigning this task to another specific law.

  Currently, the closest possible legal provision is Bill No. 1,646/19, under way in the Chamber of Deputies and according to which a repeatedly delinquent debtor would be "taxpayer whose tax behavior is characterized by substantial and repeated default on taxes.” This default was said to correspond to the existence of debts in the name of the debtor or related individuals or legal entities, whether or not recorded as outstanding debt of the Federal Government, and in the amount of R$ 15 million or more, in an irregular situation for a period of one year or more.

• Settlements that reduce criminal fines and grant discounts for debts related to the Simples Nacional tax regime, pending the enactment of a complementary law, and to the FGTS, pending the authorization of its Board of Trustees, is prohibited.

• The proposed settlement is conditioned on the abandonment of administrative and judicial litigation regarding the subject matter of the settlement and the waiver of any claims of a right on which these claims are based, including legal actions of a collective nature. In the case of judicial proceedings, the waiver must be subject to a request for extinguishment of the settlement with a resolution on the merits, through the ratification of the settlement, under the terms of item "c" of subsection II of article 487 of the Code of Civil Procedure.

• The Federal Revenue Service is not authorized to file foreclosure proceedings in the event of termination of the settlement, but may request that the judicial reorganization proceeding be converted into bankruptcy in this case.

• Failure to comply with the conditions established in the settlement will result in termination thereof in the cases provided for by law. The debtor shall be notified of this act and may challenge it within 30 days. Within this period, it is also permitted to bring into good standing a curable defect that gives rise to a notice of termination.

In relation to the points of attention identified in the text of the MP, the conversion bill deals with a very important issue, referring to the instruments of relinquishment to be requested by the debtor in judicial proceedings.

According to the new wording proposed, the purpose of the request for waiver to be submitted to the court will be to close the proceeding with a resolution on the merits for ratification of the settlement. It will also have the effect of forming a judicially enforceable instrument. Therefore, since this is a typical settlement, with mutual concessions from party to party for the ending of the dispute, there should not be, in our opinion, any judgment to charges for loss of suit.

In this respect, it is also inconsistent, in our view, to provide for a mere reduction in the legal charges incurred when registering the debt as outstanding debt of the Federal Government. Since they take on the nature of attorneys' fees, such amounts should also be excluded from the final amount to be paid in the event of a settlement.

On the other hand, the conversion bill no longer addresses the situation of tax debts that have not yet been registered, but for which the administrative proceeding has already been closed. This debt, in principle, would not be provided in any of the settlement types, until it is the subject matter of a legal action, in the form of article 19 of the bill.

If the goal of the measure is to reduce litigation, it is as important to close ongoing proceedings as it is to avoid the initiation thereof. Thus, it would be necessary that debts already created not yet enrolled in outstanding debt could also be subject to settlement.

In turn, the proposition rightly seems to have solved the situation of tax debts not yet created by the tax authorities, by providing that the second type of settlement must have as reference a controverted theory, being only conditioned, in principle, on the existence, on the date of publication of the public notice, of an active judicial or administrative litigation pending final judgment, in relation to the theory that is the subject matter of the settlement.

Therefore, the existence of a materialized contingent liability is not required to settle on a certain legal theory, which allows the rule to be applied in writs of mandamus and declaratory suits whose subject matter is discussion of the tax obligation, for example.

Thus, criticism is maintained regarding the supposed lack of provision for settlements with debts in the interim between the final creation thereof in the administrative sphere and the registration in outstanding debt. However, extension of the measure to legal disputes involving an as yet unestablished tax obligation deserves praise.

As for administrative litigation for small amounts (debts not exceeding 60 minimum wages for which the taxpayer is an individual, a microenterprise, or a small business), the bill, in consideration for the more favorable conditions for the settlement, brings in a relevant limitation on the taxpayer's right to resort to Carf, which will certainly be challenged. It is expected that the judgment of such cases will be carried out at the last level of appeal by a panel of the Federal Revenue Service, observing the binding effect of Carf's understanding.

This means that such taxpayers would not have access to a parity judgment at the last level of administrative appeal, since all the judges at the judgment offices are tax auditors of the Federal Revenue Service. In addition, the hearings at the offices are not currently disclosed to taxpayers, who are only notified regarding the outcome of the judgment, without the possibility of monitoring it in person, scheduling hearings with judges, or submitting oral argument.

In our opinion, if the proposal is approved, the regulations to be issued by the Revenue Service will have to change the functioning of the offices so that the agency may function as the last level of appeal, with full guarantee of an adversarial proceeding and a broad defense for taxpayers and the legality itself of the final creation of the tax debt, by means of equal structuring of the adjudicatory bodies (judges appointed by the RFB and by taxpayers).

Once the general terms of the bill for conversion of the Taxable Person MP is presented, there is great expectation surrounding the enactment of the law and the regulations thereof.

The bill went to the Chamber of Deputies for a floor vote. The limit for approval by the two legislative houses is March 25, 2020.

Category: M&A and private equity

The Brazilian Securities and Exchange Commission (CVM), through Public Hearing SDM No. 07/19, proposes to regulate, pursuant to article 291 of the Brazilian Corporations Law, a scale to reduce the percentage of share capital provided for in paragraph 4 of article 159. The objective of the draft instruction, currently under review by the agency is to make it easier for minority shareholders to file civil liability suits against officers and directors. If approved, the draft may have some impacts, which are analyzed below.

According to the current wording of the head paragraph of article 159 of the Brazilian Corporations Law, the rule provides for the possibility of filing a civil liability suit against officers and directors, first against the company, upon prior resolution at a general meeting of shareholders. If, however, the general meeting decides not to move forward with the suit, it may be brought directly by shareholders representing at least 5% of the capital stock, the so-called "derivative suit."

The draft CVM instruction suggests changes in this percentage. The proposal is to divide public companies into five bands, according to the value of their capital stock. For each of the bands, a percentage of the shares required is established so that minority shareholders may directly file the civil liability suit. The higher the capital stock, the lower the minimum percentage required:

The possibility for a minority shareholder to file suit directly is a mechanism to protect against abuses by controlling shareholders. The objective is to prevent them from creating a bubble to protect dishonest acts performed by officers and directors appointed by them, to the detriment of the best interests of the company and its shareholders as a whole.

What is discussed is not the existence of the mechanism itself, but the percentage considered "ideal" to avoid abuses, by both controlling and minority shareholders.

This is not the first time that the CVM has exercised its prerogative under article 291. An example of this is CVM Instruction No. 165/91, in which the agency regulated the scale, reducing the percentage of capital required for a request for a multiple vote, and No. 324/00, which regulated the percentages for requests for setting up an audit committee at companies that do not have one.

The justification presented by CVM in the public hearing notice refers to an alleged low capacity of coercion of the measures established by the provisions to be regulated. The CVM also mentions in the document that while, on the one hand, the existence of minimum percentages prevents the filing of frivolous suits, on the other hand, high percentages may prevent relevant shareholders from taking measures to protect the interests of the companies themselves.

It cannot be denied that the CVM's intention to establish mechanisms to strengthen the healthy and positive performance of minority shareholders is a beneficial measure that should be applauded. The measure could be even more effective if combined with the intention demonstrated by the CVM at the same hearing to reduce the percentages required for full disclosure of the company's books (pursuant to article 105 of the Brazilian Corporations Law) in cases where acts violating the law or the by-laws are reported or there is a well-founded suspicion of serious misconduct committed by a body of the company. This is because the prerogative of inspection is directly related to the possibility of filing a lawsuit.

The standard suggested, however, will not necessarily foster activism on the part of minority shareholders, since they do not obtain direct financial benefits from the measure. In fact, according to paragraph 5 of article 159 of the Brazilian Corporations Law, positive results of actions for compensation are intended only for the company, and not for the shareholder who filed the action. This shareholder will have reimbursed only the expenses incurred, including interest and adjustment for inflation). That is, for that individual shareholder, who does not have a relevant interest in the Company, the intended change may be ineffective, since this shareholder will continue to not directly benefit from the filing of such measure.

On the other hand, it cannot be ignored that the intention to reduce the percentages for filing such lawsuits could lead to abuses by minority shareholders, since the rule did not establish mechanisms to avoid opportunistic conduct, such as the requirement of uninterrupted corporate holding for a minimum period. This measure, in our opinion, could discourage the filing of lawsuits by shareholders that are not in line with the company's long-term policies and strategies. It could also make the idea of buying shares in a company for the sole purpose of bringing suits for liability against certain members of management less attractive.

Thus, although we believe that the measure may be beneficial to encourage greater participation and representativeness of minority shareholders in the Brazilian capital market, it does not seem advisable to us to simply reduce the percentages without creating any additional requirement to prevent abuse by ill-intentioned minority shareholders.

Category: Banking, insurance and finance

On February 6, the Brazilian Securities and Exchange Commission (CVM) issued Instruction No. 619, which amends specific issues of Instruction No. 592/17 (on the activity of securities consulting), to expressly allow investment consultants based abroad to operate in Brazil.

According to the CVM, the standard esteems an approach of multilateralism aligned with a future accession of Brazil to the Organization for Economic Cooperation and Development (OECD). By promoting the opening of the Brazilian market to foreign investment consultants, CVM Instruction 619, which enters into force on June 1 of this year, adapts the regulatory treatment applicable to the issue to the reality of an increasingly global market.

When operating in Brazil, investment consultants not based in Brazil will be subject to the same regulatory framework applicable to local consultants, i.e., the new rule favors symmetry of regulatory treatment, a plea claim greatly reinforced during the public hearing that culminated in the issuance of the instruction, on the grounds of avoiding any risk of "regulatory arbitrage."

In this regard, the mandatory recognition by the CVM of investment consultants based abroad is highlighted, as is the observance of the rules issued by the agency on suitability (CVM Instruction 539/13) and prevention of money laundering and financing of terrorism (CVM Instruction 301/99). However, these requirements will only apply when the foreign consultant operates in Brazil, as expressly provided for in article 2, sole paragraph, of CVM Instruction 592/17, introduced by CVM Instruction 619/20.

In our view, this provision correctly delimits the scope of CVM Instruction 619 to investment consultants based abroad that provide services in Brazil to investors residing here, thus eliminating the regulatory barrier that required these consultants to have their headquarters or domicile in Brazil. Thus, the CVM's recognition provided for in the rule should not cover consultants domiciled abroad if their service is rendered exclusively outside Brazil, even if to investors residing in Brazil.

In other words, nothing should change in the operations of foreign investment consultants who continue to perform their activities only abroad: they will continue having to comply with the requirements and conditions for licensing and conducting activities established by foreign law. However, still more caution will be needed in order to avoid the risk of Brazilian law becoming applicable to their activities, especially the requirement for recognition by the CVM established by the new instruction, among other rules.

Category: Labor and employment

Discussions related to working hours and control thereof are extremely relevant for companies in Brazil, due to the large number of lawsuits in the Labor Courts involving the payment of overtime, a problem historically related to two factors:

• The mismatch between work hours rules (and control thereof) and social changes in the work environment; and
• Some precedents created in recent decades by the Labor Courts that represented the granting of additional rights related to working hours based on an extensive interpretation of the legislation (for example, the precedent that considered travel time between home and work and vice versa, known as hours in itinere, as part of the work day, depending on the location of the company and the supply of public transportation).

In order to correct these points, ensure greater legal certainty for companies and employees, and reduce the number of complaints in the Labor Courts, the Labor Reform and the Economic Freedom Law have changed the rules on work hours, adapting laws and regulations and case law to the new dynamics of social and labor relations and the new forms of rendering services.

An example of a change was the regulation of the telework system by the Labor Reform, in order to exempt employees who work in this manner from control of working hours. The measure was extremely important to provide legal certainty to a new system of working resulting from social and technological advances and which are highly desired by employees.

The requirement to control working hours by means of pre-approved manual, mechanical, or electronic recording systems for establishments with at least 20 employees (previously it was 10) reduced costs and facilitated the business of small companies and startups.

The Economic Freedom Law, in turn, amended the Consolidated Labor Laws (CLT) to authorize employees and employers to enter into individual agreements instituting and regulating the control of working hours by exception, which is more practical and economical than traditional methods. In this system, employees should only input into the system working hours that deviate from the usual working hours. For this purpose, employees are assumed to work the contractually normal hours on a regular basis, except on days when overtime is entered into the system.

Before this authorization, the legality of control by exception was questioned in the Labor Courts, which generated risks to the application of this system. The legislative amendment came after a judgment in which the TST recognized the legality of the control by exception instituted by a collective bargaining agreement, settling the discussion on the subject. With the recent change, control by exception may be adopted without the involvement of the trade union, which makes the procedure for implementation simpler and facilitates companies’ day-to-day operations.

Although the changes did not alter the limits on working hours, they authorized parties to negotiate compensation agreements directly, without the need for trade union participation, as was previously required.

The new rules have reduced bureaucracy and made a positive contribution to legal certainty in employment relations. As a result, the number of new labor claims involving overtime pay has decreased by almost 40% in the last two years.

According to the Superior Labor Court (TST), 509,863 new labor claims were filed in 2017 with this type of claim. In the following year, the total fell to 355,148 and in 2019 it retreated further to 317,373.

The changes reflect the new global trend to reduce state intervention in private relations, especially labor relations, so that parties may negotiate working conditions more freely and adapt them to their needs and wishes. This freedom to negotiate has its limits well established by the CLT and by the constitutional rights guaranteed to workers, which avoids undermining rights.

Category: Environmental

The year 2019 was marked by great uncertainties and numerous challenges for Brazilian environmental law. Changes and legislative developments and events throughout the year have generated various demands, actions, and business opportunities in relation to various topics, such as mining and dams, climate change, fires and deforestation, solid waste, environmental licensing, and economic development with sustainability.

Some changes in competencies and responsibilities were made early in the year with the publication of Executive Order No. 870 (converted into Federal Law No. 13,844/19) and Federal Decree No. 9,660/19, which transferred the Brazilian Forestry Service (SFB) to the Ministry of Agriculture, Livestock, and Supply (Mapa). Mapa also received some new competencies previously belonging to the National Indian Foundation (FUNAI) and the National Institute of Colonization and Agrarian Reform (INCRA), including the identification, delimitation, and demarcation of indigenous lands and quilombolas. Federal Decree No. 9,806/19 was also published, which altered the composition and functioning of the National Environmental Council (Conama), reducing the vacancies dedicated to the participation of civic society.

In January, attention turned to Minas Gerais, where a new mining dam rupture was registered, this time at the Córrego do Feijão mine. As expected, various rules on dam safety and disaster prevention were enacted after the accident in order to tighten existing rules at the federal and state levels. For example, one may emphasize State Law No. 23,291/19, which established the State Dams Safety Policy in Minas Gerais (PESB-MG), in addition to Semad/Feam Joint Resolution No. 2,784/19, which provided for the decommissioning of all dams containing tailings and waste raised by the upstream method^[1] arising from mining activities in Minas Gerais. At the federal level, in turn, Resolution No. 13/19 of the National Mining Agency (ANM) was approved, establishing additional regulatory measures to ensure the stability of mining dams.

The year was also marked by a significant increase in the number of burns and deforestation in the Amazon,^[2] which raised international interest and influence on the Brazilian environmental scenario. In response to growing pressure, the government promulgated Federal Law No. 13,887/19, which amended provisions of the Forest Code regarding registration in the Rural Environmental Registry (CAR) and the Environmental Regularization Program (PRA). The new rule established mandatory registration in the CAR for an indefinite period, given the requirement of this registration for subsequent adherence to the PRA. The CAR is a electronic public registry, created by the Forest Code (Federal Law No. 12,651/12), with the objective of assisting in the control of deforestation and facilitating the monitoring of rural properties, through a national system that removes the need for on-site inspection.

At the end of December, the federal government published a series of decrees on the same subject. These include: (i) Federal Decree No. 10,140/19, which establishes the structure of the Amazon Protected Areas Program Committee (Arpa); (ii) Federal Decree No. 10,142/19, which created an executive commission to develop policies aimed at controlling illegal deforestation; and (iii) Federal Decrees No. 10,143/19 and 10,145/19, which establish, respectively, the National Fund and Policy on Climate Change and the Interministerial Committee on Climate Change.

In general, climate change has become a focus of attention again for the government and the public. After years asleep since the decision not to renew the Kyoto Protocol in 2012, the issue has regained strength in international forums such as the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (COP-25), with the consequent reopening of discussions on the carbon market.

In Brazil, in terms of innovation in market instruments for the environment, the Ministry of Mines and Energy (MME) published Ordinance No. 419/19, which regulated the form of issuance, bookkeeping, trading, and expiration of decarbonization credits (CBios), as established by article 17 of Federal Law No. 13,576/17 (RenovaBio Law). The standard reinforces the potential of expanding Brazil’s agricultural capacity, without the need to harm the environment, stimulating the issuance and trading of CBios related to the production of biofuels (e.g. ethanol, biodiesel, biogas, biomethane, and biokerosene).

The year 2019 also saw extremely important legislative advances on the subject of solid waste. In order to provide more transparency to the activities of monitoring these wastes, the Ministry of Environment (MMA) implemented the National System of Information on Solid Waste Management (Sinir) through MMA Ordinance No. 412/19. Also noteworthy is the publication of the Interministerial Ordinance No. 274/19, implemented in a partnership among the MMA, the Ministry of Regional Development, and the Ministry of Mines and Energy. In order to regulate the energy recovery from solid urban waste (MSW), the standard makes it mandatory to draw up contingency and emergency plans and a decommissioning plan for energy recovery plants.

Still on the subject of waste, the MMA and various entities representing the industry finally signed in October the Sector Agreement on Reverse Logistics of Electronics, which provides specific goals for players in the industry, such as reinsertion of materials into the production line, creation of points for consumer awareness actions, and increase in the number of collection points for these products. Compliance with the agreement is expected to reduce inappropriate product disposal and associated environmental impacts.

During the year there were also significant changes in the federal administrative process for investigating environmental violations. For example, Federal Decree No. 9,760/19 amended provisions of Federal Decree No. 6,514/08, which deals with environmental infractions and sanctions and establishes the federal administrative procedure to investigate them. The major changes were the creation of the Environmental Conciliation Center (NCA) and the modification of the Environmental Fines Conversion Program.

In the business sphere, the Economic Freedom Law (Federal Law No. 13,874/19), aimed at accelerating Brazil's growth, also had repercussions on environmental law, with the adoption of measures to reduce bureaucracy in the environmental licensing system. They speed up and assign good faith and legitimacy to the information provided by developers and technical managers.

The current government has already expressed its intention to implement new measures to further speed up environmental licensing, foster the productive sector, and reduce conflicts between the environmental authorities and the private sector or other areas of the Executive. In 2020, therefore, new rules are expected to be defined to make general environmental licensing more flexible, linked to a bill on the subject that has been before the Federal Chamber of Deputies for 15 years and may be voted on at any time. The objective is to provide greater legal certainty to environmental licensing processes, defining the aspects to be assessed and the deadlines for response by the competent bodies, encouraging voluntary practices and initiatives aimed at good environmental management and limiting excessive discretion on the part of public agents.

The discussions on the environmental agenda should therefore gain more strength in the national scenario in 2020. The storms, floods, and fires recorded at the beginning of this year demonstrate the clear need to address environmental issues seeking to improve and strengthen the existing legal framework, which is awaiting a vote. Environment Minister Ricardo Salles has already recognized the need to strengthen the urban environmental agenda, focusing on sanitation and waste management. This agenda will also gain relevance with Brazil's attempt to join the Organization for Economic Cooperation and Development (OECD). And with the inclusion of environmental issues on the federal government's agenda since the beginning of the year, it is certain that 2020 will also be a year with plenty of business, opportunities, and challenges for all who work in environmental law.

^[1] Semad/Feam Joint Resolution No. 2,784/19, article 2, item IV: "upstream method: dam construction methodology in which the construction material is placed upstream from the axis of the initial dam.”

^[2] According to Greenpeace: "From January to August 20, the number of fires in the region was 145% higher than in the same period in 2018" (https://www.greenpeace.org/brasil/blog/amazonia-sob-ataque-queimadas-tem-aumento-de-145-em-2019/?gclid=EAIaIQobChMInu-mgNHR5wIVk4KRCh0jaQ3qEAAYAiAAEgIoT_D_BwE) Also, according to the National Institute of Space Research (INPE), satellites registered almost 90,000 fire outbreaks in the Amazon region, 30% more than in 2018. (https://noticias.uol.com.br/meio-ambiente/ultimas-noticias/redacao/2020/01/08/amazonia-fecha-2019-com-89-mil-focos-de-queimadas-30-a-mais-que-2018.htm)

Category: Institutional

As a legal advisory firm with a strong presence in the business area, we have been able to perceive with great sensitivity the moments of change in investors' mood towards Brazil's economy. The most recent one, no doubt, started in the second half of 2019 and has been intensifying in the beginning of this year, driven by an atmosphere of more optimism and confidence in Brazil.

A positive agenda of more liberal tendencies, involving cutting red tape and fiscal discipline, has given a new focus to the market and had a very clear impact on projects of various natures that we are being invited to support.

Even in the face of threats such as the coronavirus epidemic in China, whose potential impacts on Brazil are not yet very clear, there is a general perception of a resumption of growth, benefiting from a previously repressed agenda of projects in the areas of airports, ports, highways, basic sanitation, energy, oil and gas, among others.

Another factor that contributes to improving the business environment is the control of inflation and the persistent downward trend of basic interest rates in the economy, currently at their historical low. The real estate segment, for example, is already registering signs of reheating.

This new economic environment opens a very positive window for business in the capital markets, with the prospect of increasing initial public offerings (IPOs) by Brazilian companies in search of new ways to finance their operations. We have no doubt that good projects, in expanding sectors, will attract the interest of investors.

Abroad, where low and even negative interest rates have been a reality for some time, there is a huge liquidity stock awaiting good and safe projects in reliable countries with properly functioning institutions. The interest of foreigners, be they institutional investors, private equity funds or sovereign wealth or pension funds, in local projects has been increasing since last year.

If Brazil is able to advance this year in structural reforms that boost our productivity and reduce market uncertainties regarding the economy in the medium and long term, part of these funds that are now available abroad will certainly take Brazil's course in ever-increasing and faster flow, increasing our chances of sustained growth.

Examples are administrative reform, an attempt to restructure the federal public service to contain the increase in compulsory government expenditure, and tax reform, designed to simplify and cut red tape in the payment of taxes in Brazil. Both are scheduled to be debated by the Brazilian Congress in 2020.

Another issue that will be on companies’ day-to-day agenda is the effort to adapt to the General Data Protection Law (LGPD), which comes into force in August. This work began last year and should intensify going forward, with companies finishing mapping the data they store and the forms of access authorized for them to implement the new procedures required by the legislation start on August 15.

The LGPD is just one example of how technology should affect business decisions in all sectors in the coming years. In the legal segment, the trend is no different. Technological advances may generate relevant transformation in the services we provide, with an overall improvement in the quality and efficiency of operations for clients.

To the traditional concern with the technical qualifications of our lawyers has been added in recent years to a keen eye for technological innovation, with investments in research and development for automation projects and artificial intelligence. Our team for technology applied to law, for example, achieved major advances in 2019 and we expect to implement some projects already in 2020.

Little by little, these investments are translating into a better experience for clients not only in terms of costs and response time, but above all in more precision in our analyses, in order to continue offering the market legal intelligence capable of boosting good business, a key issue in a year that promises to be very positive for the Brazilian economy.