- Category: Labor and employment
1. For example: (i) Superior Labor Court, 8th Panel. Bill of Review RR-1379-81.2016.5.21.0041. Opinion drafted by Justice Dora Maria da Costa. Date Published: November 10, 2017 and (ii) Superior Labor Court, 4th Panel, Bill of Review RR-2551-38.2012.5.02.0070, Opinion drafted by MARIA DE ASSIS CALSING, Date Published: March 4, 2016.
- Category: Competition
The Antitrust Law (Law No. 12,529/2011) establishes three objective criteria that determine whether a corporate transaction must be filed with the Administrative Council for Economic Defense (Cade), namely whether it produces effects in Brazil, characterizes economic concentration and meets the turnover threshold. The turnover threshold is met when one of the economic groups involved in the transaction has registered annual gross turnover or volume of business in Brazil equal to or greater than R$ 750 million on the balance sheet of the fiscal year prior to the transaction, and another group involved in the transaction has registered annual gross turnover or volume of business in Brazil equal to or greater than R$ 75 million in the same period. According to the interpretation traditionally adopted by Cade, in order to calculate group turnover each of the parties involved in the transaction should first identify which companies were part of the group, pursuant to Cade Resolution No. 02/2012, at the end of the fiscal year prior to the transaction. Based on this information, the gross turnover of the companies established in Brazil and the volume of business of the foreign companies with sales to Brazil were added together. This practice was modified after the interpretation adopted by Cade's General Superintendence in three merger filings in which the parties questioned which companies should be included in their economic group, namely whether they should be only those that were part of the group at the end of the previous fiscal year or at the moment immediately prior to the transaction submitted to Cade’s review. In those cases, the configuration of at least one of the groups involved in the transaction had changed from one year to another year. If the companies that belonged to the economic group at the end of the last fiscal year weretaken into account, the turnover threshold would be met. On the contrary, if the companies that belonged to the economic group immediately before the transaction were taken into account, the threshold would not be met due to the divestment of group companies during that period. Cade's General Superintendence decided to dismiss those filings on the grounds that one of the criteria for mandatory filing was not met, and clarified that the composition of the economic groups of the buyer(s) and seller(s) to be taken into account for turnover calculation purposes should be the one at the date of the transaction, which in practical terms would be the date of execution of the agreement that formalized the transaction to be potentially filed with Cade. Therefore, in order to calculate the gross turnover of an economic group for Cade's purposes, one should disregard the turnover of the companies that were part of that group in the year prior to the transaction, but which were sold before the date of execution of the transaction agreement; and take into account the turnover in the last fiscal year of companies that were not part of the group in the year prior to the transaction but were acquired by the group before the date of execution of the transaction agreement. Considering the constant changes in the composition of economic groups due to the dynamics of buying and selling companies in the market, attorneys and businesspeople involved in M&A transactions that produce effects in Brazil and entail economic concentration should rely on these guidelines when calculating group turnover and assessing the need to submit the transaction for Cade’s review.
- Category: Capital markets
Paragraph 2. If it is imperative that the disclosure of a material act or fact occur during trading hours, the Investor Relations Officer may request, always simultaneously with the stock exchanges and organized over-the-counter market entities, both Brazilian and foreign, in which the securities issued by the company are admitted for trading, suspension of the trading of the securities issued by the publicly-held company, or relating to them, for the time necessary for proper dissemination of the material information, in accordance with the procedures set forth in the regulations issued by the securities exchanges and organized over-the-counter market entities on the subject.
According to the new version of the manual, since May 2, 2018, the following procedures must be observed by issuers of securities in disclosing material facts:- the issuer must disclose material acts or facts to B3 (Brasil, Bolsa, Balcão) and to the market at least (i) 30 minutes in advance of the opening of the trading session; or (ii) after its closure, without prejudice to the provisions of item (ii) below;
- in exceptional cases where it is absolutely necessary to disclose a material act or fact during trading hours, including in the event of loss of control over the secrecy of the information, the issuer should contact B3 prior to the actual disclosure to the market of the material act or fact, in accordance with applicable legislation; and
- the contact mentioned in item (ii) above must be made by the issuer via telephone call to B3’s Board of Issuers, at +55 11 2565-6063.
Depending on the information provided by the issuer in the telephone call mentioned in item (iii) above, B3 may not suspend the trading of the issuer's securities if it finds that suspension may impair the efficient functioning of the market.
If B3 decides to suspend trading of the securities, this fact will be communicated to the issuer in the same telephone call. Thereafter, the suspension shall be disclosed to the market. In this case, the issuer shall disclose the material act or fact to the market in accordance with applicable legislation, within 10 minutes of the suspension.
- Category: Environmental
Decision No. 076/2018/C by the Board of Directors of the Environmental Agency of the State of São Paulo (Cetesb), which conditions the issuance or renewal of environmental licenses on the structuring and implementation of reverse logistics systems, accordance with the procedures set forth in the rule, will enter into force on June 4th.
The National Solid Waste Policy, instituted by Law No. 12305/2010, established shared responsibility for the product life cycle, thus defined: "A set of individualized and linked attributions of manufacturers, importers, distributors and traders, consumers, and owners of public urban sanitation and solid waste management services to minimize the volume of solid wastes and rejects generated, as well as to reduce the impacts resulting from the product life cycle on human health and environmental quality."
The idea of sharing responsibility for the management of solid waste to ensure its proper disposal was already introduced by São Paulo’s state legislation. In Article 5, item IV, of Law No. 12,300/2006 (establishing the State Policy on Solid Waste), shared waste management is understood as the "way of designing, implementing, and managing waste systems, with the participation of the sectors of society with the perspective of sustainable development." In this sense, Decree No. 54,645/2009 establishes that solid waste management is the "set of linked and articulated actions applied to the processes of segregation, collection, characterization, classification, manipulation, packaging, transportation, storage, recovery, reuse, recycling, treatment, and final disposal of solid waste."
It is within this set of individualized and linked assignments that reverse logistics is being implemented, defined by law as an “instrument of economic and social development characterized by a set of actions, procedures, and means to enable the collection and restitution of solid wastes from the business sector for reuse in its cycle or in other productive cycles, or another appropriate final environmental destination”.
According to article 33 of Law No. 12,305/2010, the manufacturers, importers, distributors, and dealers of agrochemicals; batteries; tires; lubricating oils; fluorescent lamps, sodium and mercury vapor and mixed lights; and electrical and electronic products should perform independently, that is, without mandate by the public service of urban cleaning and solid waste management, the structuring and implementation of the reverse logistics system after the product returns from the consumer.
According to article 15 of Decree No. 7,404/2010, which regulates the issue, there are three ways in which reverse logistics systems can be implemented and operationalized: (i) sectoral agreements, which are acts of a contractual nature signed among the Government and manufacturers, importers, or traders; (ii) regulations issued by the Government, which should be preceded by public consultation; or (iii) terms of commitment entered into by the Government with the manufacturers, importers, or distributors.
In view of the importance of reverse logistics systems for the effective management of solid waste, Cetesb established, through Board Decision No. 076/2018/C, that its structuring and implementation is a conditional factor for environmental licensing carried out by the agency. The measure complies with SMA Resolution No. 45/2015, which defines the guidelines for implementing and operationalizing post-consumer responsibility in the state of São Paulo.
Producers or persons responsible for the importation, distribution, or commercialization of products that, after consumption, result in wastes considered of significant environmental impact will be subject to the procedure; whose packaging is considered to have a significant environmental impact or compose the dry fraction of municipal solid waste or equivalent, according to the list of products and packaging marketed in the state of São Paulo, contained in Article 2, sole paragraph of SMA Resolution No. 45/2015, and wall paints, provided that the project is subject to the ordinary environmental licensing of Cetesb.
In its decision, Cetesb defined manufacturers as "the holders of the brands of the products, those who carry out the packaging, assembly, or manufacture of the products." But those who do not fit within the classification of manufacturer should ensure that the product is placed within a reverse logistics system.
Information on the structuring and implementation of the system should be provided by means of registration, a Logistics Plan, and operational results of the enterprise, an Annual Report. The forms for meeting the two requirements will be available in the Reverse Logistics Module of the State System for On-line Management of Solid Waste (Sigor), which will be made available by Cetesb.
The information will be given in a gradual manner, divided between the stages of structuring, implementation, and operation, each one having specific cut-offs and goals for the enterprise. Decision No. 076/2018/C regulates the first stage, with a duration scheduled until December 31, 2021.
Finally, the decision provides for gradual adaptation to the procedure and establishes minimum levels that should be reached in solid waste management by the end of 2021. The final goal, however, is that reverse logistics systems implemented in the state of São Paulo have an environmentally appropriate destination for 100% of the post-consumer products or packaging received in their systems.
- Category: Labor and employment
The Specialized Collective Dispute Division (SDC) of the Superior Labor Court (TST) authorized the Brazilian Post Office to collect from its employees’ monthly pay and co-share payment for their health plan (at the rate of 30%, provided that it does not exceed 5% of salary in the case of coinsurance payment and between 2.5% and 4.4% in the case of monthly pay, depending on the salary). In turn, spouses will pay 60% of the monthly fee. Until then, the Brazilian Post Office covered 90% of the costs of the health plan, as provided for in the collective bargaining agreements in force up to July 31, 2018.
The decision, issued on March 12, is of the utmost importance, as it raises the possibility for companies in general to undertake changes in the payment/use of health plans granted to their employees voluntarily, whether due to crises or insurers' demand, or simply due to increasing costs of the plan previously purchased (without contribution and/or co-participation by the workers).
Without specifically addressing the merits of the rules of the health plan in which postal workers were included pursuant to a collective bargaining agreement (which is not so common among private companies), the purpose of this article is to analyze the TST’s understanding (still pending publication in the Official Gazette) in authorizing changes in the form of payment and use of health plans in the event of evident economic and financial problems on the part of the companies.
Although there was no consensus, among the labor courts the understanding prevailed that any change in the rules governing the payment of health plans granted voluntarily by employers, and which could be interpreted as detrimental to workers to some extent, could not be implemented, as provided under article 468 of the Brazilian Labor Code (CLT).[1]
This position taken by the labor courts ultimately discouraged companies from granting this type of benefit to workers or even granting different types of health plans to newly hired employees, based on the TST's Precedent No. 51,[2] which allows the companies to take this path. In some situations, companies were unable to find health plans that were more competitive and had better coverage and service networks, since they would require co-share payments when the health plan previously granted was fully covered by the company.
With the entry into force of the Labor Reform (Law No. 13,467/17), renegotiation of health plan rules (although not provided for in collective bargaining agreements, but in internal rules) became possible in view of the predominance of the negotiated vs. legislated. Nonetheless, we find it very difficult for unions to agree to this kind of change, as in the case of the Brazilian Post Office.
We understand, however, that it is possible to argue that, although the Unions may not agree with changes in the rules governing the payment and use of health insurance, they may be considered by companies, depending on how they are implemented.
In view of all of the above, and in light of the recent decision issued by TST, the debate on possible changes in the rules governing the payment/use of health insurance plans is gaining new momentum. Nevertheless, caution and a case-by-case analysis are needed to avoid future labor contingencies.
1. Article 468 - In individual employment contracts, it is only permissible to change the respective conditions by mutual consent, and provided that the changes do not directly or indirectly result in prejudice to the employee, under penalty of nullity of the provision that infringes on this guarantee.
2. Precedent No. 51 of the Superior Labor Court. REGULATORY NORM. ADVANTAGES AND OPTION FOR NEW REGULATION. ARTICLE 468 OF THE CONSOLIDATED LABOR LAWS (incorporated into Jurisprudential Guidance No. 163 of the SBDI-1) - Res. 129/2005, Published in the Gazette of the Judiciary (DJ) on April 20, 22 and 25, 2005.
I - Regulatory clauses that revoke or alter previously granted advantages will only affect workers hired after the revocation or amendment of the benefit. (former Precedent No. 51 - RA 41/1973, published in the Gazette of the Judiciary on June 14, 1973)
II - In the event of the coexistence of two company benefit plans, the employee's selection of one of them has the legal effect of renouncing the rules of the other system. (former Jurisprudential Guideline No. 163 of the SBDI-1 - included on March 26, 1999)
- Category: Real estate
In order to increase collection, the Federal Government decided to sell the 17% ownership it holds in emphyteutic real estate property. With this measure, individuals, who hold 83% of these properties (useful domain), will become their full owners.
Currently, the owners of these properties must pay the Federal Government an annual fee, called emphyteutic rent, corresponding to 0.6% of the market value of the land, excluding improvements. In addition, in the event of sale of the real estate property, a fee corresponding to 5% of the market value of the land is due, excluding improvements (laudemium). With the acquisition of the Federal Government’s portion (remission), the owners will have full ownership of the real property and will no longer be required to pay the annual emphyteutic rent and laudemium to the Federal Government.
The remission of the emphyteutic rent will be done for an amount corresponding to 17% of the market value of the land, excluding improvements. Those who opt for prompt payment will be granted a 25% discount. The legislation provides for the alternative of payment in installments, which may vary from case to case.
The remission process will begin with the publication of a decree authorizing the remission of the emphyteusis regime in regions where there is no longer any reason to apply it (lack of public interest). The remission can also occur at the request of the interested party who is duly registered and not in debt, a situation in which the analysis of the Federal Government Assets Secretariat (Secretaria de Patrimônio da União – SPU) is necessary.
The real estate properties under occupation regime may also be acquired by their occupants, who will no longer pay the Federal Government an annual occupancy fee of 2% of the market value of the property (excluding improvements), and laudemium, in the event of sale. Occupants who are regularly enrolled and not in debt may exercise their preemptive rights upon receipt of notice from the SPU regarding the sale or anticipate and offer a proposal to purchase the occupied real estate property.
The initiative is the result of federal legislation (Law 13,240/2015), which authorized the beginning of the process of selling Federal Government real estate properties. Since then, numerous properties have already been sold. Continuing with this initiative, in the first week of May, the SPU in São Paulo began the process of remission of emphyteutic real estate properties located in the Municipalities of Santana do Parnaíba and Barueri. The work will begin with a pilot project and should cover about 4,000 properties in the industrial area of Alphaville. SPU technical staff will evaluate these areas to determine the market value of the real estate properties.
The expectation is that other SPU regional offices will begin similar processes soon. In Rio de Janeiro, for example, there are various real estate properties subject to the emphyteutic or occupation regime that could benefit from this initiative. Until a specific ordinance is not published listing which properties the SPU believes may be subject to remission, there is nothing that prevent owners of real estate properties subject to the emphyteutic or occupancy regime from initiating administrative procedures on their own to propose to the SPU the remission of the emphyteutic or occupation regime of their properties. In addition to the pecuniary advantages of not paying the annual emphyteutic rent, occupancy fee, and laudemium, the owners of real estate properties subject to the occupation regime will no longer have restrictions on the registration of real estate development and the granting of real estate guarantees, which can be a concrete benefit in certain cases.
- Category: Infrastructure and energy
In all, there are three liquid bulk terminals in the port of Cabedelo-PB (AE-10, AE-11, and AI-01); two liquid bulk terminals in the port of Santos-SP (STS-13 and STS 13-A); and two terminals in the port of Suape-PE, one intended for the handling of containers (SUA-05) and the other for vehicles (SUA-XX).
In order to comply with the schedule provided, it will be necessary to conduct a public hearing and submit the projects for the review of the Auditing Court (TCU), which, in evaluating other similar projects, such as the port terminals for movement of vehicles in the port of Paranaguá (PAR 12) and general cargo, primarily paper and pulp, in the ports of Itaqui (IQI 18) and Paranaguá (PAR01), it did not stop any public procurement procedure, having limited itself to providing recommendations to federal entities.
Although the project schedule is very similar, the model for the STS-13 liquid bulk terminal, located in the port of Santos-SP, aside from having already been submitted for a public hearing, has already been approved by the TCU. The next step is the publication of the public notice, which is expected to occur in the second quarter. The model of the container terminal SUA-05, to be installed in the Port of Suape-PE, is still in the study phase, although the public notice is expected to be published in the third quarter.
During the public hearing phase, the Internal Rate of Return (IRR) is a relevant subject that can be commented on. In the case of other terminals, the rate was changed before the public notice was published.
The studies on the characteristics of the projects are being conducted by Empresa de Planejamento e Logística S.A. (EPL). Most of the terminals correspond to brownfield investments, but a greenfield project is also part of this investment package, in this case the SUA-05 container terminal, which will be installed in the port of Suape-PE.
According to the information provided by the CPPI, it is estimated that the total investment is in the order of R$ 1.2 billion, of which R$ 46.34 million is for the terminals located in the port of Cabedelo-PB; R$ 912.5 million for the terminals located in the port of Suape-PE; and R$ 309 million for the terminals located in the port of Santos-SP. The term of validity of the contracts varies between 25 and 30 years, depending on the case.
Following the model of the previous calls for bids, EPL will continue to apply the judging criteria of greater grant value, which tends to exclude adventurous bidders who do not have the economic and financial health to perform long-term contracts.
Considering that the projects can be modified after the public hearing phase, it will only be possible to conduct a more detailed analysis of their characteristics with the publication of the public notice.
- Category: Labor and employment
According to Anamatra, by permitting Law No. 13,467/2017 to apply to employment contracts that were already in force, there was a violation of the principle of non-retroactivity of the law and of the principle of legal certainty and trust.
With due respect to the members of Anamatra, there is no way to agree with this understanding. From a technical and legal point of view, it is possible to say that the decision by Anamatra did not consider the principles and rules that guide the application of a new law in time, since, according to the constitutional rules and the Law of Introduction to the Rules of Brazilian Law (LIDB), it is possible that a new law has retroactive effects, provided that they respect perfected legal acts, accrued rights, and res judicata.
In addition, Anamatra's understanding seems to violate the provisions of article 912 of the Consolidated Labor Laws (CLT), which establishes immediate application of precepts of public policy.
The understanding of the members of Anamatra is also contrary to the understanding defended by the government itself, since the Ministry of Labor had already reaffirmed that the Labor Reform would be valid for all labor contracts, both new ones and ones already in force. Such an understanding was also embodied in Presidential Decree No. 808 (which became ineffective on April 23, 2018): Article 2 expressly mentioned that the provisions of Law No. 13,467/1207 would apply in full to employment contracts in force.
By applying the law only to new employment contracts, there will also be an express violation of the principle of legality and equal protection, since two employees working in the same branch of activity for the same company may have different rights (such as the right to receive hours in itinere).
Again, with the respect due to Anamatra, we understand that the goal of the legislator was to apply the law immediately to all employment contracts in force in Brazil in order to avoid the occurrence of disparate situations.
Upon understanding that Law No. 13,467/2017 was inapplicable to existing employment contracts, Anamatra also disregarded that the principle of protection continues to apply, which is why resistance to the application of the law to all employment contracts is unnecessary.
In any case, the theories approved are not binding and contradict the speeches and objectives of the government and the former president and current justice of the Superior Labor Court (TST), Ives Gandra Martins Filho, who always defended the application of Law 13,467/2017 to all employment contracts.
The debate on the subject is far from being over. Probably the understanding on the applicability of the Labor Reform will be modulated by the TST or even by the Federal Supreme Court (STF).
For practitioners of the Law, there will be a challenging work front for the defense of the apparently obvious and correct understanding that the application of Law No. 13,467/2017 also occurs for employment contracts that began before its enactment. Let us look at the scenes from the next chapters.
- Category: Litigation
The new Code of Civil Procedure (CPC) prizes the parties' autonomy of will and values conciliation and the institution of a cooperative procedural model, principles embodied in the institute of procedural legal business (article 190). Fully capable parties may directly influence and participate in proceedings involving rights that admit self-resolution, with a provision regarding settlements on procedural encumbrances, powers, prerogatives, and duties.
The legislator's expectation was to ensure greater speed and effectiveness to proceedings since, in certain circumstances, the parties may adapt procedural rules to the specifics of the case.
Court reorganization, in turn, constitutes a proceeding subject to a special framework established by Law No. 11,101/2005 (Law on Bankruptcies and Corporate Reorganizations - LFR), in which the CPC finds secondary application to the extent it is fitting and where bankruptcy legislation is incomplete or contains omissions.
In view of this, considering that court reorganization involves a great deal of collective bargaining over eminently property rights, fundamentally between debtors and creditors, the possibility of adapting the deadlines set forth in the LFR to the reality of each case was debated, among other points, as was the possibility to use mediation between the debtor and creditors.
In other words, one conceives of applying procedural legal business to court reorganization in order to adapt the reorganization process to certain peculiarities. Some examples of this are: (i) insufficient term to hold a general meeting of creditors and present a robust court reorganization plan when it relates to a business group with a sophisticated debt profile and various stakeholders (OAS Group, OI Group, Abengoa Group); (ii) counting the time limits on the basis of business days and not calendar days, especially to present challenges to or registrations of debt claims, considering the new rules of the CPC; and (iii) the time limit for concluding the court reorganization (article 61, LFR), which may be very extensive, thereby exposing the debtor to reputational wear for a longer period than necessary.
In this sense, some judicial decisions issued by First Degree Courts have already modulated the procedural rules and the time limit for court reorganization according to the principles of procedural legal business. This is precisely the case of the companies Eneva (placed in Rio de Janeiro) and Zamin (placed in São Paulo), in which the judge of such cases ordered the conclusion of court reorganizations within a time period shorter than the two years provided for in article 61 of the LFR, on the grounds that the respective court reorganization plans provided for shorter obligations and that companies would remain in court reorganization for an extended period of time, thus facing known problems with credit restriction and creditworthiness on the market.
However, although the Rio de Janeiro Court of Appeals upheld the First Degree Court decision, this was not the understanding of the São Paulo Court of Appeals, which modified the decision in Zamin case, affirming that the rule of judicial supervision of two years is cogent and shortening it could cause harm to the community of creditors by imposing a restriction on the creditors’ guarantee, supported by the Judiciary, of the conversion into automatic bankruptcy due to breach of the court reorganization plan.
It will therefore be incumbent on the Superior Court of Justice (STJ) to settle the controversy and settle an understanding with respect to the limits of application of the CPC to court reorganizations. Although STJ has already positioned itself in relation to the counting of time limits in calendar days for a stay period and for the presentation of the plan (Special Appeal REsp 1.699.528/MG), there has still been no ruling by the STJ regarding the possibility of applying the institute of procedural legal business to court reorganizations.
In principle, we have a positive outlook for application of procedural legal business to court reorganizations, with the possibility that debtors and creditors may define, among other points, a specific procedural calendar.
- Category: Corporate
To what extent may noncompliance with formal requirements provided for by the law, bylaws and shareholders’ agreements annul call notices for general meetings (GMs)? To find answers to this question, we analyze in this article the understandings of legal scholarship and case decisions related to the annullability of GMs convened in disagreement with established procedures.
The standard provisions for convening GMs are set forth in Law No. 6,404/76 (the Brazilian Corporations Law or LSA), but the company's bylaws and/or shareholders' agreements may change these rules, provided that they do not conflict with the LSA.
A fundamental requirement for a call notice for a GM to be valid is for the initiative to originate from a competent body or person.[1] According to article 123 of the LSA, it is within the purview of the board of directors, if any, or the executive officers, subject to the provisions of the bylaws, to issue such a call notice.
Also in accordance with the LSA, whenever it is necessary to hold a GM, the members of the board must meet in advance, observing the proper formalities for the meetings of this body and respecting its collegial nature, to approve the proposal for a call notice. In practice, however, the call notice is often done by the chairman of the board or another member and, as a routine act, this should not result in any prejudice for the company. It must be emphasized, however, if any damage to the legitimate interest of the company or any shareholders is found, failure to comply with a formality may render the call notice invalid.[2] Here, it is important to emphasize that the annullability of AGs convened with a procedural irregularity must take into account the actual damage caused to the company and/or its shareholders.
The importance of the shareholders’ interest
Following this line of thought, Erasmo Valladão Novaes França points out that “at a particular meeting, in which there was a disregard for the formalities set forth in the law or bylaws related to the call notice and call to order, nothing other than the interests of the shareholders themselves are at stake at the time in which the meeting is held."[3] Therefore, one should not conceive of the annullability of a GM based on formal requirements when what is to be protected, which is the most relevant point here, is the interests of the shareholders. In the absence of actual damage or conflict in relation to such interests, nullity of the GM is not justified, and the act must therefore be preserved.
This understanding is corroborated by the following decision by the São Paulo Court of Appeals, in which a suit to annul a GM was denied because no actual harm to the applicant shareholder was found:
"Appeal - Action for Annulment - Questioning of acts of representation of the Estate of Guilherme Muller Filho - Allegation of defect in call notice for an ordinary general meeting and the resolution reached therein - Overcome by the spontaneous appearance of all shareholders - Absence, in addition, of the actual and effective indication of damages caused to the interests of the parties and/or of the company - Sufficiently grounded judgment - Ratification in the form of article 252 of the Internal Rules of Procedure of this Court - Appeal denied relief. “(Appeal No. 0104399-42.2007.8.26.0000, Opinion drafted by Beretta da Silveira, decided on February 7, 2012)
Call notice for GM prompted by shareholder
Another interesting point about the annullability of GMs called only by the board is the strict interpretation of the LSA that the chairman or any other member of the board would not individually have competence to attend to the request for a call notice made in accordance with letter (c), sole paragraph, of article 123 of the LSA.[4] Fulfillment of the request for a call notice made by a shareholder holding shares representing 5% of the capital stock would also necessarily require the convening of a prior meeting of the board, only by means of which a decision should be reached by the board, if the call notice is to be made or not.
A contrary line of argumentation states that the request to convene a GM made by a shareholder representing 5% of the capital stock would generate a power and duty[5] on the part of the officers and directors, to be interpreted as a prompted call notice,[6] which would authorize the members of the board, in the strict fulfillment of their duties, to comply with the shareholder's request and, if necessary, contradict procedures established in the LSA and/or bylaws, in order to comply with the eight-day legal deadline established in article 123 of the law. In this manner, board members may take exceptional measures to obtain greater speed, which, of course, would require a case-by-case interpretation, considering the relevance of each act against the provisions of the LSA and/or bylaws and its actual prejudice to the other shareholders.[7]
In this same sense, the Brazilian Securities and Exchange Commission (CVM) affirmed, upon analyzing the organizational function of bylaws, that "the improper use of this organizational function that bylaws have, and indeed it is legitimate that they have it, to prevent or curtail the rights of shareholders cannot be accepted. The organizational function of bylaws cannot serve as a pretext for producing bureaucratic rituals and formal whims that prevent shareholders (or board members) from exercising the right conferred by law."[8]
One notes, again, an inclination to preserve the objectives sought by GMs, here interpreted broadly, over and against the formal and/or procedural aspects of lesser importance indicated in the LSA and/or bylaws.
And when the board is constituted in an irregular manner?
Another situation that may cause nullity is the convening of a GM done by a board constituted irregularly, in disagreement with the provisions of article 146 of the LSA and its paragraphs (for example, it is necessary to follow the registration and publication procedures indicated in the article for election of the board members and indicate the term of office for each board member elected).
In relation to this specific scenario, Modesto Carvalhosa pondered that: "it is clear that in this case there should be no nullity due to formal issues, that is, an irregular call notice. If, however, the resolutions reached are prejudicial to the corporate or individual interests of the partners, the defective origin of the call notice shall be a convincing issue supporting the nullity of such resolutions."[9]
In this case, it was understood that the irregular call notice should be disregarded, always considering potential damages to the company's and the shareholders' corporate and individual interests, respectively, since the determination of nullity of all GMs convened by an irregularly composed board would represent a much greater problem for the company’s life than failure to comply with a simple formal requirement of a call notice, a situation that should be avoided.[10]
In addition, it is understood that the fact that the LSA establishes a public call notice procedure for GMs (articles 124 and 289), in addition to the call notice procedure set forth in article 123 of the same law, safeguards the greater objective of giving adequate publicity to call notices, thereby correctly informing the shareholders that GMs will be held. In view of the supplementary nature of these two procedures, it is even more irrelevant that non-compliance with minor formalities is lacking.
Prevalence of relative nullity over absolute nullity
One should add to the above the fact that in legal scholarship and case decisions the prevailing understanding is that absolute nullity should be ruled out, and corporate acts should be preserved when it is possible to opt for the application of relative nullity. Again, the degree of non-compliance with legal norms and/or procedures and the effective harm to shareholders should be considered. This is, for example, the teaching of Nelson Eizirik when he affirms that: “In Corporate Law, one applies, with the adaptations necessary, the general regime of annullability of acts that are erroneous or defective (relative nullity), and not absolute nullity."[11]
It is therefore verified that the Brazilian legal system, via both legal scholarship and case decisions,[12] invokes the existence of a detachment from the nullity in corporate law under the classical theory of nullities. In addition, the tendency in Brazilian and comparative law is to understand nullities in the corporate context as relative, thereby relegating absolute nullity to only truly exceptional situations.[13]
Conclusions
Thus, although it is important to observe the provisions of the law and/or bylaws regarding the regular calling of GMs (and it is recommended that this be done strictly to avoid questions), legal scholarship and case decisions tend to value preservation of the effects of call notices whenever possible, either by relativizing procedures of minor importance for convening GMs, or based on the understanding that the application of relative nullity should prevail over absolute nullity in the corporate law context. In order to consider the annullability of GMs convened via a call notice with procedural defect, therefore, it is always necessary to observe the relevance of the procedures not followed and the actual harm caused to the shareholders and/or the company as a result of this noncompliance.
1. Additional requirements for regular convening of a GM: (i) publication of the call notice (articles 124 and 289 of the LSA) and (ii) delimitation of the matters to be discussed (article 124 of the LSA). TEPEDINO, Ricardo. Direito das companhias [“The law of corporations”], 2nd v. / Coordinators: Alfredo Lamy Filho; José Luiz Bulhões Pedreira – Rio de Janeiro: Forense, 2009, p. 890.
2. COELHO, Fábio Ulhoa. Curso de direito comercial [“Commercial law course”], volume 2: direito de empresa [“company law”] - 15th ed. - São Paulo: Saraiva, 2011, p. 225.
3. NOVAES FRANÇA, Erasmo Valladão. Invalidade das deliberações de assembleia das S/A e outros escritos sobre o tema da invalidade das deliberações sociais, [“Invalidity of resolutions at general meetings and other writings on the issue of invalidity of corporate resolutions”], 2nd ed. São Paulo: Malheiros Editores, p. 102.
4. “Article 123, sole paragraph: The general meeting may also be called: (...) (c) by shareholders representing at least five percent of the capital stock, when the directors do not attend to, within a period of eight days, a request for a call notice, duly substantiated, indicating the matters to be addressed (...)"
5. GUERREIRO, José Alexandre Tavares. Convocação de assembleia geral por acionista [“Calling of general meetings by a shareholder”]. Revista de Direito Mercantil [“Journal of Business Law”], n. 41. São Paulo: Revista dos Tribunais, Jan/Mar 1981, p. 154.
6. CARVALHOSA, Modesto. Comentários à lei de sociedades anônimas [“Comments on the Brazilian Corporations Law”]. 3rd ed. São Paulo: Saraiva, 2003. V. 2, p. 634.
7. CASTELLO BRANCO, Adriano. O Conselho de Administração nas Sociedades Anônimas [“The Board of Directors in Corporations”]. 2nd ed. – Rio de Janeiro: Forense Universitária, 2007, pp. 54-59.
8. CVM/RJ - Administrative Proceeding No. 2005/3806 - Opinion by chief judge Marcelo Fernandez Trindade, dated July 21, 2005.
9. CARVALHOSA, Modesto. Comentários à lei de sociedades anônimas [“Comments on the Brazilian Corporations Law”], 2nd volume: articles 75 to 137 - 6th ed. - São Paulo: Saraiva, 2014, p. 927.
10. TJSP – AI No. 2136380-06.2017.8.26.0000 – 1st Chamber of Business Law - Opinion drafted by Cesar Ciampolini – decided on October 18, 2017.
11. EIZIRIK, Nelson. A lei das S/A comentada [“The Commented Brazilian Corporations Law”], volume III, São Paulo: Quartier Latin, 2011, pp. 591/592.
12. STJ – Special Appeal REsp 1.330.021 – (2012/0025233-6) – 4th Panel – Opinion drafted by Justice Luis Felipe Salomão - Published in the Electronic Gazette of the Judiciary on April 22, 2016.
13. BORBA, Gustavo Tavares. COELHO, Fábio Ulhoa (coord.). Tratado de direito comercial: tipos societários, sociedade limitada e sociedade anônima [“Treaty on Trade Law: corporate types, limited liability companies and corporations”]. São Paulo: Saraiva, 2015, pp. 371, 386 and 387.
- Category: Tax
The right to a tax offset recommends reflection on the rules issued by the legislator that shape such offsets. Among the rules, special mention should be made of section 170-A of the National Tax Code (CTN), introduced by Complementary Law No. 104/2001 (LC 104/01). The provision was promulgated in a context of a great proliferation of tax lawsuits as a result of notorious governmental tax collection and questionable requirements of constitutionality and legality. Since federal tax offsetting had been introduced into the legal system in the 1990s without much regulation, taxpayers interpreted the institute in such a way as to petition the Judiciary for preliminary injunctions seeking the immediate recovery of improperly collected taxes, which often was granted. However, since provisional nature is inherent to preliminary injunctions, some decisions were subsequently overturned, thus generating legal uncertainty not only for taxpayers but also for the public administration. The objective of section 170-A of the CTN was to provide greater legal certainty to tax offsets, thus only admitting them when the right becomes determinate and enforceable,[1] which usually occurs at the time of the final and unappealable judicial decision.
Extraordinary appeal with recognized general repercussion and special repetitive appeal Since the promulgation of Constitutional Amendment No. 45/2004 (EC 45/04), Brazil’s legislature has been expressing its intention to grant to litigants in court a more efficient Judiciary, thereby introducing fundamental guarantees such as the reasonable duration of the proceeding, speed, and, essentially, greater legal certainty in decisions. It was exactly in this scenario that the institute of "general repercussion" emerged as a new admissibility requirement for extraordinary appeals. Subsequently, various changes introduced into the legal system sought to favor the standardization of judicial decisions, such as Law No. 11,418/2006, which introduced sections 543-A, 543-B, and 543-C into the 1973 Code of Civil Procedure (CPC 73). The first two of these regulated appeals subject to general repercussion and the latter was promulgated to create appeals submitted to the so-called "repetitive" appeals system under the purview of the Superior Court of Justice (STJ). With the promulgation of the 2015 Code of Civil Procedure (CPC 15), there was an even greater need for respect and uniformity of case law in order to maintain it stable, complete, and consistent,[2] including with the improvement of the systems of general repercussion and repetitive appeals and the creation of other procedural forms of judicial relief/adjudication.[3] The intention to give more force to the precedents led to the inclusion, within the scenarios for granting provisional relief, of the so-called relief of evidence, which is independent of the urgency of the prayer for relief (the so-called periculum in mora), in cases where there are recognized repetitive appeals or binding precedents.[4] As Justice Rosa Weber pointed out in her opinion issued in the decision on habeas corpus No. 152.752/PR, "the consistency and coherence of judicial development of Law are virtues of the normative system as virtues of the Rule of Law. State institutions should protect citizens from unnecessary uncertainties about their rights." All this is in line with the constitutional principles of equality, reasonable duration of proceedings, and legal certainty. One notes, accordingly, that, since the promulgation of EC 45/04, the legislator has been endowing the procedural system with mechanisms capable of making the provision of judicial relief more effective and timely, thus enabling the party to be able to give effect to the substantive law pled and granted by the Judiciary. This occurs from the establishment of fundamental guarantees, such as the speed of proceedings and reasonable duration of the proceeding (EC 45/04), to the enactment of a norm that establishes the list of decisions that present, to a certain extent, binding effect (section 927 of the CPC/15), in order to standardize case law, always favoring legal certainty. In this context, the question is: how does one interpret section 170-A of the CTN when there is a theory established in an extraordinary appeal with general repercussion recognized by the Federal Supreme Court (STF) or in a special repetitive appeal by the STJ, in order to avoid having taxpayers who were diligent in filing a lawsuit seeking recognition of their subjective rights to a credit remain in an unfavorable situation with respect to taxpayers who did not file a lawsuit?
Systematic interpretation by the legal system and Carf When we consider taxation as an exception to the fundamental right of property recognized by the Federal Constitution (CF 88), if there is a theory settled by higher courts that a certain tax is not due or that a certain calculation basis is not applied, it is necessary that its effects be felt on the practical level as quickly as possible, including, if necessary, with respect to the recognition of a subjective right to a credit. In these cases, there is no reason to postpone the legitimate enjoyment of a determinate and enforceable credit. It is unreasonable to allow a taxpayer who has brought a legal action to await a final and unappealable decision favorable to its claim to administratively seek an offset when there is already a favorable theory settled by the higher courts. It is therefore necessary that both the Judiciary and the tax administration systematically interpret the legal system seeking to privilege equality and legal certainty among taxpayers. The Administrative Council of Tax Appeals (Carf) itself already recognizes the force of precedents in binding its decisions on the findings of higher courts in the framework of repetitive appeals (section 62, paragraph 2, of the Carf Internal Rules). In addition, both the STF and the STJ have already recognized the need for a systematic interpretation of the legal system in order to achieve greater harmonization of rules.[5] Such an interpretation does not represent the repeal of the limit established by section 170-A of the CTN, but rather, according to a certain factual scenario under examination, consideration of the provision in conjunction with the other norms and guarantees provided by the legal system, to give greater effectiveness, reliability, and predictability in the provision of judicial relief. In this sense, two decisions issued merit emphasis, one in the judicial sphere and the other in the administrative sphere. In 2017, the 5th Federal Court of São Paulo granted provisional relief of evidence to assure the taxpayer its right to immediately offset amounts unduly collected by the Tax Administration,[6] precisely based on an understanding issued via binding restatement by the STJ. More recently, Carf’s 4th Chamber of the 2nd Ordinary Panel, in a judgment on Administrative Proceeding No. 10880.906342/2008-96,[7] unanimously granted partial relief to a voluntary appeal filed by a taxpayer to process a petition for offset lodged before a final and unappealable judicial decision favorable to reimbursement of amounts paid in excess by way of PIS and Cofins. The reporting judge based his understanding precisely on a systematic interpretation of section 170-A of the CTN, considering the factual peculiarities presented and the understanding established by the STF in the decision on Extraordinary Appeal RE No. 357.950/RS, thus ruling out, in this case, an in-depth and isolated reading of the provision. Therefore, although this is an incipient debate within the judicial and administrative courts, the subject invites us to further reflect on the interpretation and scope of section 170-A of the CTN, especially when, considering the peculiarities of each case, it opens up space to interpret it in conjunction with other rules and constitutional and procedural principles provided for in our legal system, with a focus on the right to tax offsetting, speed of procedure, legal certainty, and the decongestion of Justice.
1. Explanatory Memorandum No. 820, of October 6, 1999, signed by the then Minister of Finance, Pedro Malan.
2. Section 926. The courts of appeal must standardize their case law and keep it stable, complete, and consistent.
3. Such as, for example, the Ancillary Proceeding for Resolution of Repetitive Demands provided for in section 976 of the CPC/15.
4. Section 311. The relief of evidence shall be granted, regardless of the demonstration of danger of harm or risk to the useful result of the proceeding, when: (...).
II - the allegations can in fact be verified only in a documentary manner and there is a theory established in a judgment on repetitive cases or in a binding precedent;
5. Direct Suit of Unconstitutionality - ADI No. 2.650/DF and Appeal per Internal Rules in an Interlocutory Appeal in the context of a Special Appeal - AgRg no Ag em REsp No. 2011/0176982.
6. Provisional Execution of Judgment No. 5007628-70.2017.4.03.6100, federal substitute judge Tiago Bitencourt de David, decision issued on July 14, 2017.
7. https://www.conjur.com.br/2018-abr-24/seguindo-stf-carf-autoriza-compensacao-antes-transito-julgado
- Category: Infrastructure and energy
- Category: Banking, insurance and finance
For a long time, a generic rule prohibited financial institutions from granting credit to related parties. More recently, however, in the process that culminated in the enactment of Law No. 13,506/17, an amendment to article 34 of Law No. 4,595/64 created several new exceptions to this rule, although the principle prohibiting the granting of credit to related parties still prevails. The proposal for a resolution commented on in this article regulates the provisions of article 34 of Law No. 4,595/64, as amended by Law No. 13,506/17.
With regard to the definition of related parties, the proposal for a resolution does not innovate, but merely repeats the text of the law. However, there are several aspects of interest regarding: (i) the definition of credit transactions; (ii) the definition of conditions compatible with the market; and (iii) the limits for transactions with related parties. Each of these items is analyzed separately below.
Definition of credit transactions. Historically, the concept of credit transactions was restricted to lending, financing, and security discount transactions, so much so that there was a need for a later rule "clarifying" that the same restrictions for credit transactions with related parties would also be applicable in the case of guarantee transactions. Now, in the proposal submitted for public consultation, the role of credit transactions appears not only broader (including, for example, transactions with post-paid payment instruments) but also covering "other transactions or contracts with credit-like characteristics." That is, instead of adopting a strictly formal conceptualization, the regulator also considered the function and the essence of the instrument. This seems to us to be very positive, since it is an exception to a prohibitive rule.
Conditions compatible with the market. The Central Bank of Brazil determines that credit transactions with related parties must comply with the same standard adopted for transactions with unrelated parties, that is, they must be contracted under conditions (interest, term, guarantees, etc.) substantially similar to those prevailing for similar transactions with unrelated parties, including when collateral is required (e.g. if the institution requires collateral from a customer with a given risk rating and if the related party that qualifies with such risk requires collateral).
Limits. In addition to normal market conditions, such transactions may not exceed certain limits. Thus, there is an overall limit (10% of the institution's adjusted equity) applicable to the total balance of such transactions and there are individual limits (i.e. a maximum risk exposure to a single borrower) of 1% of PLA for individuals and 5% for legal entities, both of which are calculated on the date the loan is granted.
The Central Bank of Brazil will receive comments and suggestions until April 13.
- Category: Labor and employment
- Category: Labor and employment
The Federal Attorney General’s Office (AGU) opined that Law No. 13,467/2017 (the Labor Reform) was constitutional as regards its amendments to articles 578, 579, and 582 of the Consolidated Labor Laws.
Subjected to various criticisms, the new wording of these articles has profoundly changed the dynamics of the annual contribution of workers and employers to unions. Previously obligatory, the contribution became optional and came to depend on the express authorization of those interested in paying it to the union.
Among the criticisms presented, we highlight the controversy over the constitutionality of this change. Based on the argument that, because of its tax nature, the union contribution could only have been amended by a complementary law (and not by an ordinary law, such as the Labor Reform), various suits were filed by unions in the Labor Courts.
The plea, often granted at the outset, is the incidental declaration of unconstitutionality of the Labor Reform in this regard and an order that the contribution must continue to be collected.
In addition to these individual actions, at least 14 Direct Suits of Unconstitutionality (ADI) were filed with the Federal Supreme Court (STF) to debate the matter.
In one of them, ADI No. 5.887, filed by the Federation of Trade Union Entities of Brazil's Court Officials, the AGU was in favor of altering the union contribution through an ordinary law.
As one of its arguments, the AGU reminded that the STF, upon analyzing similar issues, has already settled the understanding that complementary law is dispensable to establish the triggering event, calculation basis, and responsible taxpayer. It cited the issue instituted in favor of Sebrae by Law No. 8,029/1990, ruled constitutional by the Court.
In fact, the STF’s precedents have established that, although they have the nature of a tax, contributions may be subject to ordinary law because they are not taxes per se. And this has already occurred even in relation to funds destined to trade unions.
Law No. 9,615/1998 (Pelé Law), for example, provided that sports practice organizations pass on to the National Federation of Professional Soccer Athletes, a second-level trade union entity, a percentage of the funds related to athlete transfers. The constitutionality of this obligation was ratified in various decisions after being questioned by many soccer clubs.
More than this, the union contribution itself modified by the Labor Reform has undergone alterations imposed by other ordinary laws. It was thanks to Ordinary Law No. 11,648/2008 that trade union confederations raised their fortunes, having started to benefit from part of the funds collected with union contributions. The same trade union confederations today affirm that the amendment of the Labor Reform would only be valid if implemented via a complementary law.
In addition to trade union confederations, attorneys (including those who argue for the unconstitutionality of the Labor Reform) have also benefited in regards to the union contribution. It was Ordinary Law No. 8,906/1994, the OAB Statute, that removed the obligation of making the union contribution from this professional category.
In this scenario, despite the criticisms and the understanding of the Labor Courts, important precedents on changes or institutions of contributions must be taken into account, also for unions, through ordinary law.
And the opinion of the AGU may contribute to having the STF maintain its settled position and ratify the constitutionality of the Labor Reform by making the union contribution voluntary.
- Category: Labor and employment
The rapid expansion of social networks has provoked important debates about the consequences and limits of freedom of expression. With the popularization of the use of smartphones, networks like Facebook, Twitter, Instagram, WhatsApp, Snapchat, and many others popped up and grown exponentially throughout the world and also in Brazil. Surveys indicate that about 130 million Brazilians were active users of some social network in 2017, placing the country in fourth place in the world, behind only China, India, and the United States (and next to Indonesia). The same surveys reveal that Brazil is the third country in the world in number of active users on Facebook and the second in active users of Instagram. Despite some restrictions on the use of social networks, such as blocking racist comments or inappropriate scenes, the ease of use of these tools allows users to freely express their thoughts and opinions on a wide variety of subjects and in a variety of ways. The face-to-face distance between network members, however, creates a false sense of protection and causes people to manifest their thoughts and ideas more freely. The fact is that this often-unthinking use of social networks to publicly express opinions about issues related to their own employment can have negative impacts on labor relations. Article 482 of the Consolidated Labor Laws provides for the possibility of dismissal of an employee for just cause when that employee has committed an act considered harmful to the honor or good name of the employer or superiors, and it is up to the employer to review these statements to take the appropriate measures. Our courts of labor appeals have increasingly received labor claims containing petitions to overturn dismissals for cause arising from acts allegedly harmful to the employer's honor committed by employees. In analyzing the decisions handed down, it appears that there is no majority position in the labor courts, and the judges have conducted detailed analysis of the evidence and facts presented by the parties. In order not to run the risk that the labor courts will find that dismissal was not for just cause, the employer has two paths to follow. The first is the preparation of a code of conduct or a policy for procedures to be respected by employees. It should set out boundaries on the use of social networks for work-related issues, thereby requiring employees' confidentiality on certain subjects, and emphasize that the employer does not accept publication of social commentary on working conditions that exposes specific issues on the work environment, or comments about the company or co-workers. Along those lines, as a second path, the employer will be given the option of analyzing employees’ conduct in the same way that labor judges themselves would do it, thereby considering that dismissal for just cause to be the maximum penalty to be applied to the employee, with consequences that will mark employees’ entire professional life. If the employer adopts this measure without robust evidence that the posts on the social network constituted an act harmful to the company’s reputation, just cause may be reversed in court. The employer should therefore analyze the materiality and authorship of statements on social networks to confirm whether the employee is the author of the postings that cause damage to the company's image or, if not, if they made comments that corroborated the harmful postings. Cases in which employees only "like" the posting of other users, without expressly stating their opinion contrary to the company, have ended in reversal of just cause in the Labor Courts and in judgments entered against the employer to pay the severance and incidentals. Another point to be analyzed concerns the seriousness of the act committed by employees and the proportionality of the penalty applied by the employer. Posts where there is no objective injury to the employer's honor may lead to a finding of dismissal without just cause. In such cases, the employer must apply other administrative penalties to the employee in proportion to the conduct adopted. Subliminal messages, therefore, are not enough to give rise to the application of just cause. Dismissals for just cause with less potential for reversal when challenged by employees in the Labor Courts have been cases in which employees directly attack the honor or good reputation of the employer or their superior, with complaints about working conditions, associating them with slave labor, for example, or vulgar words directed against the company or against hierarchical superiors. It is also important to check the publicity given to employees' statement. In cases of private postings, which are hidden from the general public, damage to the image or good reputation of the employer would not be found. On the other hand, injury is clear when employees make postings public and link them to other employees or companies. Finally, employer must observe immediacy in the application of dismissal for just cause, since delay in punishment is interpreted as tacit pardon and, consequently, as acceptance that there was no harm or damage to the company’s honor or image. In sum, in response to potentially negative messages passed on by their employees on various social networks, employers must analyze in detail whether all the above elements are present, and whether statements go beyond the limits of freedom of expression and constitute an injury or offense to the company’s honor and good reputation.