Category: White-Collar Crime

In a recently published judgment, the 3rd Section of the Superior Court of Justice (STJ) affirmed the understanding that the termination of the legal personality of the company resulting from its incorporation resembles the death of the individual. In Casu, it was considered that the termination of legal personality extinguishes the punishability for environmental crime, as it occurs when an individual dies.

The case relates to charges pressed against an agricultural company for pollution by launching solid waste (Article 54, § 2, item V, of Law 9.605/98). The defense argued that the complaint must be dismissed because the defendant had been incorporated by another company and, therefore, its liability would have been extinguished by analogy to the case of death of an individual. The new company, on the other hand, could not become a defendant in the criminal proceedings for absolute illegitimacy of parties, since it had not committed the alleged criminal conduct.

The first-degree court rejected the defense's arguments and ordered the continuation of criminal prosecution. Thus, the defense filed a warrant before the State Court of Justice of Paraná (TJPR), arguing that the first-degree decision would have violated the right to defense and the due process, since the theses presented on the illegitimacy of part and extinction of the liability for incorporation were not even analyzed in the decision.

The TJPR^[1] accepted the arguments of the defense and granted the warrant, recognizing that there was a violation of the rights in question. The court decreed the nullity of the order, but did not assess the thesis of illegitimacy of part or extinction of the liability, on the grounds that such analysis would characterize the suppression of instance.

The case returned to the first-level judge, where the preliminary theses of extinction of liability and active illegitimacy were expressly rejected. According to the court decision, the corporate incorporation implies the receipt of both the liabilities and the assets of the incorporated company so that the responsibility for acts performed by the company incorporated remain. Otherwise, one could make room for impunity.

The defense filed another warrant before the TJPR, reinforcing the extinguishment of the liability by incorporation under Article 107, item I, of the Penal Code.

The TJPR^[2] granted the warrant ruling in favor of the extinguishment of the liability by the incorporation thesis. According to TJPR, the crime described the complaint corresponded to activities carried out ten years before the incorporation, and the extinction of the legal entity would correspond to the death of the natural person, which extinguishes the criminal liability by law.

The court noted, however, that the extinction of liability is restricted to the criminal jurisdiction, resisting the civil obligations of the company.

The Public Prosecutor's Office then filed an appeal to the STJ, arguing that the extinction of liability by death and the principle of personality^[3] of the penalty would be restricted to individuals.

When judging the appel^[4], the rapporteur of the case in the STJ raised the following points:

• The non-equalization by analogy of the principle of intransferability of the liability to the company would result in a strict liability to the defendant.
• By the very logic of law, it would be impractical to legally prosecute and punish an agent who no longer exists for the purposes of Brazilian law.
• There must be an analogy interpretation of Article 107, item I, of the Penal Code, which lists the death of the agent as the cause of extinction of the liability, to the case in question, since there would be the interruption of the existence – in legal terms – of the active subject of the conduct investigated.
• The fact that criminal law allows business societies to be charged with environmental crimes implies that, even if there are specificities for their punishment, these defendants must have all the fundamental guarantees ensured in the context of due process.
• It would be a failure of the isonomy of criminal law if the protective institutes directed at the defendants were denied to legal entities, since they also constitute themselves as taxable persons of criminal prosecution in this situation.
• The principle of personality of the criminal penalty must be maintained even if there are particularities related to the defendant, not being removed by its corporate character. Although it is understood that the original intention of the institute targeted individuals, this is due to the historical impossibility of having reference to moral entities, and there should be analogy in favor of the defendant in this gap. Moreover, it would not be reasonable to fill that omission in criminal matters by the transmissibility of civil law provided for in the arts. 1,116 cc and 227 of Law 6,404/76.
• Criminal liability does not equate to the constitution of the property obligation, which would be transmitted to the incorporator. This differentiation is due to the nature and purpose of the institutes. While the constitution of obligations comes from the human will in relation to the legal system and can be completed by payment, the sanction is imposed by an imposition of obligation and responsibility by the public authorities, and it is necessary to mediate it for its application. The legal consequences also differ, therefore, while the obligation affects the property by the adoption (spontaneous or forced) or generates the resolution in losses and damages, the punitive claim implies the application of penalty, which can reach the freedom, individual rights and the life of the sentenced, in addition to his assets.

The rapporteur then voted to maintain the decision of the TJPR and to recognize the incorporation as the cause of extinction of the liability. It was followed by the majority of ministers who set the extinction of the liability by incorporation, provided that absent evidence of fraud in carrying out the incorporation.

The recognition of the extinction of liability, however, was not a consensus among ministers. There were also divergent votes to overrule the TJPR's decision, with the following arguments:

• The criminal types provided for in Law 9.605/98, applicable to legal entities, establish accountability through obligations to give and do, which could very well be transmitted to the incorporator in the determinations of civil law.
• The incorporation is only a fictitious death, since the incorporated remains alive in the subsequent company through its activities and economic functions. The equivalent of an analogy of "death" should be reserved for cases in which there is the dissolution and liquidation of the company, since there would be a complete cessation of its activities.
• Incorporation cannot be equated with death both by a lack of legislative provision and by the fact that it is not an irreversible and definitive issue.
• The developer has particular means for the investigation of criminal or administrative procedures involving the incorporated, and the liability cannot be extinguished due to the fact that the operation took place in the absence of due diligence deliberate blindness.
• The extinction of the liability by death would not be appropriate in cases of incorporation due to a divergence of purpose of the institutes. While the first is for the logical impediment of punishment, the second is a particular act, and this cannot extinguish the punitive claim.
• The extinction of liability in these cases would deflate the effectiveness of environmental criminal devices, since, in case of possible punishment, the existence of the legal entity may be terminated, preventing its liability.
• Even if it is understood that legal entities have procedural guarantees when subjected to criminal prosecution, only those possible should be applied and the framing of the principle of personality is not possible.
• There would only be substantial offense to the principle of personality if a dissenting partner or director in the decision that gave rise to criminal conduct were also punished, which did not occur in casu.
• By comparison with Spanish criminal law, it is observed that the punishment of the incorportor would not be a transfer of punishment from one person to another, but rather the perpetuation of the liability of a previously committed crime.

With the ruling of the STJ for the extinction of criminal liability of the legal entity by the incorporation, a very well-delimited barrier of the scope of the criminal punishment is established, which is limited to the agent of the imputed conducts. With this, a brake is established on the persecution expansionism that characterizes corporate criminal law.

It should be noted, however, that this decision applies to the criminal liability of legal entities. However, any damages or violations of environmental legislation may have repercussions in three distinct and independent spheres: administrative, civil and criminal. As the STJ's thesis is restricted to criminal repercussions, it is possible that the liability of incorporated companies persists in other spheres.

The STJ pointed out that there were no indications that the incorporation had occurred fraudulently to exempt the incorporated, but did not detail the criteria to be observed to identify a fraudulent incorporation.

The issue can still be analyzed by the Supreme Court (STF) under the aspect of constitutional compliance, but, in the short term, the STJ's thesis may influence any ongoing criminal proceedings and even convictions pending of appeal.

^[1] Decision given in a writ of security on 15 August 2019.

^[2] Decision given in a writ of security on 10 October 2020.

^[3] It is the principle rule that provides that the penalty cannot transcend beyond the person to whom the typed conduct has been imputed. It is positive in the Article 5, item XLV, of the Constitution of the Republic.

^[4] STJ, Special Appeal 1.977.172/PR, 3rd Section, Rel. Min. Ribeiro Dantas.

Category: Infrastructure and energy

The biogas sector has been gaining more space in Brazil in recent years. It is a critical segment in the current global scenario, in which sustainable solutions are sought in the energy transition effort. In this sense, having an adequate legal and regulatory framework and abundant raw material are fundamental factors for the development of biogas projects, as evidenced by international experiences.

In relation to the raw material, Brazil figures in a prominent position in the global scenario, according to the Brazilian Association of Biogas and Biomethane (Abiogás). The country is one with the highest potential for biogas production in the world from waste from agroindustry (especially sugar alcohol), livestock, and sanitation.

In 2022, we have seen a strengthening of the incentive to use biogas and biomethane with the publication of Decree 11,003/22, which instituted the Federal Strategy to Encourage the Sustainable Use of Biogas and Biomethane. Following the decree, the Ordinance 71 of the Ministry of the Environment, which established the National Methane Emission Reduction Program (Zero Methane Program), and the Normative Ordinance 37 of the Ministry of Mines and Energy, which have included biomethane production projects in the list of the Special Incentive Regime for Infrastructure Development (Reidi).

This scenario of favourable conditions to produce biogas and biomethane in the country, associated with the need for viable solutions in the short term for meeting the goals of decarbonization and increasing national energy security, has led agents to point the sector as extremely attractive for investments. The establishment of programmes and policies aimed at the development of structuring biogas projects are paramount to attracting more investments. This is the case of initiatives such as the Zero Methane Program, which stipulates some guidelines for reducing methane emissions.

The challenges around biogas regulation, however, are still considerable. Despite its equivalence to natural gas for regulatory purposes (provided for in Law 14.134/21 (Gas Law) and Decree 10,712/21 (Gas Decree)), it is necessary to consider that all the regulation applicable today to biomethane was elaborated under the rationale applied to fossil hydrocarbon. Because it is a "borrowed" regulation, there are some regulatory gaps or even relevant doubts that can generate legal uncertainty for the development of projects in the area.

The timing of regulatory review, therefore, is opportune for agents of the sector to stand before the National Petroleum Agency (ANP), to contribute to the establishment of standards capable of meeting the needs of the market.

In addition to the effort at the federal level, it is urgent to develop state policies. The absence of specific regulation in most states of the country reveals an important bottleneck. Few states have legislation focused on biogas and/or biomethane: São Paulo, Rio de Janeiro, Rio Grande do Sul, Paraná, Santa Catarina and Goiás.

Biomethane has an unparalleled internalization potential, which can contribute to the demand formation in regions not integrated into the national gas transport grid – such demand creating is fundamental to anchor the infrastructure building in new markets. This potential for the internalization of biomethane production also reveals a vocation to reach local markets, which as more restricted, through its injection into the distribution grid.

The biomethane production scale tends to be comparatively lower than that of natural gas. The daily production volume and the corresponding injection into pipelines is more compatible with an operation involving local distribution networks than gas transport networks.

Once the initial injection occurs in the distribution network, the biomethane commercialization would be restricted, at least at first, to that concession area. This is because it is currently considered impossible to reverse the flow and inject the gas into the transport network from a distribution network.

That is, for the biomethane achieves national projection through its injection into transport pipelines, bottlenecks of an operational nature need to be overcome.

Investments in gas compression to enable the injection of biomethane directly into transport pipelines would allow the formation of a nationwide market. But considering that the costs involved in these operational solutions can be huge and discourage market formation, other creative solutions need to be considered.

There is, for example, the possibility of carrying out Swap (exchange) of natural gas, both at the local grid, to connect different distribution networks, as well as at the national level, involving distribution networks and transport networks . But these solutions still run into legal and regulatory questions.

Despite recent advances, much is still to be done for Brazil to develop its full potential for biomethane production. For that, it is fundamental to prompt a more attractive sector for investments.

Category: Litigation

The succession regimes of the partners and spouses have been equalized after the trial of the Extraordinary Resource 878,694/MG by the Supreme Federal Court (STF), occurred in 2017, and the consequent declaration of unconstitutionality of the Article 1,790 of the Civil Code, which dealt exclusively with the succession rights of the partner.

Fixed by the Supreme Court the thesis for the Theme 809, with general repercussion, the application of the Article 1,829 of the Civil Code, which provides for the order of inheritance rights for both spouses and partners. The Superior Court, however, did not indicate whether the article would be the only one applicable to the companions or whether the equivalence of stable union to marriage would be extendable to the other provisions, that is, for all succession purposes.

Therefore, the question arose whether the Article 1,845 of the Civil Code, which defines which heirs are needed, should also be applied to the companion. If so, they would join descendants, ascendants and spouses in a special class of heirs, to whom it belongs, the legitimate part, that is, to them is mandatorily destined half of the assets of the inheritance. The question has divided the scholars.

On the one hand, some argue that the equivalence between succession regimes is not absolute, with the exception of the application of Article 1,845. By this understanding, the companion would not have been elevated to the status of necessary heir, since, in the case of a restrictive rule of rights, an extensive interpretation would not be possible. The article would have a restricted list and only the law could expand its scope.

This position is defended by Rolf Madaleno and Mario Luiz Delgado, who also states that it is not up to the doctrine or jurisprudence to regulate stable union and attribute to it the effects of conjugal society, thus transforming stable union into a forced marriage. They are legally different institutes, with different legal natures by express legal determination, and it is not possible for the judiciary to make the legislator's times on the matter.

On the other hand, renowned jurists such as Flávio Tartuce, Zeno Veloso and Giselda Hironaka, representatives of the school of constitutional civil law, advocate the inclusion of the companion in the list of necessary heirs, given the succession allocated with the decision of the Supreme Court, mainly considering the equalization of the different family entities, present in the Federal Constitution, in accordance with its Article 226.

Despite the intense doctrinal debate, based on the recognition expressed by the Third Panel of the Superior Court of Justice (STJ), in judgment of 2018, that the companion would be necessary heiress,^[1] our courts have applied the full inheritance equalization of the partners to the spouses, even though there was no position of the higher courts in Repetitive Regimen – it is not, therefore, a binding understanding.

However, in June of this year, the Court of Justice of Rio Grande do Sul decided to exclude the companion from sharing in a separation of property pact.^[2] This is an action filed by the companion against the daughters of the deceased to annul the sharing held, in which she would not have been contemplated as the necessary heiress.

In his vote, the rapporteur judge states that the deceased would have formalized a private contract of stable union with established regime of absolute separation of assets in 2014, with no evidence of inability of the parties to carry out the act, which would be valid for all legal purposes.

He then recalls that the effects of the Supreme Court's decision for the unconstitutionality of Article 1,790 of the Civil Code were modulated. The understanding would only apply to judicial probate without the  decision reaching res judicata and extrajudicial probate in which there was no public deed.

Considering that the death occurred in 2015 and the public deed was drawn up in 2014, the effects of the Decision of the Supreme Court of 2017 would not go back to the case. It would not be up, therefore, to speak of equalization of the companion to the spouse for inheritance purposes.

Based on these arguments, that Court reformed the judgment and upturned the appeal, to consider valid the deed regarding probate and sharing assets that excluded the companion as the necessary heiress.

Mario Delgado, commenting on this judgment, indicates that this is the first decision that expressly mentions the fact that the companions are not necessary reciprocal heirs, which may be relevant for other cases.

However, as published article by the Brazilian Institute of Family Law (IBFDAM), Delgado also points out that: "However, the surviving companion, in this specific case, is not a necessary heir, not because of the regime of assets of absolute separation, but because the Supreme Court did not want to ensure this status to the companion, as was clear in the judgment of the declaration embargoes in RE 878.694".

It is perceived, therefore, that the issue of the companion as a necessary heir is far from unanimous, which reinforces the importance of giving adequate treatment to this type of relationship in wealth and succession planning, so that there is full understanding and discernment about the issue, its consequences and the legal uncertainty that still permeates the theme.

Sources:

MADALENO, Rolf. Legitimate Succession. GEN Group, 2020.

GONÇALVES, Carlos R. Brazilian civil law - Succession law - v 7. Saraiva Publishing House, 2021.

TARTUCE, Flavius. Civil Law - Succession Law - v. 6. GEN Group, 2021.

^[1] STJ, REsp 1.357.117/MG, 3rd Class, rel. min. Ricardo Villas Bôas Cueva, j. 13.03.2018, DJe 26.03.2018

^[2] Civil Appeal 50002762120178210088, Eighth Civil Chamber, Court of Justice of RS, rapporteur: Mauro Caum Gonçalves, Tried: 30-06-2022

Category: Digital Law

In the week that celebrates two years of its creation, the Brazilian National Data Protection Authority (ANPD) published a new agenda for the period 2023 and 2024, making public the regulatory planning developed by the municipality, now autonomous and independent of the federal government. The ANPD Regulatory Agenda presents the actions and measures understood as priorities in the entity's scope for the next biennium and is a continuation of the previous agenda, which ends and at the end of 2022.

The document is considered a planning tool that aims to give more transparency and give more predictability to the regulatory process of the municipality. Public consultations and the analysis made by the ANPD raised the main points that should be included in the agenda for discussion. The document details the deadline of the regulatory process and how the matter will be handled: whether by resolution, good practice guide or ordinance.

HISTORIC

In January 2021, the ANPD issued its first Regulatory Agenda with the objective of indicating which topics related to the General Law on The Protection of Personal Data (LGPD) would be highlighted in the sphere of action of the municipality during its first two years of activity.

In the first version, the Regulatory Agenda listed ten priority points, categorized into three phases. It can be said that the ANPD valued an orientative posture when establishing as a priority the elaboration of resolutions, frameworks, protocols and guides to guide the beginning of the functioning of the authority in the supervision and protection of personal data and privacy of holders.

Such an agenda would bring greater legal certainty in the orientation of business models that, with the LGPD, began to address new security measures, in line with rights associated with the guarantee of privacy and data protection.

Since the publication of the LGPD, the discussion on the right to privacy and protection of personal data of data subjects has come to have great attention from the three powers. So much so that, in 2022, Article 5 of the Federal Constitution came to have a new wording, including among the fundamental rights the right to the protection of personal data.

Since then, the ANPD's performance continues at an accelerated pace, based on its Regulatory Agenda as guidance to future points of attention and obtaining subsidies for regulation by the municipality: all items of the Regulatory Agenda for the biennium 2021-2022 were initiated within the established deadline.

However, several initiatives brought in the Agenda 2021-2022 were not completed on time: some points submitted to consultation by the ANPD did not advance in consolidating an understanding by the authority. This is the case of the determination of the dosimetry of the penalty and sanctions applied despite violations of the LGPD, definitions such as high-risk treatment, mentioned in the Regulation that makes the application of the LGPD more flexible to small agents, and specifications involving the reporting of incidents and time of notification to the authority.

THE NEW REGULATORY AGENDA

The priority attention points detailed by the ANPD in the Regulatory Agenda 2021-2022 and that have not yet resulted in determinations published by the municipality will now make up Phase 1 of the new agenda, and the 12 items listed in this category will continue to be developed as a priority by the authority. In addition to the points listed in phase 1, eight more items began to include the regulatory planning of the ANPD:

• Data sharing by the government – Provided for in Articles 26 and 27 of the LGPD, the sharing of data between private entities and the public authorities will be the subject of studies to determine procedures to be adopted by agents, as well as transparency parameters on the disclosure of established agreements.
• Processing of personal data of children and adolescents – Although the authority has already conducted a preliminary study on the subject, the new study aims to include analysis of impacts on internet applications and online platforms in the protection of data from minors, expanding the research approach on top of the work already developed.
• Guidelines for the National Policy for the Protection of Personal Data and Privacy – The policy should involve several other projects in the field of public policies, encompassing all actors of the data protection ecosystem and management plans already developed in other systems, such as the Digital Strategy, the National IoT Plan, etc.
• Regulation of criteria for recognition and dissemination of rules of good practice and governance – As part of a work of constant updating, measures of good practice and information security that guide the internal organization of the parent companies and / or data operators should always be reviewed to consider changes in the technological scenario and business models. The regulation will serve as the anpd's recognition of standards of best practices in governance.
• Sensitive personal data: biometric data – The collection of biometrics should receive greater attention from the authority, on a guiding point, regarding the legitimacy of its collection and the security of the holder.
• Security, technical and administrative measures - In line with Article 46(1) of the LGPD, the authority plans to provide for minimum technical safety standards considering the nature of the information processed and the state of technology available for processing agents to ensure the protection of personal data from unauthorized access or situations of inappropriate or unlawful processing of data.
• Artificial Intelligence (AI) - In view of the complexity of the theme addressed in Article 20 of the LGPD, the authority seeks to develop documents and guidance to data subjects for the exercise of their rights in requesting review of automated decisions, in addition to serving as a basis for other rules that discipline the AI system.
• Conduct Adjustment Term (TAC) - As part of the ANPD's review process, the TAC will be an instrument for mediating proposals in sanctioning proceedings promoted by the authority, in any investigations of illicit acts committed under the LGPD.

FIRST CONCLUSIONS

The publication of the new Regulatory Agenda for the next two years reinforces the ANPD's ongoing effort to provide more predictability to the regulatory process and maintain transparency as one of its pillars of action.

Although the new agenda follows the discussion of the themes of the last biennium, which corroborates the orientation posture adopted by the ANPD, it can be expected that the coming years will be a transition to authority. This is because some of the themes based on the new Regulatory Agenda, such as Fines, rights of holders, incident reporting and impact reports, indicate that the ANPD will highlight the supervision of the LGPD and possibly adopt a coercive stance in a more emphatic way.

Category: Litigation

The use of consensual methods – such as negotiation, conciliation, mediation, arbitration and dispute boards – it is increasingly appropriate to resolve and prevent disputes, given the congestion of demands in the judiciary – which often lags more slowly than guarantees the realization of rights.

The adoption of these methods has been recommended and even stimulated by the Judiciary itself,^[1] by the Legislative Power^[2] and the National Council of Justice (CNJ)^[3] as the first and best option for conflict resolution.

Its use gives greater efficiency, helps to reduce the number of legal disputes in the process, unburdening the judiciary, which, in this way, can hold on to conflicts in which litigation persists even after attempts at conciliation or whose judicial assessment is mandatory.

The use of these methods, however, is not a consensus. The culture of litigation and judicialization so deeply rooted in our society is one of the main obstacles. The view that a third party, impartial, with decision-making power over the conflict, - the judge –, would be the only one capable of ensuring a "fair decision" and guarantees the balance between the parties is still very strong.

This idea often departs from false premises, because not always a decision given by a third party promotes the pacification of the conflict. It often does not even serve the interests of those involved in the dispute.

In this sense, there are several instruments that can be used to make consensual methods achieve an appropriate result that accommodates the interests involved. The representation of both parties by lawyer and judicial approval of an agreement concluded are examples of these tools.

In the case of representation by lawyer, it should be considered that the posture of this professional in an extrajudicial negotiation differs greatly from that expressed before a court, where the lawyer assumes a more combative stance.

In an out-of-court negotiation, the parties are protagonists of their own interests. The lawyer should be more collaborative and provide legal advice to accommodate the interests at stake until they reach a consensus.

Lawyers, in this situation, should seek to establish a more empathetic, respectful and productive dialogue, in order to create an environment that both parties are able to expose their emotions, present their interests clearly and, in the end, reach an agreement.

In this sense, it is possible to stipulate that the main attributions of the lawyer in the application of a consensual method are:

• indicate the most appropriate negotiation method for the situation.
• understand the real interests and needs of the client.
• ensure that there are no illegalities in the procedure.
• ensure the principles of good faith, isonomy between the parties, autonomy of the parties, among others.
• provide the client with all the necessary information so that his interests are preserved, clarifying any doubts throughout the procedure; and
• contribute to the decision making, helping the client to reach an informed, conscious and favorable solution for both parties.

Therefore, it is perceived that lawyers not only can but should work to alleviate any imbalances between the parties, arising from social, legal or even information asymmetry. The parties must search and hire a qualified lawyer with experience in consensual methods, otherwise the procedure will end up being misplaced.

With regard to the submission of the out-of-court agreement for the approval of the Judiciary, the only requirement is that the subject matter of the out-of-court agreement corresponds to available rights.

If the out-of-court agreement involves the interest of minors under 18 years and/or incapable, however, the document only produces legal effects after its approval by the Judiciary, because, in this case, there is the prior intervention of the Public Prosecutor's Office as custus legis, in accordance with the Article 178 of the Code of Civil Procedure.

As much as judicial approval is not mandatory in relation to agreements that do not involve the interest of minors and/or incapacitated persons, in accordance with articles 487 and 515, III, of the Code of Civil Procedure, there is resolution of the merits in cases where the judge ratifies the transaction. Therefore, the judicial decision means the existence of res judicata and represents judicial enforcement, which brings greater legal certainty to the signatory parties, avoiding future questioning and the perpetuation of disputes.

In order to judicially ratify an out-of-court agreement, there is no need to have a previous procedure, it is enough to submit a simple petition, signed by the parties, represented by their respective lawyers, in the Judicial Centers for Dispute Settlement and Citizenship (“Cejuscs” in Brazil) or, in their absence, the local civil courts . This is a pre-procedural phase in which there is no dispute brought.

The agreements, in these cases, are submitted directly to the magistrate – except when it is mandatory the intervention of the Public Prosecutor –, who may or may not subpoena the parties to provide clarifications, analyze the formal aspects of the agreement and, finally, ratify it.

It is also worth adding that this procedure of judicial approvar, in general, lasts days or a few months, a short time when compared to the average time of a lawsuit – approximately five and a half years.^[4]

Brought that, the consensual methods and the use of the appropriate tools for each case allow to strengthen trust between the parties to the dispute in order to reach a beneficial, fast and efficient solution. It is an important resource that greatly contributes to avoid the bureaucratization of the judiciary, reaffirming the exercise of the citizenship by the parties.

^[1] Article 3 and Articles 165 to 175 of the Code of Civil Procedure.

^[2] Law 13.140/15 (Mediation Law).

^[3] Resolution 125/10 of the National Council of Justice, which created the Permanent Centers of Consensual Methods of Conflict Resolution, the Judicial Centers for Conflict Resolution and Citizenship and also standardized the training courses of the conciliator and mediator.

^[4] Justice in Numbers 2021. National Council of Justice (CNJ). Brasilia: CNJ, 2021.

Category: Environmental

On August 24, of this year, the Environmental Company of the State of São Paulo (Companhia Ambiental do Estado de São Paulo - Cetesb) issued Board Decision 081/2022/P, which updates the procedures to be observed mainly in the environmental licensing process. Following, on 5 September, it was issued the Board Decision 085/2022/P, which brought changes and inclusions to the former, expanding its applicability to other licensor administrative processes, such as those related to vegetation suppression authorizations, intervention in Permanent Environmental Protected Area (Área de Preservação Permanente - APP)license permit, among others.

Before the issuance of these two board decisions, the entrepreneur was guided by the Law 10.177/98, which regulates the administrative process within the state public administration. Considering, however, that this law establishes only general procedures, the board decisions have the purpose of disciplining details of the licensing processes that are carried out at Cetesb, according to their particularities.

Among others, the two decisions address parameters for the environmental licensing process in the state of São Paulo and establish competencies and attributions for specific sectors of the environmental agency in the evaluation of technical studies that support environmental licensing processes. In addition, they consolidate the obligation to sign an Environmental Recovery Commitment Term or signature and registration of the Green Area for Lot Preservation Responsibility Term, in cases involving authorization to intervene in the Permanent Environmental Protected Area and/or tree suppression authorization.

Another highlight is the fact that the board's decisions provide specific procedures related to the informatization of licensor processes, which were already applied by the environmental agency, but are not addressed by Law 10.177/98.

The board's decisions regulate that the environmental licensing process will begin with the request protocol (SD) or request of those interested in the Environmental Licensing Portal used by Cetesb and, just as before, after the application for granting of environmental license was filed, the documents are forwarded to the platform e-environment, where communications between the environmental agency and the person concerned occur.

As for communication to the entrepreneur, Article 9 of Decision of the Board 081/2022/P determines that notifications of procedural progress must be forwarded to the interested party by message within the electronic platform.

Deadline counting

In addition, Article 11 of The Board's Decision 081/2022/P, amended by Board Decision 085/2022/P, establishes that, for term counting purposes, the date of the notifications will be considered that of the confirmation of reading of the task contained in the "Communicate" or automatically the tenth consecutive day, after sending the message to the address registered on the electronic platform. Therefore, the same logic provided for in Article 5, § 3, of Law 11.419/06, which regulates electronic judicial process, applies.

Also concerning the deadlines, Article 3 of The Board's Decision 081/2022/P reinforces that the counting must occur in accordance with State Law 10.177/98, which establishes that the deadlines must be counted in calendar days, unless expressly provide otherwise, without interruption on Sundays or holidays. Article 11, § 1, clarifies that the deadlines must be counted with the exclusion of the day of the beginning and the inclusion of expiration date.

Regarding environmental licensing processes, Board Decision 081/2022/P provided a minor change in the deadline to file administrative answer in cases of denial of the application for environmental license.

Before, the environmental agency applied, by analogy with Article 101 of the State Decree 8,468/76, the 20-day answer period. The Decision of the Board 081/2022/P, however, clarifies that the period of 15 days is applicable to file administrative answer against the decision which refused the license, counted from the day which the interested party was notified by the rejection decision, as defined in article 44 of State Law 10.177/98.

If the decision which denied the administrative answer by the judgment authority is maintained, the interested party concerned shall also be given an administrative appeal within 15 days. The judgment authority of first instance may, within five days from the date of receipt of the case, reconsider its decision. There is no appeal against the decision given at second instance. The Decision of the Board 081/2022/P did not bring innovations on the deadlines established in State Law 10.177/98 in this sense.

Board Decision 081/2022/P also established that processes that remain paralyzed for more than 120 days awaiting action from the entrepreneur will be filed by Cetesb. It will be possible to request an extension of the deadline, provided that the request is submitted before the deadline.

The board's decisions can be seen as an advance in the modernization of licensor processes and environmental authorizations, as they aim to standardize the processing of administrative procedures conducted by Cetesb and provide greater clarity to entrepreneurs both in relation to the use of the online platform and the monitoring of the progress of cases and in relation to the deadlines to be observed.

Category: Environmental

Known as the Agro Law, the Law 13,986/20 provides in its Articles 7 and following the Rural Heritage in Affectation (PRA), a kind of guarantee of financing in agribusiness that allows the rural owner the segregation of rural property in its entirety or only in one or more fractions. The objective is to guarantee certain credit securities, including the Rural Producer's Ballot (CPR) and the Rural Real Estate Card (CIR).

The PRA is inspired by the existing equity allocation in real estate development and seeks to promote the financing of the rural sector as a credit aid mechanism. According to the explanaming memorandum Provisional Measure 897/19, which gave rise to the Agro Law, the PRA aims to "simplify and expand access to financial resources by rural property owners, and may even improve the conditions of negotiation in rural financing".

From an environmental point of view, the Agro Law establishes certain environmental obligations for the constitution of the PRA:

• Among the documents necessary for the registration of the PRA in the registration of the property, we highlight the registration of the property in the Rural Environmental Register (CAR), in accordance with the Law No. 12,651/12 (Article 12, item I, point "b");
• In case of constitution of the PRA on part of the rural property, the unaffected fraction must meet all environmental obligations provided for by law, including in relation to the affected area (Article 12, § 2º); and
• The PRA or its party linked to each CIR must comply with the provisions of environmental legislation (Article 22, § 2).

Although the law determines compliance with environmental standards for the constitution of the PRA, the institute still needs to be implemented to demonstrate its effectiveness, in the event of default of the debtor and consequent transfer of the affected area to the creditor.

This is because the Agro Law does not regulate responsibility for the environmental liabilities of the area. If environmental damage is found in the property or in its fraction destined for PRA, it is understood that the environmental liability will be automatically transferred to the new owner, by force of the obligation propter rem. That is, the obligation will be transferred along with the right of ownership to the new owner.

Pursuant to Article 2, § 2, of the Forest Code, Federal Law 12,651/12, the obligations provided by law are real in nature and are transmitted to the successor, of any nature, in the case of transfer of dominion or possession of the rural property.

The legal provision translates the concept of obligation propter rem to the extent that it provides for the obligation to maintain and restore permanent preservation areas and legal reserve to the owner, even if it was not the cause of environmental degradation.

In other words, the duty of repair and restoration stems from the right subject's position in relation to the thing. It is, therefore, an obligation originated from the thing, because of the thing. What establishes the obligation is not the conduct itself, but the actual subjective bond.

As highlighted above, since the Agro Law does not regulate the form of accountability for the existing environmental liability in the affected area – for example, any legal reserve deficit or permanent preservation areas that have not been preserved – the new owner will assume the said liability, based on the obligation propter rem, where that issue has not been the subject of prior agreement between the parties.

It is worth noting that the Law 11,101/05, which regulates judicial recovery, extrajudicial and bankruptcy of the entrepreneur and business society, has recently been amended by the Law 14,112/20, which included in Article 60, § 1, the prediction that the Isolated Productive Unit (UPI)^[1] shall be free from any burden and there shall be no succession of the bidder in the obligations of the debtor of any nature, including, but not exclusively, those of an environmental nature.

In such a case, the legislature made an exception to the propter rem in the UPI trespass. However, for the case of PRA, the Agro Law is not expressed in this sense. With this, nature propter rem environmental obligations related to the property involved in the PRA will remain.

^[1] UPI is provided for in Article 60 of Law 11,101/05, which provides that "if the approved judicial recovery plan involves judicial disposal of subsidiaries or production units isolated from the debtor, the judge will order its realization". In summary, UPI is an asset of the company that can be disposed of in isolation during the judicial recovery process, with the aim of preserving the development of the company's activities and also the payment of the total or part of the debts of the company in judicial recovery.

Category: Labor and employment

The Joint Recommendation TST 26/22 CSJT/GP, published on October 11, provides for the need to prioritize the processing of labor lawsuits, whose credit must be paid before the Court of Judicial Reorganization or Bankruptcy, for the prevalence of what was established and approved in the judicial reorganization, and for the promptness in the issuance of credit certificates, as per article 9 of Law 11.101/05 – Law of Judicial Reorganization and Bankruptcies.

The recommendation of the Superior Labor Court (TST) is extremely relevant and timely, especially regarding the need for judges to observe the rules defined in the judicial reorganization even after its closure.

After all, is it possible to affirm that the closure of the judicial reorganization entails the invalidity of the rules defined therein and entails the conclusion that the company under reorganization has become solvent? In our opinion, the answer is no.

This discussion has been contended in several labor lawsuits and, for some Labor judges, the rules defined in the judicial reorganization cease with its closure.

The main motivation in these decisions is the fact that, once the judicial reorganization is closed, the Labor Court must execute the credit arising from the labor lawsuit, and it is no longer necessary the issuance of the credit certificate of the labor lawsuit for the judicial reorganization, the involvement of the Civil Court, and the compliance with the criteria decided therein.

This understanding does not seem correct because the closure of the judicial reorganization, with the eventual reorganization of the company, does not mean that the judicial reorganization plan simply ceased to exist and that the company under reorganization has surplus funds.

It is important to emphasized that, precisely because the judicial reorganization plan existed, the company under reorganization was able to subsist and end the judicial reorganization lawsuit.

Furthermore, the closure of the judicial reorganization cannot be interpreted as the return of the financial health of the company under reorganization because the effects of the judicial reorganization plan are prolonged in time and remain reflected in the future, until all creditors involved in the judicial reorganization receive their credits, within the limits of what was defined in the judicial reorganization plan.

As with any legal transaction, the judicial reorganization plan is binding on all the parties involved within the term and in the form defined upon its approval.

The incidence of the judicial recovery plan on a labor credit is tied to its generating fact. If it is prior to the approval of the judicial reorganization, there is no doubt as to its subjection to the definitions established therein, even if the labor lawsuit is filed after the closure of the judicial reorganization.

Therefore, the Labor Court cannot simply ignore the existence of a judicial reorganization plan because it is closed. It is necessary that its content and that of the decisions given in the judicial reorganization are analyzed, understood, and applied by the Labor Court when judging labor lawsuits that submit to labor relations prior to the date of the approval of the judicial reorganization.

For this reason, the pronouncement of the TST was essential for jurisdictions seeking compliance with the constitutional principles of legal certainty and the reasonable duration of the lawsuits.

Among other measures, the president of the TST and the Superior Council of Labor Justice (CSJT) recommend that the parameters established in the judicial recovery plan approved in the file of the lawsuit in which the judicial, extrajudicial or bankruptcy reorganization, even if already closed, including in the hypotheses of the appearance of labor lawsuits after the closure, should be observed and applied when the generating event pre-process of judicial recovery:

• 3. In the event of the emergence of labor lawsuits after the complete closure of the judicial reorganization lawsuit, out-of-court and bankruptcy of the entrepreneur and the business company, in the name of good faith and the effectiveness of Law No. 11,101/2005, the parameters set out in the approved reorganization plan must be observed and applied in the file of the lawsuits in which the judicial, extrajudicial or bankruptcy recovery has been processed, even if it has already ended.
• 4. The moment of the provision of services, as a generating fact, qualifies the subjection of labor lawsuits to the judicial reorganization plan, regardless of the date of filing of the respective labor lawsuit pursuant to Article 49 of Law No. 11,101/2005.

Although the recommendation is not binding or coercive, our expectation is that it will influence the judgments in the first and second instances, so that the Labor Court will have greater honor for what is decided by the Civil Justice, ensuring more legal certainty for those involved.

Category: Labor and employment

The promotion of trainee programs aimed at black people and minorities is an innovative initiative increasingly adopted by companies that aim to promote diversity and social inclusion. The legality or not of such action, however, has generated doubts.

The uncertainty of some is related to the fact that such programs are intended exclusively for a specific group of workers, which would supposedly exclude the rest.

However, the target audience of such programs are people who, for a long time, due to the social historical context, were on the margins of the labor market, subject to discrimination by race, gender, social condition, among others, which prevented them from having access to equal employment opportunities.

It is a group of people who faced, and still face, difficulty in inserting into the labor market due to social and educational obstacles and, even after their insertion, they are still not at an equal level with others. This is what studies published by the Insper – Institute of Education and Research^[1] and by the IBGE - Brazilian Institute of Geography and Statistics^[2] on the huge gender and race disparity in wages paid in the labor market in Brazil.

Of the 12 million Brazilians unemployed in the first quarter of 2022, 64% declared themselves black and brown. They represent, however, a share of 55.8% of the Brazilian population. Data from the Continuous National Household Sample Survey -PNAD, released by the IBGE and indicate a possible structural discrimination of black and brown people, despite the scenario of equal opportunities.

With regard to management positions, the gap is even greater: 68.6% are occupied by whites and only 29.9% by blacks or browns people, although, as already said, the black or brown population is the majority in Brazil.

In order to break this historical paradigm and change the social scenario, contributing to promote equal opportunities and greater diversity for future generations, the solution has been affirmative actions aimed at social inclusion. They have been instituted both by the public authorities, with quotas in universities and in public tenders, and by private initiative, with programs to promote a more inclusive work environment.

Such actions are supported in our legal system, because they are based on the principle of equality insculpied in Article 5 of the Constitution of the Federative Republic of Brazil.

In this respect, it is important to clarify that the equality advocated by our order is not formal and negative, that is, that in which the law should not establish any difference between individuals, treating everyone equally. In fact, it is a material equality (real or substantial), which recognizes the differences between individuals in hypotheses and social situations.

It is an equality that discriminates not to exclude, making use of aristotelian thought too much mentioned, in which equals must be treated equally and unequal ones unequally, to the extent of their inequalities. Thus, it is denoted that there is a guideline that authorizes the proposed "discrimination", to achieve the reverse effect of combating it.

In accordance with this understanding, the Judiciary has been positioned, in the situations that have been put to it for analysis, by the legality of such programs aimed at minorities and sustained their validity. As is the case in the judgment of the ADPF 186, in which the Supreme Federal Court -STF considered the quotas constitutional as a policy of affirmative action in the system of access to the public university.

In the same sense, in October 2020, the Supreme Court, in judging the ADPF 738, affirmed the constitutionality of positive measure instituted by the Superior Electoral Court-TSE, to determine the immediate application of incentives to applications of black people, in accordance with the exact terms of the TSE's response to Consultation 600306-47.

More recently, in the public civil action file, the respective Judge recognized the validity of an institution of an exclusive trainee program for black people, with the substitute Labor Judge, Laura Ramos Morais, of the 15th Labor Court of Brasilia/DF, affirming that such a program is not discriminatory: "On the contrary, it demonstrates an initiative for social inclusion and promotion of equal opportunities arising from the employer's social responsibility,  pursuant to Art. 5, XXIII, and Art. 170, III, of the Federal Constitution, and is duly authorized by Article 39 of Law 12,288/2010".

Thus, in our point view, it is fully lawful to create affirmative actions by the private initiative in order to enable conditions of equity and progress of groups of people who have been excluded due to discrimination by race, gender and other related forms of intolerance. Such measures shall not be considered discriminatory.

^[1] Available in https://www.insper.edu.br/wp-content/uploads/2020/07/Policy-Paper-45.pdf 

^[2] Available in https://biblioteca.ibge.gov.br/visualizacao/livros/liv101681_informativo.pdf

Category: Labor and employment

The World Cup and the search of the Brazilian national team for the sixth championship begin in November.. As it is well known, besides being the most practiced sport, football generates a great economic and cultural impact in the country.

According to the match schedule, Brazil will play their first three games of the group stage on weekdays, which has raised the question about how the workday will be like during the games.

Initially, it is necessary to observe whether business activity is essential or not. If it is, the company should evaluate the possibility of setting a scale between employees during the hours of the games, if feasible. If not, the company will not be able to release the employee to watch the games.

Whatever the company's activity, it is important to emphasize that it is not obligated to release employees to follow the Brazilian national team matches, since there is no legislation that declaring these days holidays or days-off. In case of unjustified absence, therefore, the payroll discount and the application of other appropriate penalties are allowed.

However, in view of the great cultural impact of the event, the company can choose to release its employees for the period of the game or for the day. In this case, there are alternatives provided for by law that guarantee greater legal security for the parties.

Journey compensation

Labor law authorizes the negotiation of an individual agreement between employee and employer, verbal or written, for the compensation of the workday, provided that the compensation occurs within the same month.

Although it is possible to agree to this compensation system verbally, it would be recommendable to formalize the terms of this agreement in writing, detailing the rules and how compensation will occur.

Bank of hours

If the company already has bank of hours system in place, the period granted to employees to watch the games can be offset. This can be done by deducting any positive balance that the employee may have or registering negative balance for the employee to compensate later.

We remind you that the legislation provides two hypotheses for the bank of hours: through individual agreement or collective bargaining with the union.

• Individual agreement: implementation of bank of hours through an individual written agreement between employee and employer, provided that compensation occurs within a maximum period of six months.

• Collective agreement or collective bargaining agreement: implementation of a bank of hours through a collective agreement with the union, in which the conditions for release during the games will be agreed, provided that the compensation occurs within a maximum period of one year.

In addition to these hypotheses, if the compensation of hours does not occur within the same month and the company does not have a bank of hours system, it is possible to negotiate an agreement with the union to compensate the days or hours of employees, specifically for the period of the games of the Brazilian national team, ensuring greater security for the parties.

It is also possible that the company, by mere liberality, dismisses employees during the games and refrain from any salary discount.

In either case, the employee's release may be partial, i.e. only during the period of the game, and not necessarily all day.

It is essential that the company organizes such procedures in advance, aligning the best strategy and ensuring clear and open communication with its employees.

The Company must evaluate and adopt the alternative provided by law in advance to allow its employees to watch the games of the Brazilian national team without negatively impacting the workday and salary.

The evaluation and adoption of the best alternative for the company’s needs shall guarantee a higher degree of legal security, prevent undesired questioning, and mitigate potential risks related to the release of employees during the Brazilian national team World Cup matches.

Category: Litigation

The Second Section of the Superior Court of Justice (STJ) should soon resume the trial of Special Appeal 1.964.067/ES, whose matter refers to the intention of The Usiminas Pension Society — successor of the Cosipa Social Security Foundation (Femco) — to alter the hitherto peaceful understanding of that collegiate body in the sense that there would be responsibility of the fund for the payment of the retirement complementation benefit plan to former employees of the bankrupt Companhia Ferro e Aço de  Victoria (Cofavi).

There is great expectation in relation to the case in view of the possibility of changing the understanding previously signed by the Second Section in the judgment of REsp 1.248.975/ES, when the vote of Minister Raul Araújo prevailed to fix the responsibility of the social security entity "for the payment, contracted in the respective benefit plan, of complementation of retirement due to participants/assisted,  former employees of sponsor Cofavi, retired on a date prior to the termination of the adhering agreement, in March 1996 even after the bankruptcy of Cofavi, noting the impossibility of using the assets belonging to the Femco/Cosipa fund when, in the ordinary instance, the absence of solidarity between the funds is recognized."

Furthermore, it is expected that the thesis is fixed on the existence, or not, of solidarity between the submasses[1] of the same supplementary pension plan – since, in the previous judgment, the Supreme Court referred to ordinary authorities the competence for a case-by-case analysis of the subject – in order to ensure legal certainty, which did not occur.

The controversy began with the investigation of a collection action by a former Cofavi employee – who entered into an agreement to support Femco, already existing at the time and maintained by the employees of a diverse company, Companhia Siderúrgica Paulista (Cosipa) – in the face of said pension fund.

The author understood that the bankruptcy of his employer/sponsor would not affect the receipt of the agreed benefit, once the necessary contributions were made until Cofavi was excluded from the plan by decision of the regulatory body. That is, the author intends to receive a lifetime pension due to his contribution period, regardless of the bankruptcy of Cofavi and, consequently, the end of his contributions.

In turn, The Usiminas Pension System argues that the payment of supplementation depends on the contribution of the participants and sponsors in the form of Art. 19 of LC 109/2001,[2] since the entity has no equity and is organized in the form of a non-profit foundation.[3]

A logical consequence is that, if Cofavi ceased the transfer of the contribution of its employees, the financial health of the benefit plan was impaired by the absence of prior costing, leaving it impossible to pay the retirement in view of the non-compliance with the obligations of the sponsor. Thus, the former employees of Cofavi would be entitled only to receive the amounts arising from the liquidation of the specific fund of the bankrupt company.

This is because, according to the entity, there is no solidarity between the plans directed to the employees of each company. Thus, each submass must be in the assets of its respective benefit plan, under penalty of illegally reaching the assets formed by third parties unrelated to the situation that gave rise to the harmfulness indicated by the author (bankruptcy of the sponsor).

The closed complementary pension entity (EFPC) faced unfavorable positions in the first and second instance mainly due to the position already signed by the Second Section in the judgment of REsp 1.248.975/ES.[4]

At the time, the STJ judged the matter on a case-by-case basis, fixing the right of former Cofavi employees retired at the time before the denunciation of the plan (March 1996) to receive the benefit, provided that it recognized the solidarity of the submasses by ordinary bodies. In other words, the controversy over the existence of such solidarity was not resolved in order to guarantee legal certainty.

In this context, REsp 1,964,067/ES was pointed out as a possible indicator of overruling, mainly because, after the judgment of the aforementioned special appeal, "188 appeals were filed on the same matter before the Supreme Court, of which 142 had analysis of the respective ministers and/or by the 3rd and 45th Classes, all (100%) favorable to retirees".

There is no precedent formed in favor of the EFPC even though the Fourth Class has already witnessed a divergent position on the part of Minister Isabel Gallotti,[5] in the same way that the Third Panel diverged from the 2nd Section in appeal judgment with the same background matter.[6]

[1] Pursuant to Article 7 of CNPC Resolution No. 41 of June 9, 2021: "Submast is understood as a group of participants or assisted linked to a benefit plan and having an identity of homogeneous rights and obligations among themselves, but heterogeneous in relation to the other participants and assisted thereof plan".

[2] Art. 19. The contributions destined to the constitution of reserves will have the purpose of providing the payment of social security benefits, in reference to the specificities provided for in this Complementary Law.

[3] Art. 31. Closed entities are those accessible, in the manner regulated by the regulatory and supervisory body, exclusively:

(...)

• 1^orClosed entities will be organized in the form of a foundation or civil society, non-profit.

[6] "1. Until the extrajudicial settlement of the private pension plan addressed to employees of Companhia Ferro e Aço de Vitória - COFAVI, the Cosipa Social Security Foundation – Femco, current Usiminas Pension, is responsible for the payment, contracted in the respective benefit plan, of complementation of retirement due to participants/assisted, former employees of sponsor Cofavi, retired on a date prior to the denunciation of the agreement of the  in March 1996 even after the bankruptcy of Cofavi, noting the impossibility of using the assets belonging to the Femco/Cosipa fund when, in the ordinary instance, the absence of solidarity between the funds is recognized."

Category: Digital Law

The Consumer Policy Committee of the Organization for Economic Cooperation and Development (OECD) and its Working Party Consumer Product Safety carried out research with marketplaces and government authorities from several countries – including the National Consumer Secretariat (Senacon) in Brazil.^[1]

The idea was to understand and bring together practices adopted by online consumer protection products and services marketing ecosystems, to better explore their business models, and to identify common issues that in some way interfere with or may interfere with consumer protection in marketplaces. The study is available and is an important source of best practices adopted to mitigate accountability risks.

Generally speaking, the Marketplace is characterized as a virtual space for buying and selling products that usually includes partnerships with other retailers, to create a mall virtual. Each partner uses the space as their product ad showcase, enabling consumers to access a variety of advertisers on the same portal.

Confirming what we observe in marketplaces in the country, the research identifies that the main nuisances of consumers are associated with:

• advertising practices;
• Blows;
• problems in dispute resolution;
• counterfeit products;
• unsafe products;^[2]
• unfair terms and conditions;
• delays in receiving goods; and
• fake ratings and comments.

These practices need to be addressed to reduce the legal and reputational risks arising from them.

Most of these situations, according to global research, occur due to problems faced by consumers with:

• delivery, as the products are delivered late or are not even shipped;
• products other than the photo used in the ad; and
• problems involving payments or fraud of a financial nature.

The research also confirms one of the great difficulties encountered by marketplaces: the relationship with third-party sellers (commonly referred to as Sellers), who advertise their products on the platform.

According to the study, the majority of marketplaces instructs Sellers even before the first announcement, as well as providing support and even training on how to improve customer service. This care aims to strengthen the relationship with Sellers and, in some way, try to standardize the service provided, to avoid inappropriate or irregular conduct (such as fraud).

The research points out as a set of legal practices recommended:

• production of robust documents for Sellers, indicating what can and cannot be done (such as making the announcements, what are the appropriate levels of logistics, clear separation of responsibilities, etc.);
• adoption of procedures for due diligences rigorous participation of the Sellers platforms and the improvement of other internal governance mechanisms;
• conducting training and delivery of assertive and functional communication materials in order to reinforce sellers' awareness of risks;
• development of mechanisms (including through algorithms) that are accurate in classifying Sellers, that may reflect the credibility of sellers and allow the identification of deviations of pattern and possible risks;
• a robust structure of solutions for discussions and divergences that includes consumers and sellers, to reduce conflicts and mitigate situations that may generate lawsuits.

The study also sought to understand how government authorities have been cooperating with marketplaces to reinforce consumer protection, the difficulties faced in relation to the theme, what engagement activities have been done between the parties to educate and guide, what are the recent initiatives of monitoring activities, market studies and legal enforcement actions.

Among the answers, some points stand out:

• most participating countries developed educational guidance material for buying and selling online, aiming to guide sellers and consumers;
• most participating countries carried out specific monitoring and regulatory activities involving online markets;
• several participating countries have reported that they have implemented or considered implementing legislative reforms on the subject.

The research was attended by Senacon, which highlighted some Brazilian initiatives to improve conflict solutions involving consumers and marketplaces:

• creation of the National Council to Combat Piracy, which underheads anti-piracy initiatives in Brazil and is responsible for the preparation and maintenance of the National Plan to Combat Piracy – the council has a specific working group for the treatment of the subject of piracy in the digital sphere, especially in e-commerce;
• preparation, in the context of the National Plan to Combat Piracy, of the E-Commerce Good PracticeS Booklet, with indications of conduct scans to be adopted by marketplaces to safeguard and guarantee consumer rights, especially with regard to the prevention of the marketing of products;
• creation, in line with the National Plan to Combat Piracy, the Guide to Good Practices and guidelines for the implementation of measures to combat piracy by the public authorities, rightholders, associations and payment service providers, with the aim of hindering or hindering the receipt of revenue stemming from the sale of goods, provisions and services, in violation of intellectual property; and
• establishment of the gov.br, which, although not entirely directed at consumer relations with marketplaces, is gaining more and more traction among users of these platforms as a method of dispute resolution.

In addition, the study mentioned the initiative of the Court of Justice of São Paulo on the creation of the seal "Justice-Friendly Company",  that known marketplaces in Brazil have been able to obtain.

These practices and initiatives should be closely monitored by the marketplaces brazilians, so that they are always aware of the best initiatives pointed out by the authorities and potential benefits provided by their adoption.

The issue is extremely important and has become even more relevant with the digitisation of markets and the platform economy. In addition to risk awareness, it is essential to adopt good practices that prove diligence in consumer protection and effectiveness in mitigating risks.

^[1] In Brazil, the research also had the participation of Inmetro and Anatel.

^[2] "unsafe products" means those that pose risks (to the health or safety of consumers) at levels higher than those reasonably expected in view of the very nature of that product.

Category: Digital Law

By imposing the suitability of companies to the Brazilian General Data Protection Act (Lei Geral de Proteção de Dados Pessoais or LGPD), came to tow, in Brazil, a flood of new types of warnings on hundreds of Brazilian sites regarding the so-called Cookies, files installed on the device that allow the collection of information from users, which can even happen to track their behaviors.

For their technical features, Cookies play a key role on the Internet. They enable the operation of websites and the provision of online services and can help improve the user experience by supporting countless business models. To perform their functions, however, they ause themselves to the processing of personal data, and this requires special attention.

The truth is that the warnings of Cookies they appeared in Brazil even before the lgpd was in force, inspired by a specific standard (e-Privacy Directive) that Europe adopted years ago for this collection methodology, although our law is different from the European reality.

All this raised many questions. For example, in recent months Brazilian companies have often wondered whether or not they needed to do a warning from Cookies. In addition, critics were also heard with opinions contrary to the mechanism.

The question, however, it's not eliminating the Cookies, but strengthen the balance line between business development and protection of privacy and personal data. This guideline has always been present in historical data protection documents and is expressly reinforced by the distribution of grounds made by Art. 2° of the LGPD.

Then, at a great time, the new Guidelines to Cookies and Protection of Personal Data National Data Protection Authority (ANPD). The guide presents an overview of the subject, sets out the main concepts and categories of Cookies and examines the most common legal bases of treatment and the requirements to be observed in the use of Cookies, such as strengthening transparency measures through policy publication. The document remains open for public consultation, which demonstrates the democratic performance of the ANPD.

Classification of Cookies

Reinforcing the recommendations of the specialized literature and what the practice reveals, the guide brings clear and useful criteria for the classification of Cookies, by separating them according to:

• The entity responsible for the management of: may be suitable when defined directly by the site, or third-party, if diverse domain.
• The need: May be necessary, if used to ensure the functionalities of the site, or not necessary, when disabling does not prevent the operation of the site.

• The purpose: may be analytical or performance, if they aim to identify the use of the site; functionality, when used to provide basic services to the user; when used to display ads.
• The retention period of the information: may be session or temporary, if they collect and store information only while the holder accesses the site, or persistent, if stored for a defined period.

It is interesting to note that the guide highlights the Cookies able to make the user identifiable, because they contain personal data, and that, therefore, are pertinent to the regulation of privacy protection.

The Cookies that store only information that does not identify the user or make it identifiable (with anonymous data profile only) does not fall within the scope of application of the LGPD and, consequently, is not subject to anpd guidelines.

Use of Cookies and the LGPD

The ANPD reinforces that the use of Cookies that identify users is within the scope of the LGPD and should follow their predictions.

In an extremely didactic way, the Authority explains how this should be done, highlighting the need to observe the principles of legislation in the collection and use of information, such as the principles of purpose, need and adequacy, free access, rights of the holder, period of processing and deletion of personal data and transparency, among others. The ANPD provides practical examples of how to observe such criteria.

Transparency, as expected, receives special attention. Ensure the clarity and completeness of the information regarding Cookies is a measure of governance to be constantly sought.

In addition, the ANPD demonstrates caution in this respect, recommending that companies redouble their attention to the subject in order to mitigate sanctioning risks.

As the Authority itself points out in the Guide, "one of the potential problems related to the use of Cookies it is the lack of transparency, that is, the lack of clear, accurate and easily accessible information about the collection and performance of the processing, which may derail or unduly restrict the control of the holder over his/her personal data. Privacy risks can be magnified in situations where lack of transparency is associated with practices of collecting massive amounts of personal information for the purpose of identifying, tracking, and creating behavioral profiles of users."

The publication also highlights the concern to realize the foundation of informational self-determination (Art. 2°, I, LGPD) in relation to Cookies.

In this way, the holder should be given the possibility to manage the preferences of Cookies, so that you have the option to disable those that are not necessary for the operation of the site, which involves, for example, Cookies third-party and advertising.

The information should be made available by means of notice or banner from Cookies already widely used by the portals and with more detailed information in privacy policies or notice or in the Cookies Specific.

The ANPD stresses that the holder should be informed, in a clear and easy manner, about the processing purposes for which the Cookies will be collected and for what period they will be stored. According to the Authority, the purposes of using Cookies should be specific, and no longer generic, as with the request to accept general terms and conditions. Storage periods must be determined and proportionate in relation to their processing purposes and necessarily compatible with the LGPD.

In this sense, explains the Authority in its Guide, "if the person responsible for the website informs the holder who uses Cookies for the purpose of audience measurement only, you may not use the information collected for purposes other than that purpose and not compatible with that purpose, such as for the formation of profiles and the display of advertisements."

Consent or legitimate interest?

I'm having another question about the Cookies, the ANPD delimited a little more the pattern to be followed in identifying the legal bases related to such files. The Authority identifies consent and legitimate interest as the two most common legal bases,^[1] reaffirming its understanding that there is no hierarchy between legal bases.

Or assent, following LGPD standards, should be free, informed and unambiguous. That is, the free option for the collection or not of the data should be ensured, complete information about what data is collected and all the circumstances of processing must be ensured, and consent must be obtained without the holder having any doubt about his expression of willingness to agree.

In relation to Cookies not necessary (as the necessary ones will be related to other bases – legitimate interest and compliance with legal obligation so in particular), the holder must be provided with all information relating to the Cookies collected on the page and offered the possibility of authorizing or not the collection.

In practice, the holder should be assured of the effective possibility of accepting or not the use of Cookies, without negative consequences or interventions of the controller, may become addicted or impair his expression of will, so that he is not truly free.

Considering that consent cannot be tacit, it is not possible to use warnings or Banners from Cookies with pre-selected authorization options.

The holder must also be given the possibility to revoke such consent in a simple and free manner. According to the ANPD "a simplified and free procedure should be made available to the holder to revoke the consent provided for the use of Cookies, similar to the procedure used to obtain it."

In relation to the legitimate interest, the ANPD stresses that it can be used in cases of Cookies strictly necessary, which the Authority considers as those that "are essential for the proper provision of the service or for the operation of the website, which can be understood as a form of support and promotion of activities of the controller and the provision of services that benefit the holder (Art. 10, I and II, LGPD)".

According to the Authority, following the best market practices to date, this essentiality it should "consider the peculiarities of each specific situation and assess whether, in this case, the rights and interests of the holders do not prevail, in compliance with the other applicable legal requirements".

In other words, governance decisions establishing legitimate interest in a generic way may be questioned. Such a basis is therefore not a carte blanche for the use of any Cookies. The specific preparation and documentation of a LIA (Legitimate Interest Assessment) is essential for decision-making and the documentation of accountability expected by law.

Based on the idea that the case-by-case analysis will reveal whether the legitimate interest is a possible legal basis or not, the ANPD stresses that "the use of Cookies for audience measurement purposes (Cookies can be based on the legal hypothesis of legitimate interest in certain contexts, in any event, the requirements laid down in the LGPD. In particular, it is reasonable to assume that audience measurement will be a legitimate interest of the controller, as well as that the risks to the privacy of holders will be minor when the processing is limited to the specific purpose of identifying patterns and trends, based on aggregated data and without the combination with other tracking mechanisms or without the formation of user profiles."

Policy of Cookies

The ANPD dedicates a relevant part of the guide to recommendations on the structure and content expected for the Cookies or equivalent document, such as a banner, to ensure the necessary transparency.

The policy of Cookies may be included in a specific section of the privacy notice, in a specific and separate location, or in the banner from Cookies. Regardless of the format adopted, the holder must be informed how its collection is carried out and for what purpose. The main thing is to ensure how this information will reach the user. The guidelines of ABNT ISO IEC 29.184/2021 in this regard are relevant.

In addition, the holder should be able to give his consent to the Cookies which cannot be previously enabled, through the options "accept all Cookies", "reject Cookies not needed" and "manage/select Cookies". The holder should also be able to revoke the consent, which can be carried out by means of banner second level.

The guide expressly indicates the following guidelines on the banner from Cookies, including a number of practical examples:

• all buttons (reject, accept, and manage Cookies) must be the same size;
• Cookies cannot be enabled by default;
• all information should be brought in a clear and simplified manner to the holders; and
• the options for choosing Cookies for the holder should be simple and easy to adjust.

The policy of Cookies and the privacy notice to comply with the principle of transparency and the rules of Article 9 of the LGPD should be easily accessible to the holder (as hyperlink included in the banner), in Portuguese, presenting which categories of Cookies collected, for what purposes and providing information on how to perform the blocking of Cookies browser settings.

Final comments

The guide brings an educational bias that deserves praise and reinforces how much the ANPD represents a Case success in this respect. The publication corroborates the guiding stance adopted by the Authority, which seeks to promote the culture of the protection of personal data, encouraging the adoption of transparent practices that improve understanding and control of holders over the use of their personal data.

Similarly, the guide reinforces the ANPD's tendency to follow the directions adopted by european data protection authorities on the subject. It thus revalidates the work supported by the foreign experience. Although there is convergence between European regulation and Brazilian legislation, it is worth remembering that Europe has a specific standardisation on the application of Cookies, which does not occur in Brazil. Therefore, the collection and use of Cookies may be subject to new regulations by the ANPD.

^[1] Cookies may also meet compliance with legal obligations for example (art. 7°, II, LGPD), in the case of the duty to guard electronic records by the application providers, according to the legal obligation established by the Civil Framework of the Internet (Federal Law No. 12.965/2014).

Category: Environmental

On September 13 of this year, the Brazilian Institute of The Environment and Renewable Natural Resources (Ibama) issued the Ibama Ordinance 83/22, which established the "Standard Operating Procedure (Procedimento Operacional Padrão - POP) for information gathering and conduction of inspections aimed at confirming  the occurrence of environmental damage in areas altered or degraded by suppression of native vegetation without prior attainment of license / authorization or violating the conditions set forth in the valid license / authorization".

The ordinance defines environmental damage as "any harm caused to the ecologically balanced environment resulting from the degradation of environmental attributes through anthropic activities, actions and omissions which are unauthorized or in violation of applicable authorizations".

It also establishes that the evidence that the involved party has committed an infraction, of the materiality and of the existence causal nexus between the conduct described by the Ibama agent and the alleged harmful event must be indicated in the inspection report – a document that is either incorporated in the proceeding or precedes it.

These provisions demonstrate the environmental authority’s clear concern in conditioning the enforcement of potential sanctions to the confirmation of essential elements to adequate assessment of environmental administrative responsibility – which, according to the majority position of doctrine and jurisprudence, is subjective in nature – i.e. requires the existence of fault.

Therefore, the recognition of environmental administrative responsibility shall depend on the verification of the occurrence of an illegal conduct, along with the demonstration of the subjective element in said conduct, in addition to proving the existence of a causal nexus between the conduct and the damage ensued.  

This has been the official position of the environmental institution, as perceived from the ratification of Opinion 04/2020/GABIN/PFE-IBAMA-SEDE/PGF/AGU, on July 14, 2022. The same understanding regarding environmental administrative responsibility has also been repeatedly reinforced by the Superior Court of Justice (Superior Tribunal de Justiça - STJ).

The existence of well-defined rules for the imputation of penalties in the administrative sphere can potentially reduce the number of penalties enforced by Ibama agents, for it prevents the sanctioning of conducts that lack such subjective element. This limitation may result in a cutback on significant resources by the entrepreneur relating to the elaboration of his administrative defense and even on the potential filing of judicial remedies aimed at the annulment of an unfair administrative penalty.  

Ibama also benefits from the new rules, as clear definition of parameters for the characterization of environmental administrative responsibility may assist authorities in avoiding excessive discussions in the administrative sphere and unnecessary spending of public resources with future challenging of the penalties in the judicial sphere.

Even the judiciary may benefit from the new rules considering the proper application of the institute of environmental responsibility in the administrative sphere may lead to a decrease in lawsuits questioning the lawfulness of the issuance of infraction notices and, therefore, contribute, to a certain extent, to the mitigation of the judiciary’s work overload.

In addition to establishing rules for the imputation of environmental administrative responsibility, the main objective of the ordinance is to standardize the necessary information to be collected by Ibama's environmental inspection in order to characterize the environmental damage resulting from irregular suppression of vegetation.

The new standards establish the obligation to fill information relating to two additional forms (A and B), in addition to the requirements regarding the preparation of an inspection report, as previously required by Article 14 of the Federal Law 6,938/81 (National Environmental Policy Law – PNMA).

Information to be included in form A must be collected primarily in the field. Such information, for instance, relate to the biome, successional stage, and characterization of water bodies and humid areas, among others. This form is also intended to provide ample characterization of the damaged area’s surroundings, through the detailing of information about connectivity and landscape flows, as well as the indication of external threats.

Form B, in its turn, deals with information that should preferably be filled out "in office". Some examples provided by the ordinance are: the type of property where the area of interest is inserted, the domain of the degraded area, the enrollment before the rural environmental registry (Cadastro Ambiental Rural - CAR) and the occurrence of vegetation suppression in an area inhabited by endangered species.

Ibama expressed a clear intent of using the data collected in environmental inspections  to subsidize the procedure for repairing environmental damage. Item 3 of the ordinance provides that "the collection of data on the environmental inspection at the time of the issuance of a penalty will improve the definition of administrative procedures necessary to the repair of environmental damage, with the purpose of making the inspections more effective in favor of environmental preservation and/or conservation".

The ordinance may, therefore, result in very beneficial results for the productive sectors, as it aims to consolidate robustly detailed concepts and recommendations to guide the proper drafting of the inspection report by Ibama’s inspectors and, as such, enable the regular imputation of environmental responsibility in the administrative sphere. Considering that the standards set forth by the ordinance are quite recent, there is still expectation about the effectiveness and scope of its application.

In addition to the benefits already listed, the effective application of the standard may bring greater legal certainty to the entrepreneur, since the new rule will inhibit the application of sanctions in situations that lack a subjective element to the supposedly unlawful conduct.

If the imputation of a penalty actually takes place, the sanctioned party will have the necessary information to adequately exercise its right to contradictory and broad defense, since, if completed correctly, forms A and B will present detailed information by Ibama agents on the alleged unlawful conduct.

Category: Institutional

The Quotas Act (12,711/12) will turn ten years old in 2022 and a review of its provisions is scheduled for this year. The legal text reserves 50% of the vacancies of federal higher education institutions for people who attended their entire high school in public schools and declare themselves black, brown, or indigenous, in addition to people with disabilities. Half of the spaces reserved must be reserved for students from families with a per capita income equal to or less than 1.5 minimum wages. In this article, we propose two changes that can be made in the legislation to increase the enrollment of marginalized individuals in public education and reduce dropout rates.

An instrument for repair of historical injustices

Racism, discrimination, and the effects of social inequality are some of the various assaults that individuals from minority groups experience in the course of their social and academic trajectory. The problem requires a more active role of the State in the adoption of effective measures, whether voluntary or coercive, with the aim of safeguarding the dignity of the human being.^[1]

The Federal Constitution of 1988, in its article 3, defined as the fundamental objectives of the Republic: to build a free, fair, and solidary society, to guarantee national development, to eradicate poverty and marginalization, to reduce social and regional inequalities, and to promote the well-being of all, without prejudice to origin, race, sex, color, age, and any other form of discrimination.

The framers of the Constitution explicitly established that the State has the duty to apply the measures necessary to combat prejudice and discrimination, eliminate social inequality, and promote opportunities for historically vulnerable groups, in order to allow this segment to ascend from the socioeconomic point of view.

The institutionalization of affirmative action is, therefore, a tool for the Rule of Law to achieve de facto equality, given the historical injustices in Brazilian society against social minorities identified as black, indigenous, women, people with disabilities, and LGBTQIA+ individuals.

The Quotas Act was enacted exactly for this purpose. The advances it provides, however, have been slow. A study by the IBGE (Brazilian Institute of Geography and Statistics) showed that "between [the years of] 2016 and 2018, the proportion of [black] students aged 18 to 24 years attending higher education, went from 50.5% to 55.6%. This level, however, was still below the 78.8% of students in the white population of the same age group in this level of education.^[2]

Two proposals for improvement

In our view, two relevant changes could be made during the revision of the Quotas Act to increase its effectiveness:

• inclusion of welfare mechanisms to keep quota-holding students in academic education; and
• implementation of measures to combat fraud by candidates who self-declare as black, brown, and indigenous without actually belonging to this segment.

We believe it is not enough to insert peripheral people in the academic environment through a quota mechanism without means for the permanence of these students in the educational system, with measures such as pedagogical and emotional support and financial aid for the maintenance of black students in educational institutes. This would reduce dropout rates for financial reasons. After all, the reality faced by many individuals at the margins is that they leave the educational institution, without completing the basic cycle, in search of unskilled jobs for subsistence.^[3]

As for the problem of fraud, Law 12,711/12 is silent regarding inspection to validate racial self-declaration. As a way to compensate for this omission, some higher education institutions already adopt security mechanisms, such as the hetero-identification committees, "method[s] of identifying an individual's race and ethnicity from the social perception of another person."^[4] Thus, the candidates who declare themselves to be black, brown, and indigenous during the selection process for admission to higher education are analyzed by a committee based on phenotypical and documentary criteria, in order to reduce the access of fraudsters to higher education.^[5]

Intentional action by business to accelerate correction of inequalities

Faced with the reality of underemployment of historically vulnerable individuals, the companies themselves have started to promote affirmative action in the job market to expand the amount of black people in the corporate environment through specific selection processes for this segment.

A well-known example is Magazine Luiza. With 53% blacks in the workforce, the company found that this group represented only 16% of management positions. To start correcting the problem, the company has adopted a selection process for trainees aimed only at black individuals, without excluding criteria such as the need for fluent English and prior experience abroad.^[6] In the end, 19 professionals were selected and went through a training process for leadership roles.

The initiative shows that it is not enough to insert people at the margins of the elite labor market by means of university quotas and affirmative action. It is also necessary to offer courses, mentoring, a financial basis, and management training to develop and improve these individuals so that in the near future they can be on an equal footing with other professionals.

Another important affirmative action is Project Include Right, which encourages participation by and inclusion of black professionals in law firms. The initiative of the Center for Studies of Law Firms (Cesa), which recently won the 18th edition of the Innovare Award^[7] in the Law Practice category, offers courses to train professionals and help them compete for positions in the firms associated with Cesa in selection processes aimed only at black participants in the project.

From formal equality to de facto equality

Reparative initiatives are extremely important for the inclusion of blacks and other minorities in society. It is necessary to treat individuals who experience different realities unequally, in order to offer those at the margins of society greater chances for improvement. From formal equality, established by the Constitution, we need to advance to material equality, de facto equality, and fulfill the goal of the Republic, based on the principle of human dignity, of building an equitable society, in which actions of historical equalization will no longer be necessary for the placement of vulnerable groups in the class environment.

^[1] Research, Society and Development, v. 10, n. 7, e47510717067, 2021.

^[2] Desigualdades sociais por cor ou raça no Brasil [“Social inequalities by color or race in Brazil”], IBGE, Estudos e Pesquisas – Informação Demográfica e Socioeconômica, No. 41, 2019. https://biblioteca.ibge.gov.br/visualizacao/livros/liv101681_informativo.pdf

^[3]"The college is not ready to deal with the remainder of quota students", Carta Capital, November 20, 2019 https://www.cartacapital.com.br/educacao/a-faculdade-nao-esta-pronta-para-lidar-com-a-permanencia-dos-alunos-c/

^[4] " What is hetero-identification and how will hetero-identification committees work in this selective process?", IFRS Selective Process, March 22, 2021 https://ingresso.ifrs.edu.br/2021/perguntas/o-que-e-heteroidentificacao-e-como-vao-funcionar-as-comissoes-de-heteroidentificacao-neste-processo-seletivo/

^[5] "Quotas Act has decisive year in Congress," Agência Senado, February 11, 2022, https://www12.senado.leg.br/noticias/infomaterias/2022/02/lei-de-cotas-tem-ano-decisivo-no-congresso#:~:text=O%20PL%204.656%2F2020%2C%20do,de%20gradua%C3%A7%C3%A3o%20de%20institui%C3%A7%C3%B5es%20particulares.

^[6] Legacy: The Magalu Trainee Program exclusive for black (black and brown) people, YouTube, September , 21, 2021, https://www.youtube.com/watch?v=_Z0ovbveEkI

^[7] 18th edition of the Innovare Prize, Innovare Institute, 2021, https://www.premioinnovare.com.br/pratica/projeto-incluir-direito/1407

Category: Capital markets

In July, the joint committee of the Securities and Exchange Commission of Brazil (CVM) examined a proposal for a consent order originating from a lawsuit filed to investigate the criteria used by a company in the allocation of earnings, pursuant to article 193 of Law 6,404/76 (Brazilian Corporations Law).

The analysis was based on inquiries and complaints filed by an investor who questioned the amounts recorded in the company's capital stock and profit reserve accounts. He also pointed out that a relevant part of the net profit was allocated to the profit reserve account, to the detriment of an increase in the capital stock.

The investor, who holds preferred shares, felt harmed, since the company's bylaws have a clause of priority dividends for holders of preferred shares, with a minimum value of 6% of the capital stock.

After inquiries from the CVM's technical area, the company reported that the profits had been allocated according to regular approvals in general meetings and that the allocations did not exceed the limit established in article 193 of the Brazilian Corporations Law - 20% of the value of the capital stock.

In addition, the company indicated that the amounts allocated to profit reserves derived, among other sources, from unrealized profits and reserves for contingencies, this being a practice presented and approved at general meetings of shareholders, aimed at preserving business security.

The technical area of CVM, after analyzing the company's statements, found that, with regard to:

• the legal reserve, at the time of the facts presented by the investor, the company could not have proceeded with the allocations of net income, due to the limit provided for in article 193 of the Brazilian Corporations Law;

contingency reserves, there was non-compliance with articles 153 and 192 of the Brazilian Corporations Law, because the documents related to the general meeting did  not  mention the creation of contingency reserves;

• retention of profits, there was non-compliance with article 196, paragraph 1, of the Brazilian Corporations Law, since, although it was stated in the management proposals that there would be no retention of profits, an analysis of the explanatory notes of the approved financial statements proved otherwise; and
• the reserve of unrealized profits, there was violation of article 197 of the Brazilian Corporations Law, since the portion of net income realized exceeded the amount of the minimum mandatory dividends, and therefore the reason for the creation of the reserve of unrealized profits in the periods analyzed was not proven.

Regarding distribution of dividends, the Brazilian Corporations Law establishes that companies must allocate part of their net income to payment of mandatory dividends to shareholders, pursuant to article 202 of the Brazilian Corporations Law.

Paragraph 6 of article 202 of the law provides that "profits not allocated under the terms of articles 193 to 197 must be distributed as dividends." Exceptions are the amounts allocated to the profit reserves (which cannot exceed 20% of the capital stock), the amounts retained by the capital budget, or the amounts allocated to the unrealized profit reserve, in the event that the minimum mandatory dividend exceeds the realized portion of the net income.

In view of the facts, the CVM's technical area proposed accountability of those who were members of the company's board of directors in the period of the data analyzed. The defendants, in turn, after being made aware of the accusations, presented a joint proposal to enter into a consent order, which included, among other points, monetary obligations and obligations related to the correction of the irregularities pointed out in the proceeding.

After review by the Consent Order Committee (CTC), the following obligations were negotiated with the defendants:

• pay to the CVM the amount of R$824,614.00;
• allocate the amounts created in the unrealized profit reserve - as a result of the resolutions passed in the general meetings of the period analyzed - to the increase in the company's capital stock; and
• make accounting adjustments to rectify errors in the company's financial statements.

Unanimously, the joint committee of the CVM accepted the CTC's opinion and accepted the proposal for a consent order.