Category: Litigation

The Federal Supreme Federal Court (STF) convened en banc concluded last month the trial of Direct Action of Unconstitutionality (ADI) No. 4,296/DF, which debated the (un)constitutionality of provisions^[1] of Law No. 12,016/09 (the Application for Mandamus Law).

Among the provisions submitted for the Court's review in the ADI filed in 2009 by the Federal Board of the Brazilian Bar Association (CFOAB),^[2] attention is paid, in procedural matters, to article 22, paragraph 2, according to which urgent relief, in a collective application for mandamus, may only be granted after hearing the judicial representative of the legal entity under public law, which must be ruled on within 72 hours.

Article 22, paragraph 2, was declared unconstitutional by the majority of the Federal Supreme Court. The Court found that, among other grounds, the provision in question restricts the general power of the magistrate's discretion and the constitutional principle of irremovable jurisdiction, provided for in article 5, subsection XXXV, of the Federal Constitution of 1988 (CF).

The debate submitted to the Supreme Court is old and subject to divergence. On the one hand, there are those who contend, in the legal scholarship^[3] and case law,^[4] non-relativization of the provisions of article 22, paragraph 2. Whereas the collective applications for mandamus aim at protecting transindividual liquidated and certain rights that have been violated or threat of an illegal or abusive act by a public authority or by those who exercise a public function, the understanding prevails that the intention of the legislator was to guarantee the public power awareness of the size of the claim contained in the collective action and the repercussions that may be caused to the administrative organization if the urgent relief is granted. Thus, the requirement of a  prior hearing of the government authority has as a background preservation of the public interest.

From the point of view of procedural law, the declaration of unconstitutionality of article 22, paragraph  2, by the Federal Supreme Court should be considered a step forward, since the institute of provisional urgent relief is respected.

Although at issue is a collective application for mandamus, there is no way to ignore the system envisaged, especially in the Code of Civil Procedure of 2015, which valued the the paradigmatic system of democratic constitutional process, valuing the aforementioned constitutional principles of the effectiveness of relief and the reasonable duration of the proceeding.

The exercise of the adversarial process – the right of the party to be aware of all acts and terms of the proceedings, to influence the content of the judicial decision, and enable cooperation between the parties and the judge – may and must be postponed in exceptional circumstances, where the requirements laid down in article 300 of the CPC are met: the likelihood of success on the merits and the danger of damage or risk to a useful outcome of the proceedings (e.g., cases seeking the supply of medicines by the State and beds for hospitals).

It is still relevant to state that the decision by the STF values the general power of discretion of the magistrate, provided for in articles 297 and 301, of the CPC,^[7] as well as the constitutional principle of separation of powers (article 2 of the CF), since it removes the obligation of the public representative in view of the analysis and granting of urgent relief in favor of the plaintiff.

The result of the STF’s judgment is another demonstration that care is needed in indistinct and unthinking application of legal concepts linked to the administrative legal system, especially regarding the prevalence of the public interest over the private.^[8] Because, as Justice Alexandre de Moraes pointed out in the judgment on ADI No. 4,296/DF, litigating against the Treasury is a battle similar to that fought between David and Goliath – in practice, even if urgent relief is granted without the hearing the representative of the legal entity governed by public law, the public authorities have at its disposal instruments of its own to seek suspension of the judicial relief (for example, suspension in limine relief).

In line with the majority understanding of the STF, it is expected that the state courts will review the current position and allow the granting of urgent relief in collective applications for mandamus when the urgency of the concrete case so determines.

The recognition of the unconstitutionality of article 22, paragraph 2, of the Application for Mandamus Law should mean overcoming the prior understanding, so that the summons of the representative of the public power to rule on the request for urgent relief is understood as an exception, when it does not compromise the safeguarding of the collective right of the plaintiff, respecting the independence of the judiciary.

^[1] Article 1, paragraph 2; article 7, subsection III and paragraph 2; article 22, paragraph 2; article 23; and article 25.

^[2] Among the provisions examined by the Federal Supreme Court, the following were declared unconstitutional, by a majority: Article 7, paragraph 2 (which provides for the granting of an in limine relief with the objective of "clearing tax credits, the delivery of merchandise and goods from abroad, the reclassification or equalization of public servants, and the granting of an increase or extension of advantages or payment of any kind"; and article 22, paragraph 2, dealt with in this article.

^[3] "The requirement that the granting of in limine relief in a collective application for mandamus be preceded by a hearing of the government authority (Law No. 12,016, article 22, paragraph 2) is justified by the public interest, expanded, in kind, by the broad repercussion that the relief may provoke, by the very nature of collective rights, for the exercise of the functions of the Public Power." (GOMES JÚNIOR, Luiz Manoel. Comments on the new Application for Mandamus Law. 4th Ed. São Paulo: RT, 2015, p. 268). Similarly: "Collective applications for mandamus follow the same procedure as individual applications for mandamus, except that the relief may only be granted after the hearing of the judicial representative of the legal entity governed by the relevant public law, which must be ruled on within 72 hours .... This is a repetition of what was already contained in article 2, Law 8,437, of June 30, 1992." (MEIRELLES, Hely Lopes; WALD, Arnoldo; MENDES, Gilmar Ferreira. Applications for mandamus and constitutional actions. São Paulo, Malheiros, 2019, p. 144).

^[4] TJMG, Interlocutory Appeal No. 1.0024.13.129103-1/001, opinion drafted by Appellate Judge Vanessa Verdolim Hudson Andrade, 1st Civil Chamber, decided on April 15, 2014; TJSP; Interlocutory Appeal No. 2141910-88.2017.8.26.0000, opinion drafted by Appellate Judge Osvaldo de Oliveira, 12th Chamber of Public Law; decided on February 14, 2018; TJSP, Interlocutory Appeal No. 2157344-83.2018.8.26.0000, opinion drafted by Appellate Judge Ferraz de Arruda, 13th Chamber of Public Law, decided onNovember 28, 2018; TJRS, Interlocutory Appeal No. 70080999584, opinion drafted by Appellate Judge Marcelo Bandeira Pereira, Twenty-First Civil Chamber, j. 3.29.2019.

^[5] "The rule, in fact, is that all interested parties – and this includes, nor could it be otherwise, the Public Power – be heard in court in advance. In this sense, nothing is more coherent than for the legislature to, considering the subjective extent that the collective application for mandamus has the ability to reach, choose to establish the prior adversarial process prescribed in the provision under examination. What cannot occur, however, under penalty of aggression against the 'constitutional model of civil procedural law', is that the legal requirement end up making it impossible to grant relief in natura to the application, including in its collective form, intended since the enactment of the Federal Constitution. So much so that broadly it is a majority understanding in legal scholarship that the representative of the public power alone should be ordered to rule on the request for an in limine relief if such an relief does not compromise the safeguarding of the right of the plaintiff, that is, in those cases where, necessarily, the Periculum in Mora (the danger of ineffectiveness of the measure) is not as intense. However, as the establishment of this prior adversarial process must be necessary and systematically set aside, giving rise to the constitutional greatness of the institute." (BUENO, Cassio Scarpinella. The New Application for Mandamus Law, 2nd ed., São Paulo: Saraiva, 2010, pp. 182/183). Emphasis added.

^[6] THEODORO JUNIOR, Humberto. Course on civil procedural law. 56 rev. ed., current. and expanded. Rio de Janeiro: Forensics, 2015. v. I. p. 616.

^[7] GAIO JÚNIOR, Antônio Pereira. Institutions of civil procedural law. 2nd Ed. Belo Horizonte: Del Rey, 2013. p. 661. In addition, the scholar points out, in an express mention of the Code of Civil Procedure of 1973, that: "we were already saying at that time of the repealed Code that the existence of such power is justified with a central argument that, for the legislature, it would be impossible to predict and provide for, completely and exhaustively, all feasible forms of danger and possible solutions thereof. This time, it will be up to the magistrate, when prompted, to undertake the task of determining, in the face of the specific case, the measures necessary to cope with situations of law worthy of relief." Emphasis added.

^[8] "The theory that the interest of society (primary public interest) could be sacrificed is no longer well accepted to meet purely state interests (secondary public interest), especially those of a budgetary nature: in the Democratic State of Law the guidelines outlined in the Constitution motivate and lead the performance of the Public Power, which is why often the public interest is only truly met upon true satisfaction or restoration of a particular right." (BARROSO, Luis Roberto. The Contemporary State, Fundamental Rights, and the Redefinition of Supremacy of the Public Interest, Rio de Janeiro: Lumen Iuris, 2007, pp. 8-9.

Category: Tecnology

The Madrid Agreement of 1981 and the Madrid Protocol of 1989 are the legal bases of the current international trademark registration system operated by the World Intellectual Property Organization (WIPO). This system was designed to simplify, cheapen and accelerate the process of trademark registration in the various signatory countries – which are now more than 120 – simultaneously.

Applications for registration are filed at the regional or national office of the signatory country (in the case of Brazil, the PTO), which holds the conference of documents submitted by the applicants. The application is then sent to the WiPO International Secretariat, which decides on the conformity of the application. If confirmed, the application becomes an international application and is sent to the signatory countries selected by the applicant for the application to be reviewed on the basis of the local legislation of each country.

The Madrid Protocol entered into force in Brazil in October 2019. One year after the beginning of its validity, 109 international trademark applications were registered made by Brazilian users and 7,896 requests made abroad and received by the PTO for compliance analysis. Currently, the members and signatory countries of the Madrid Protocol represent more than 80% of global trade (to learn more about the Treaty of Madrid, click here).

Federal Deputies Julio Lopes (PP/RJ) and Paulo Abi-Ackel (PSDB/MG) presented Bill No. 10,920/18, with the aim of amending Law No. 9,279/96 (Industrial Property Law, LPI) to reduce bureaucracy and give isonomic treatment to nationals and foreigners, in view of Brazil's then imminent agreement to the Madrid Protocol.

On June 17, the plenary of the House of Representatives approved Urgent Request No. 1,325/21 presented by Deputy Efraim Filho (DEM/PB) to expedite the processing of the bill, which has already been analyzed by the Commission for Economic Development, Industry, Trade and Services (CDEICS) and should now proceed to analysis by the Constitution and Justice and Citizenship Commission (CCJC).

The purpose of this article is to present the main changes in the LPI suggested by the deputies authors of the bill and the suggestions proposed by Deputy Efraim Filho, who was the rapporteur of the opinion on the bill in CDEICS, in addition to evaluating the relevance of the project in the field of intellectual property in Brazil.

Inclusion of Paragraphs 5 and 6 of Art. 128

Pursuant to Paragraph 1 of Article 128 of the LPI, persons under private law may apply for trademark registration only for activities that they perform effectively and lawfully. The exercise of the activities is demonstrated by means of the person's own declaration at the time of the application. The new Paragraph 5 suggests granting a deadline for submitting the "declaration of activity" when it cannot be submitted at the time of filing.

The new Paragraph 6 of Article 128, in turn, expressly intends to include in lpi the possibility of co-ownership of trademarks (provided for in the Madrid Agreement).

In the opinion of the rapporteur, Mr Efraim Filho, the legislative change is unnecessary, because the PTO itself is working to implement these changes internally in the administrative sphere.

Inclusion of Art. 143-A

Article 143 of LPI deals with the expiry of the registration due to the disuse of the mark, that is, the extinction of the trademark registration due to its non-use. The purpose is to prevent the accumulation of trademarks and unused, preventing the competitiveness of the market from becoming more organic. Currently, for the PTO to assess the expiry of a trademark, the application must be made by any person with legitimate interest. The PL includes art. 143-A in LPI to create more hypotheses of extinction of the marks by expiry, requiring the proprietor to submit a declaration of use of the mark during the sixth and tenth year of validity of the registration.

According to the opinion of CDEICS, however, creating this condition would result in another step to be overcome when renewing the marks and another for charging fees, which goes against the very purpose of the bill.

Inclusion of Art. 146-A

This new article would serve to extend the provisions related to the hypotheses of extinction and expiry of trademark registrations to international records derived from the Madrid Protocol.

The Opinion of the CDEICS, however, points out that the Madrid Protocol does not interfere with the causes of extinction and expiry provided by the LPI (there are exceptions for specific cases), which led to the conclusion that there is no need for this legal change.

Amendment of art. 158 (caput) and §§ 1 and 2 and inclusion of §§ 3 and 4

The current article 158 of lpi provides for the publication of applications for registration of trademarks for submission of opposition. The modification suggested by the draft law aims to determine that the application be published in Portuguese. The following paragraphs, in short, provide that, if the application for registration is made in a foreign language, the applicant must provide a simple translation into the Portuguese. For the justification presented, it is not reasonable to impose on the PTO the cost and responsibility of carrying out the translation of foreign applications.

Nevertheless, Mr Efraim Filho understood that, depending on the principle of reciprocity in international relations, the deposit may be made in English, French or Spanish and the PTO will be responsible for the translation into the Portuguese.

Inclusion of §§ 1 and 2 to art. 160

Article 160 of the LPI deals with the examination to be done by the PTO on the granting or rejection of the trademark registration application, after the deadline for submitting opposition to the application for registration. The bill included two paragraphs to Article 160 to provide for the automatic approval of the application for registration if it is not analyzed within 18 months by the PTO counted from the filing of the application.

Paragraph 2 provides that the period of §1 may be reduced if a shorter term is granted to foreigners by means of an international agreement or convention.

The amendment is refuted in the opinion of the CDEICS, for which the average for analysis of applications for registration by the PTO is eight months, and any differences in deadlines between parallel systems and equally accessible to nationals and foreigners do not constitute discriminatory treatment.

Inclusion of the sole paragraph to Art. 217

Article 217 establishes the obligation for the trademark owner in Brazil domiciled abroad to constitute and maintain qualified and domiciled attorney in Brazil, with powers to represent him judicially and administratively, including to receive citations.

While the draft law includes a single paragraph that gives 60 days after filing the application for registration for the foreign applicant to submit to the PTO the power of attorney of his representative in Brazil, the opinion of cdeics understands that such proposition is incompatible with the Madrid Protocol, because the filing of the application for registration is made by the office of the member country (in Brazil , the PTO), and it is unnecessary to maintain a legal representative in the country for which protection is intended.

Nevertheless, it is notorious the difficulty of quoting representatives of foreign trademark holders, which is why Mr Efraim Filho proposed to introduce the sole paragraph to Art. 217 with another wording. The objective is to require the constitution of a prosecutor in Brazil only in cases where there is notification of the PTO on ongoing legal claims, which will lead to the notification of the trademark holder via WIPO, so that she may constitute a proxy in 20 working days.

Repeal of Art. 135

Article 135 states that the assignment of a trademark shall encompass all registrations and requests on behalf of the transferor of the same or similar marks, relating to the same product or service, under penalty of cancellation of registration or filing of the application.

The bill intends to repeal this provision because it believes that, with the accession to the Madrid Protocol, foreigners could perform the assignment of trademark without the restrictions defined in art. 135 and that, because it is a voluntary act, the assignment of the trademark should not be regulated by law, as it is analyzed from the commercial point of view by the parties before it is carried out.

The proposal is rejected by the opinion of the CDEICS, which states that the rule of assignment of trademarks would apply to national and foreign registrations, without distinction, according to the pto.

Conclusion

Brazil's adhering to the Madrid Protocol was a major advance on trademark registrations, facilitating the registration process both by foreign companies wishing to have their trademarks registered in Brazil and by Brazilian companies wishing to obtain registrations abroad.

In principle, the proposed amendments to the LPI do not seem necessary to us in that there is no incompatibility between the provisions of the LPI and the Madrid Protocol, nod.

Below is a complete list of articles with the suggestions proposed by the bill and its CDEICS substitute.

Category: Real estate

Fatima Tadea Rombola Fonseca, Vagner Araujo and Luiza Indio

Published in 2017, Law No. 13,465 established an important instrument and legal framework in the context of public policies aimed at land regularization of consolidated informal urban centers, the Reurb (Urban Land Regularization). This regularization can be total or partial and aims at providing ownership title to the occupants of these spaces, granting legal certainty through the individualization of real estate certificates of title and the updating of the property before the registry office of real estate.

Although the legislation is relatively recent, it is noticed that Reurb already has examples of practical application in several regions, such as the state of Minas Gerais (MG) and the Federal District (DF). Only in the region of Planaltina (DF), there are 72 Projects of Reurb, among which stands out the project of the urban nucleus Estancia Mestre D'armas I, which describes the regularization of an area of 271,743 hectares, benefiting 40,761 inhabitants of up to 3,267 residential lots and 927 residential and/or commercial lots, among others. In the city of Coronel Fabriciano (MG), the Reurb project developed by the municipality reached the registration of 247 units, of the 2,000 plots planned, in just 23 days.

The promotion of a Reurb begins with the request of the interested party to the municipality where the urban nucleus that is to be regularized is located. This protocol can be done by individuals, legal entities (including developers and allotment companies), entities of the Federation, the Public Defender's Office (on behalf of hyposufficient beneficiaries) and the Public Prosecutor's Office. The process is conducted by the municipality, who will be responsible for the relocation and resettlement of occupants whenever necessary, such as in case of irregular occupations of degraded areas or risk areas.

This instrument can be used by both the government and the private sector, considering that, as said before, allotment companiesand real estate developers can request the Reurb directly to the municipality, presenting the respective project and the documents required by law. The Reurb project, however, must comply with certain legal criteria to be approved, under penalty of rejection.

In practice, the law creates two modalities of operationalization of Reurb: one specific for informal urban centers occupied predominantly by low-income population (Reurb-S) and another for other situations of specific social interest (Reurb-E). The economic criterion of the Reurb-S is fixed by municipal law and may undergo variations to suit the territorial reality of which Reurb will be operated. On the other hand, The Reurb-E will be proposed in cases where the economic criterion adopted in the previous modality is not applied.

Reurb's application must be accompanied by specific documentation for its evaluation to be feasible, such as: preliminary study of non-conformities and the legal, urban and environmental situation of the area to be regularized; urban project and physical schedule of services and implementation of essential infrastructure works; and urban, environmental and other compensations, when any, defined at the time of the approval of the land regularization project. The last item reinforces the mixed objective of Reurb, which involves not only land regularization for the occupants of the area, but also the proposition of solutions for non-conformities and environmental and urban issues affecting the informal nucleus analyzed, which, in the end, should be funded by the municipality itself or by the applicant, depending on the modality of Reurb.

It will be up to the municipal government to approve, or not, land regularization project. In cases of approval, it will take place by formal and public act, which will matter in the issuance of the certificate of land regularization. The last stage of the project consists in the formalization of the real right of the owners of the properties, which will take place through the registration in the registry of real estate, through the presentation of the certificate of land regularization and the land regularization project.

For effective approval, the Reurb project must necessarily include a very well-structured technical and legal documentation and, mainly, serve the purpose of urban regularization provided for in the legislation. After four years of validity, the instrument still has high potential for application in the national territory by public and private entities. It is up to the real estate market to identify business development opportunities that can, at the same time, target profit and have enormous social impact.

Category: Infrastructure and energy

Alberto Faro, Laura Souza, Felipe Baracat and Fernanda Quiroga

Green hydrogen is a market with an estimated value of $2.5 trillion by 2030. An opportunity is open up for Brazil, which is one of the countries with the highest potential for renewable electricity generation in the world and with one of the lowest marginal production costs. To take advantage of it, it will be necessary to create national strategies to foster the development of this market.

In this e-book, we present the main characteristics and perspectives of the green hydrogen sector in Brazil. Machado Meyer's Infrastructure team has been actively working in this market and is proposing a series of initiatives that may be adopted in Brazil with the aim of fostering the sector. With this publication, we begin a series of articles, which will be published on the subject on a weekly basis. 

Category: Tax

Due to the severe and persistent financial difficulties faced by the Economy of Rio de Janeiro in 2017, the state of Rio de Janeiro signed the Fiscal Recovery Regime (RRF) with the federal government. Approved by Complementary Law No. 159/17, the RRF was established to give states in severe financial imbalance instruments to adjust their accounts. Thus, the state of Rio de Janeiro could have access to instruments such as:

• Rfull deduction of benefits related to debt contracts administered by the National Treasury for up to 36 months;
• Temporary suspension of legal requirements for the contracting of credit operations, as well as the limits and determinations applied when non-compliance with the limits established for personnel expenses and consolidated debt. In relation to personnel expenses, the deadline for the state to recomply with the legal limits becomes that of the RRF;
• Suspension of the need for proof, for voluntary transfers, that the state is up to date with the payment of taxes, loans and financing due to the Union, with the accountability of resources received and compliance with the limits of consolidated and furnished debts, credit operations, including in anticipation of revenue, registration in Leftovers payable and total expenditure on personnel; and
• Possibility of contracting credit operations with Union guarantee aimed at financing a voluntary staff shutdown program.

In order to have their tax recovery plans approved, states must make a commitment to restrict the increase in expenses and fulfill their obligations in accordance with the conditions established in Complementary Law No. 159/17, among which are the impossibility of:

a) granting adjustments to civil servants and public and military employees in addition to the annual review provided by the Federal Constitution;

b) creation of a position, employment or function involving an increase in expenditure;

c) change in career structure involving increased expenditure;

d) admission or hiring of personnel, subject to the repositions of management positions that do not result in increased expenditure and those resulting from vacancy of effective or lifetime position;

e) conducting a public tender, with the possibility of vacancy;

f) creation or the increase of aid, advantages, bonuses, allowances, representation funds or benefits of any kind to civil servants and civil servants and military personnel;

(g) the creation of compulsory expenditure of a continuing nature;

h) adjustment of mandatory expenditure above the IPCA or the annual change in net current revenue;

i) granting or expanding an incentive or benefit of a tax nature from which revenue waiver sits, with the exception of those granted pursuant to Art. 155, §2º, item XII,(g) of the Federal Constitution.

The postulant state has to present its Fiscal Recovery Plan, which, once approved, formalizes the program's support. The purpose of the presentation of the document is to seek the rebalancing of public accounts to meet the guidelines of the Fiscal Responsibility Law.

In the specific case of the Tax Recovery Plan signed by the state of Rio de Janeiro, the request was made in 2017 for three years, extendable for the same period. To increase revenues and reduce expenditure, the state forced itself to authorize the privatization of companies in the financial, energy and sanitation sectors; establish supplementary pension scheme; reform of pensions; review tax benefits; and limit expenditure growth, among other measures.

Even before the edition of Complementary Law No. 159/17, which instituted the RRF, the states had already signed, within the scope of Confaz, the ICMS Agreement No. 42/16, which authorizes bothsuch as the Federal District to create conditions to take advantage of incentives and benefits related to ICMS or reduce its amount.

Based on this agreement, the state of Rio de Janeiro issued Law No. 7,659/17 to impose on Rio de Janeiro taxpayers to enjoy tax benefit a deposit equivalent to 10% of the benefit to the State Fiscal Balance Fund (FEEF).

Expired the deadline (31/12/2020) provided to allocate 10% of the tax benefits to the FEEF and in due to the intense tax litigation filed by taxpayers against this requirement, the state of Rio de Janeiro, based on Complementary Law No. 159/17, issued Law No. 8,645/19 and created the Temporary Budget Fund (FOT) which, in reality, is basically the FEEF with some changes.

According to Article 10 of Law No. 8,645/19, the need to contribute to the FOT will persist while the Fiscal Recovery Regime of the State of Rio de Janeiro is in force:

"Art. 10 This law comes into force:

I - from January 1, 2020 and will take effect while the Tax Recovery Regime is in force - RRF"

However, in spite of its participation in the RRF and due to the systematic difficulty in fulfilling the considerations assumed in its plan, the state of Rio de Janeiro requested to the Supreme Court (STF), in mid-December 2020, the suspension of its RRF, which came to be deferred by the then President Justice of the Supreme Court, Luiz Fux.

Due to the widespread difficulty of states that had their fiscal recovery plans accepted by the federal government to comply with severe constraints, the National Congress issued Complementary Law No. 178/21, which implemented adjustments in the regulation of the RRF.

In April 2021, the state of Rio de Janeiro requested the Supreme Court that its Tax Recovery Regime remain suspended until there was effective regulation of the new RRF being drafted in the federal government, as established by Complementary Law No. 178/21.

The rapporteur designated was Justice Dias Toffoli, who, based on cooperative federalism, authorized the state to suspend the payment of debt to the federal government until the new RRF is effectively regulated:

"I have that the current scenario of the national economy needs an even greater effort among the entities of the federation. The so-called 'cooperative federalism' has never been more in vogue, and since the Union is competent to regulate the provisions brought by Complementary Law No. 178/21, it should not shie away from fulfilling its role in order that the recovery plans and programs offered to state entities are effective and possible, thus avoiding the collapse of the states of the federation." (Original Civil Action No. 3,457).

In June 2021, the state of Rio de Janeiro announced that it has joined the new RRF and, with it, until six months to submit a new Tax Recovery Plan, which will have to be duration of ten years. With the joining, the state will no longer pay debts with the Union and guaranteed by the federal government in the first 12 months. In the following nine years, the installments will be gradually resumed until the return of the full amount at the end of the plan.

That is, since December 2020, the state of Rio de Janeiro has its RRF suspended. Nevertheless, the contribution to the FOT continues to be demanded monthly, which we understand is not consistent with the principles of purpose, morality and transparency, since deposits for the FOT are intended for fiscal balance and should only be required as long as the RRF is in full force.

How well highlights Fernando Facury Scaff, the taxes that have linked collection, such as the deposit for the FOT, whose collection is related to the fiscal balance, must observe the link between their revenues and corresponding expenses: "Linking stems from the existence of a legal link between revenue and expenditure, so that there is a specific relationship between what is collected and what is spent the amount collected."

It is valid to clarify that we are not arguing the illegitimacy of the collection of the deposit to the FOT due to the untying of the proceeds of its collection. We know the decision of the Supreme Court in Theme 846 by the constitucionality of the maintenance of a given social contribution when the object for which it was instituted persists.

The point is, since the deposit for the FOT is linked to the fiscal recovery of the state, while the determining reason of its institution - the existence of the RRF in progress - is suspended, either by force of court order issued by the Supreme Court or the lack provided by the new RRF, there is no legal basis or reason that justifies the collection of the deposit. The imposition of the FOT, therefore, should be equally suspended, because only in this way will the principles of purpose, linkage, morality, transparency and good faith with rio's taxpayers be observed.

Category: Banking, insurance and finance

The Climate-Related Financial Disclosures Task Force (TCFD), an institution created in 2015 at the G20 request to promote recommendations for disclosures related to climate change, issued in 2017 recommendations to financial and non-financial companies seeking to make consistent, comparable, clear and efficient some voluntary disclosure information.

TCFD's work aims to provide more transparency to risks and opportunities related to climate change to enable better investment, credit and insurance procurement decisions, and to improve understanding of the concentration of carbon-related assets in the financial sector.

After becoming a supporting institution of TCFD in September 2020, the Central Bank of Brazil launched its sustainability agenda, with even greater scope than the recommendations of the task force, because, in addition to contemplating the management of climate risks, it addresses the management of social and environmental risks, the promotion of sustainable finance and the integration of sustainable variables in the decision-making process of the Central Bank.

The initiative of the federal authority is very welcome, for integrating in its strategy rules of risk management and social and environmental responsibility. In this sense, Central Bank's policy also seems to embrace the acronym of order at the moment: ESG (Environmental, Social and Governance), which reflects the need for an analysis capable of integrating, in addition to financial return, issues of environmental, social and governance character.

For example, the Central Bank has put proposals in public this year on:

• sustainability criteria applicable in the granting of rural credit and ban access to rural credit for socio-environmental issues (Rural Credit Consultation);
• definitions of social risk, environmental risk and climate risk and requirements for its management (Risk Management Consultation); and
• disclosure of social, environmental and climate risk and opportunity reporting by financial institutions (Consultation Risk and Opportunity Report).

With regard to the Rural Credit Consultation, the proposed standards divide transaction into three segments:

• those that can be considered sustainable according to the list (pointed out as very comprehensive because it can include practices far from sustainability);
• those that cannot receive rural credit (which includes only areas enbared in the Amazon biome); and
• intermediaries, who can receive rural credit, but with warning to financial institutions that the transaction represents environmental risk (easing past restrictions and generating legal uncertainty for the financier).

A novelty already expected by the market in the proposal of the Rural Credit Consultation is the integration of government databases and the creation of the Bureau of Sustainable Rural Credit, whose information can be provided by authorization of the borrower, within the principles of open banking.

The Risk Management Consultation provides that social, environmental and climate risks should be considered in the risk management structure of financial institutions and updates the Social and Environmental Responsibility Policy.

Social risk includes the possibility of losses generated, directly or indirectly, by events associated with practices of violations of fundamental rights and guarantees or acts harmful to collective interests, such as acts of harassment, prejudice, discrimination, child labor, work in conditions analogous to slavery, among others.

Environmental risk includes the possibility of losses to institutions caused, directly or indirectly, by events associated with environmental degradation acts or activities, including excessive use of natural resources, or environmental disasters resulting from human intervention – including air, water or soil pollution, large-scale environmental destruction , deforestation, forest fire or forest fire.

In turn, climate risk is divided into:

• resulting from the possibility of losses to the institution caused, directly or indirectly, by events linked to the transition process to a low-carbon economy, in which greenhouse gas emissions are reduced or offset (changes in legislation, technological innovations, negative perceptions of any Stakeholder on the institution's contribution to a low-carbon economy); and
• physical, possibility of losses by events associated with extreme environmental conditions caused by changes in weather patterns (weather, long-term environmental changes, human migration by such events).

The Risk and Opportunity Report Consultation proposes mandatory disclosure of the report by financial institutions addressing qualitative aspects of TCFD's recommendations with a focus on governance, institutions' strategies and social, environmental and climate risk management. In a second moment, Central Bank intends to require quantitative aspects focused on goals and metrics.

Even if some of the proposals contained in the public consultations can be improved, it is certain that the standards that may be implemented should contribute to the financial market in general to take more environmentally, socially and governance-responsible practices. This applies both to the granting of credit and to the channeling of investments and is another important step in addressing the great socio-environmental and climate challenges of the coming years.

Category: Litigation

The need for proof of bad faith for double refund of collection carried out improperly against consumers (popularly referred to in the legal universe as double repetition) is the subject of controversy in the Superior Court of Justice (STJ) for a long time.

The debate was based on the distinct interpretations that the First Section and the Second Section of the Superior Court gave to the theme, based both on the wording of the single paragraph of Article 42 of the Consumer Protection Code^[1] (CDC) as to the consolidated understanding that such a requirement is necessary for cases governed by Article 940 of the Civil Code^[2] (CC).

For the First Section, whose jurisdiction encompasses the relations of public law and, consequently, the consumer relations involving the State and public service concessionaires, it was not necessary to prove bad faith to apply the penalty provided for in the sole paragraph of above mentioned Article 42, because the provision "unless there is justifiable deception" was interpreted as "when it does not arise from intentionality (bad faith) or guilt in the conduct of the service provider".^[3] Thus, considering that it is a consumer relationship, the First Section understood that the penalty provided for in the CDC would apply, with consequent refund in double the amounts charged, when the intention (intentional or intentional omissive conduct) or when the fault (commissive or omissive conduct resulting from malpractice, recklessness or negligence) of the service provider is identified.

On the contrary, the Second Section of the Superior Court, whose competence encompasses relations of private law – consequently influenced, therefore, by the long understanding of the need to demonstrate bad faith to apply the same sanction in the relations governed by the CC (Article 940, reproduced above) – had an understanding by the requirement of demonstration of bad faith of the supplier for double repetition in consumer relations. In this case, it would not be enough to blame the supplier who charges a debt improperly, since "the dominant understanding in this Superior Court is to admit the repetition of the refund of collection in the simple form, and not twice, unless proof of bad faith".^[4]

Given the divergent interpretation between the two sections of the STJ, the question was submitted to Theme 929/STJ for solution: Discussion on the hypotheses of application of double repetition provided for in art. 42, paragraph, single paragraph, of the CDC.

Initially, the dispute would be represented by Special Appeal No. 1,517,888/RN, which was later replaced by Special Appeal No. 1,585,736/RS. However, in a trial session held on 02/20/2019, the Superior Court decided to disapprove this second appeal as representative of the controversy of Theme 929, thanks to the understanding of the STJ Grand Chamber that it would be more appropriate to proceed with the judgment of the Motion to Resolve Divergence No. 1.413.523/RS, which was on the same subject and was already guided by decision.

Thus, in judging the Motion, on 10/21/2020, the Grand Chamber stated the following thesis:

With these considerations, it is known from the Embargoes of Divergence in order, on the merits, to establish the following thesis: THE DOUBLE REPETITION, PROVIDED FOR IN THE SOLE PARAGRAPH OF ART. 42 OF THE CDC, IS IT APPROPRIATE WHEN IMPROPER COLLECTION CONSTITUTES CONDUCT CONTRARY TO OBJECTIVE GOOD FAITH, I.E., IT MUST OCCUR INDEPENDENTLY OF THE NATURE OF THE VOLITION ELEMENT.

This judgment of the Motion to Resolve the Divergence by the Special Court would already represent a binding precedent, pursuant to Article 927, item V, of the Code of Civil Procedure, being sufficient to consolidate the understanding on the subject both in the Superior Court Sections and in the lower courts.

Despite this, in order to give greater legal certainty to the issue, Minister Paulo de Tarso Severino, in a decision given on May 14 of this year, voted for the allocation of Special Appeal No. 1,823,218 as representative of the controversy of Theme 929, referring it to trial by the Grand Chamber.

In practice, the sedimentation of understanding should benefit consumers. This is because, with the previous understanding, depending on the service whose debt was sought to complain, it was necessary to prove the bad faith of the supplier so that the double refund was due (the simple refund, that is, only the amount charged, already depended on mere demonstration that the collection was undue). With this new understanding, however, it will be enough to prove the agent's guilt to obtain the refund in double undue charges made in consumer relations.

Even if confirmed, the dispensation of proof of bad faith will be exclusive to consumerist relations. In the undue collections occurred in relationships governed by the CC, it will continue to be necessary to prove the existence of bad faith, which is supported by judgments of repetitive appeals by the STJ^[5] and Precedent no. 159 of the Supreme Court.^[6]

With the imminent sedimentation of this understanding, it will become even more relevant for organizations and people who appear as defendants in lawsuits on the subject the presentation of technical and detailed defenses. Such defenses can succeed in demonstrating, for example:

• the non-application of the CDC, but of the CC - either because it is not a consumer relationship (according to the theories most used for defining consumers and suppliers), or because the requirements for application of the CDC by equality are not present.
• the existence of evidence that the collection was due, or that it falls within the exception provided for in the CDC, resulting from a justifiable error that does not constitute a fault or guilt.
• that the legal nature of the claim sought by the plaintiff in the judicial proceedings is not improper debt collection, but of damages or restitution for unjust enrichment, for example.

The acceptance of any of these arguments could lead to the conviction for simple restitution of the amount charged (and not double) or even the dismissal of the claim, hence the relevance of the theme.

^[1] Art. 42. In the collection of debts, the defaulting consumer will not be exposed to ridicule, nor will he be subjected to any kind of embarrassment or threat. Single paragraph. The consumer charged in an undue amount is entitled to a repetition of the default, for an amount equal to twice what he has paid in excess, plus monetary correction and legal interest, unless justifiable deception is inplace.

^[2] Art. 940. He who demands debt already paid, in whole or in part, without repaying the amounts received or asking for more than is due, will be obliged to pay the debtor, in the first case, double what has been charged and, in the second, the equivalent of what requires it, unless there is a prescription.

^[3]Brazil. Superior Court of Justice. Special Appeal No. 1,084,815/SP - São Paulo. Rapporteur: Min. Denise Arruda. Available in: <https://processo.stj.jus.br/processo/pesquisa/>. Access: 06 Jun. 2021.

^[4] Brazil. superior court from justice. Regimental Interlocutory Appeal Injury No. 570.214/Mg – Minas Gerais. rapporteur: Min. Nancy Andrighi. Available in: <https://processo.stj.jus.br/processo/pesquisa/>. Access in: 06 Jun. 2021.

^[5] Brazil. superior court from justice. Special Feature No. 1.111.270/Pr – Paraná. rapporteur: Min. Mark Buzzi. Available in: <https://processo.stj.jus.br/processo/pesquisa/>. Access in: 06 Jun. 2021.

^[6] Brazil. Supreme Court. Summary No. 159. Excessive collection, but in good faith, does not give way to the sanctions of Art. 1,531 of the Civil Code. Brasília, DF: Supreme Federal Court. Available in: <http://www.stf.jus.br/portal/jurisprudencia/menuSumarioSumulas.asp?sumula=4195>. Access: 06. Jun. 2021.

Category: Corporate

Brazil descended 15 positions in the ranking Doing Business in 2020, taking 124th place in a list of 190 countries.^[1] In its annual survey, the World Bank analyzes and classifies several aspects related to the regulation of business activity and the business environment of these nations. The downfall of Brazil was a cause for concern and prompted the issuance of the Provisional Measure No. 1,040/21, of March 29. Known as MP of the Business Environment, the text aims to improve the position of the country, raising its score in certain indicators, such as opening companies, obtaining electricity, protecting minorities, paying taxes and international trade.

Among the measures to protect minority shareholders, the following changes are highlighted in Law No. 6,404/76:

• need for resolution at a general meeting on disposal or contribution to another asset company, if the value of the transaction corresponds to more than 50% of the value of the total assets of the company contained in the last approved balance sheet, and the conclusion of transactions with related parties that meet the criteria of relevance to be defined by the CVM;
• amendment of the minimum period for the convening of general meetings in publicly held companies, which is now 30 days;
• prohibition of the accumulation of positions of chairman of the board of directors and chief executive officer of the company; and
• participation of independent directors in the composition of the boards of directors of publicly held companies.

Hundreds of amendments were submitted to the MP, among which is the amendment No. 17, which suggests the inclusion of provisions in Law No. 6,404/76 to allow plural voting, a matter that was not provided for in the original wording of the MP. Plural voting consists of the allocation of more than one vote per share of a given class of the share capital of a corporation. Currently, plural voting is expressly prohibited in Brazilian law, which provides for the rule of "one share, one vote", according to Article 110 of Law No. 6,404/76. This provision ensures a certain proportion between the participation in the share capital and the political rights linked to it.

In general, plural voting is a much discussed and controversial topic in corporate law. Through it, the holder is assured an influence on the company's decisions greater than its effective contribution to capital. It should be recognized, however, that this instrument can be important to reconcile the exercise of control of the company with the raising of funds for the development of activities, especially in newer companies, in which the figure of the founding and controlling shareholder is closely linked to the company’s market value. In addition, the prohibition of plural voting in Brazil is considered one of the reasons why some companies decide going public in other markets that allow the plural voting. Therefore, its adoption could lead to retention of investments in the country and greater competitiveness of our stock exchange. 

With regard to amendment No 17, we highlight the following provisions on plural voting:

• General features: it is now allowed to create one or more classes of common shares with plural vote, subject to the limitation of ten votes per share, both in the closed company and in publicly held companies, provided that the creation of the class occurs before the negotiation of shares and securities in an organized market. That is, plural voting will not be allowed to companies that already have registered as publicly held companies before CVM.

• Quorum for the creation of shares with plural vote and right of withdraw: the creation of shares with a plural vote would depend on the favorable vote of shareholders representing at least half of the votes (a) of the voting shares and (b) of preferred shares without or with restricted vote, at a special meeting. Dissenting shareholders are guaranteed the right to withdraw upon reimbursement of their shares.

• Deadline (sunset clause): the plural vote would have a maximum limit of seven years, extendable only once for a period equal to or lower, with the approval of shareholders. The quorum of the extension would be the same as the creation of shares with plural vote, provided that the holders of the shares whose plural vote is intended to be extended should not vote.

• Conversion of shares with plural vote into common shares without plural vote: a hypothesis applicable in the event of transfer of shares to third parties, except in cases where (a) there is an agreement with such third parties with respect to the joint exercise of voting rights, (b) the transferor remains as indirect holder of the shares and in control of political rights, (c) the third party owns the same class of shares with plural vote or (d) the transfer takes place in the fiduciary title regime.

• Prohibited transactions: (a) incorporation, incorporation of shares and merger of a publicly-based company that does not adopt a plural vote in a company that adheres to the plural voting and (b) the partial spin-off of a publicly-held company without a plural vote for the incorporation of a company with a plural vote or incorporation of the spun-off portion into a company with a plural vote.

• Resolutions in which plural voting will not be adopted: remuneration of directors and conclusion of transactions with related parties, according to criteria established by CVM.

The reports delivered by Congressman Marco Bertaiolli welcomed suggestions of the amendments to ensure greater transparency to minorities, including:

• Permission to replace books in closed companies with mechanized or electronic systems (amendment no. 5);
• Reduction of the deadline for convening a general meeting from 30 to 21 days, in first call (amendment no. 163); and
• Inclusion of CvM as authorized person to propose public civil actions claiming damages to investors (amendment no. 211).

In addition, the drafting incorporated the plural vote, substantially in the terms of amendment No. 17, including the limitations of ten votes per share and the rule that allows publicly held companies to create plural-voting shares only before the capital opening. According to the reports, the plural vote would have an initial term of seven years, and could be extended for any period, subject to approval by the same quorum required for the creation of shares with plural vote, excluding the holders of the shares whose plural vote is intended to be extended. The right of withdrawal would also be guaranteed to shareholders who deviate from the resolution of a deadline extension.

The provisions on plural voting would not apply to public companies, mixed economy corporations, their subsidiaries and controlled companies.

The opinion was approved by the Chamber of Deputies (Câmara dos Deputados) on the night of June 23,2021 and proceeds for consideration by the Senate.

Without the intention of detailing the discussions on the advantages and disadvantages of the adoption of plural voting in Brazilian law and the other changes proposed in the wording of MP 1,040, it is necessary to reflect whether:

• corporate law should be changed exclusively to improve the country's ranking in the ranking Doing Business;
• such changes, in particular those of a structural nature, should be implemented via provisional measure, without a broad debate with market players and
• in the specific case of plural voting, it would be up to the law to regulate issues such as the number of votes allowed per share, the duration period and their intransferability.

^[1] The issues examined by the report include data on the degree of difficulty in (i) opening companies, including hiring employees; (ii) installation of the company in a given location (in addition to access to applicable licenses, registration of ownership and obtaining electricity); (iii) access to financial resources, including obtaining credit and protecting minority shareholders; (iv) day-to-day operation, such as tax payment, international trade and government contracting; and (v) business operation, including the Enforcement contract procedures and the handling of insolvency situations.

Category: Litigation

Arbitration is the method of dispute settlement based on the autonomy of the parties, who decide to submit their dispute to private judicial system instead of the Judiciary Branch. The advantages commonly associated with arbitration are several, such as greater speed, the flexibility of procedure, possibility of more technical decisions, and confidentiality. Arbitration is considered more suitable for disputes involving complex contractual relationships and expressive amounts, but can be used for any disputes related to freely transferable property rights.^[1]

In corporate law, the greatest use of arbitration was mainly because of the reform of the Brazilian Corporate Law, through Federal Law N° 10.303/01, which expressly authorized the inclusion of an arbitration clause in the bylaws of the companies (Section 109, §3^rd).^[2] Another factor was the mandatory arbitration for publicly-held companies listed in B3's special listing segments, including Novo Mercado, to be managed by the Market Chamber (Câmara de Arbitragem do Mercado).^[3]

Although the confidentiality of arbitration is not prescribed by law,^[4] but it rather results from choice of parties and/or provisions of the arbitration chambers’ regulation, in practice it is extremely common for procedures to be processed confidentially. This results in discussions and decisions not accessible to the public in general or to anyone who is not part of the dispute directly. Consequently, ignorance about arbitration could, within the capital market, impact the exercise of rights by shareholders and investors.

To improve the mechanisms for the protection of investors and minority shareholders, the Brazilian Securities and Exchange Commission (CVM), in partnership with the then Ministry of Finance, with the financial support of the United Kingdom Prosperity Fund and the technical support of the Corporate Governance Committee of the Organization for Economic Cooperation and Development (OECD), formed a working group to study measures to improve the mechanisms of private enforcement in the Brazilian capital market. The final report of this study was published in November 2020.

Among the various recommendations of the working group, the confidentiality of arbitration procedures was a prominent theme, given the concern with the possible restriction of the exercise of rights by shareholders and investors who might be interested in participating in arbitration proceedings or having knowledge of the issues discussed and their outcomes.

To resolve the issue, CVM published the Public Hearing Notice SDM N°. 01/21^[5] to change CVM Instruction N°. 480/09 by creating a duty to publicly held companies of communicating corporate claims to the market. The instruction set forth the rules for registration of issuers of securities and contains several rules applicable to publicly held companies, including those related to periodic and occasional informational duties.

Under the proposal, corporate claims are judicial or arbitration proceedings:

• involving corporate and securities market legislation, including CVM rules;
• in which the issuer, its controlling shareholders, or its directors appear as parties; and
• involving diffuse, collective, or individual homogeneous rights or interests or in which a decision may be given and may affect the legal sphere of the company or other holders of securities who are not part of the proceedings.

As an example, the proposal mentions lawsuits for annulment of corporate resolutions, action for civil liability against officers, administrators and controlling shareholders. In relation to such corporate claims, the issuing company would be required to disclose, in summary:

• news about the commencement of the arbitration, including the indication of parties, the amounts, assets or rights involved, main facts and request;
• in the case of judicial proceedings, any interim decisions (of approval or rejection) and the result of judgments on the merits in any instance;
• in the case of arbitration, interim decisions (granted or denied), decisions on the jurisdiction of arbitrators (positive or negative), decisions on the challenge of arbitrators (accepting or rejecting) and the result of merit decisions; and
• any agreement proposal or any agreement entered into during the proceeding.

The public hearing was opened for contributions until mid-April and, in all, 18 commentaries were presented by the legal community, including lawyers, associations, arbitration chambers and others.

Among the contributions, some procedural aspects related to the application of the new regulations were suggested, such as:

• the inclusion of a period of vacatio legis for better suitability of issuers and arbitration chambers; and
• the need for a transition rule for ongoing proceedings.

On the merits, the contributions were quite varied, including comments on the definition of corporate demands and the content of mandatory disclosure. Among the most recurrent – and most controversial – topics it the disclosure of settlement agreement proposals and decisions on the challenge of arbitrators.

Currently, the audience is under analysis by CVM and there are several relevant suggestions to be considered by the autarchy. The initiative to update the provisions involving the duty of disclosure related to corporate disputes is positive, as well as the broad involvement of the legal community in the debates on the subject. It is now expected that the result of the work will fulfill the intended purpose and be positive for the Brazilian capital market and arbitration.

^[1] Law No. 9.307/96, Art. 1 - Persons able to hire may use arbitration to settle disputes relating to available property rights.

^[2] Law No. 6.404/76 – Art. 9, §3 - The company's bylaws may establish that disagreements between shareholders and the company, or between controlling shareholders and minority shareholders, may be resolved by arbitration, as specified.

^[3] Companies listed in tier 2, Bovespa Mais and Bovespa Mais Tier 2 are also subject to mandatory statutory arbitration.

^[4]  Although the Arbitration Law provides that arbitrators must act with discretion (art. 13, §6), there is no provision under the same law that confidentiality is the rule.

^[5] Available in http://conteudo.cvm.gov.br/audiencias_publicas/ap_sdm/2021/sdm0121.html

Category: Labor and employment

The discussion on the possibility of the employer requesting the examination of pregnancy at dismissal has already been the subject of major discussions in the Labor Court, since there is divergence between those who support the measure, as a way to guarantee the right to the parties involved and bring greater legal certainty to the end of the employment contract , and those who understand that such a practice would be an offense to the intimacy of the worker.

In recent decision, the Third Class of the TST rejected the appeal of former employee who requested the payment of compensation for moral damages, because the company had required the performance of pregnancy examination in the commission. The winning thesis stipulated that the conduct was not discriminatory or violated the worker's intimacy, since it aimed to provide legal certainty at the end of the employment contract.

The legislation on the subject (Law No. 9,029/95) and Article 373a, item IV, of the CLT prevent the application of pregnancy testing only for the admission or maintenance of employment, since the conduct is considered discriminatory because it hinders women's access to the labor market. In other words, there is no legal provision that prohibits, or expressly permits, the employer's performance of pregnancy testing in the commission.

The case-law is strictly applying Law No. 9,029/95 and Article 373a, item IV, of the CLT, in the sense that the prohibition is restricted only to cases of admission or maintenance of employment. Some decisions also provide that the request for pregnancy testing in the demissional examination, in addition to not being sealed by legislation, is a beneficial practice for offering legal certainty to the parties, since it guarantees the right of the pregnant woman to maintain employment, upholds the right of the unborn child and anticipates any harm caused to the employer in the face of future legal action.

This understanding, however, is not unanimous. For a divergent minority jurisprudential current, the requirement of the pregnancy test on dismissal is a procedure that violates the intimacy and privacy of the employee and constitutes an intervention within the personality of the woman. This was the position of Minister Maurício Godinho Delgado in the most recent decision of the TST mentioned above.

Thus, it is concluded that the request for pregnancy test on the demission alexameno has no legal seal, being a lawful practice and considerably well received by the majority jurisprudential current. However, out of caution, it is recommended that the company take some care, such as:

• lack of obligation in relation to the performance of the pregnancy test;
• registration of refusal in relation to the performance of the examination, in case of disagreement of the employee;
• confidentiality of the pregnancy test result;
• request for pregnancy examination as an indiscriminate measure to all employees with the terminated employment contract, to avoid the characterization of a discriminatory act; and
• inclusion of specific forecast, at the end of the examination, indicating the desired legal purposes and the commitment of the company in the processing of the data obtained exclusively for this purpose.

It is proceeding in the National Congress the Bill No. 6.074/16, which aims to add a paragraph in Article 373- A of the CLT, regulating the requirement of pregnancy testing in the dismissal exams and, thus, pacifying the issue and enabling greater legal certainty for the parties. The project meets with the rapporteur of the HRC (Commission on Human Rights and Participatory Legislation), Senator Zenaide Maia, for the issuance of a report since February 2020.

The legal pacification of the theme would bring benefits to companies, as it would reduce spending on labor actions that would be avoided, but it is important to mention that legal discussions about pregnancy have social implications that go far beyond the legal sphere. Among the reasons pointed out by experts for the gender pay gap, in addition to the numerical disparity of women in leadership positions,  are issues involving the maternity and the time spent on household duties. Therefore, measures aimed at standardizing understanding on the subject should be seen as beneficial, as they guarantee legal certainty and contribute to reducing social and economic disparities between men and women.

Category: Tecnology

The LGPD establishes limits on the processing of personal data, and companies should be aware of the conditions for handling this data based on the concept of legitimate interest. The subject is new in Brazil and the National Data Protection Authority (ANPD) has not yet expressed itself on the subject. In this article, we address the hypotheses in which companies can use the concept to handle their clients' personal data.

Category: Litigation

Gisela Mation, Leandro Felix and Mateus Zottarelli

Just open the days' newspaper to come across news about impasses, delays, and suspension in the realization of works and infrastructure projects arising from bidding contracts, discussions about the termination of bidding contracts and reports on disputes that drag on for years in the judiciary without a definitive resolution. For this reason, when it comes to bidding contracts, one of the points that most arouses the attention – of experts and laypeople – is the general desire to prevent disputes or give them a quick and efficient solution, especially in contracts involving works and infrastructure projects, to ensure continuous execution, within the established deadlines and according to the budget for in order to preserve the contractual relationship between the private sector and the public agent.

The new Bidding Law (Federal Law No. 14,133/21), sanctioned on April 1, has everything to promote improvement in public management. The new legal framework, which had long been requested by experts, replaces the old Bidding Law (Federal Law No. 8,666/93), the Auction Law (Federal Law No. 10,520/02) and the Differentiated Contracting Regime (Federal Law No. 12,462/11), in addition to attaching various topics related to public procurement.

In the midst of so many amendments promoted by the new law, it is worth mentioning the chapter "Alternative Means of Dispute Resolution", which– in line with recent legislative practice in similar situations – establishes the possibility of using appropriate means for the prevention and resolution of conflicts related to available property rights arising from bidding contracts.

The new Bidding Law states that, in the contracts governed by its dictates, "alternative means of prevention and resolution of disputes may be used, notified by conciliation, mediation, the dispute resolution committee and arbitration" (art. 151).

The possibility of resolving disputes in the field of arbitration, although it is not in itself an innovation (since the arbitrability of disputes involving public authorities is a peaceful matter and of wide practical application in Brazilian law), is quite commendable, especially because it brings greater legal certainty to those involved.

Although there was no express provision to this effect in the previous legislation, several public contracts already had an arbitration clause, which were included based on of Article 54 of the former Bidding Law, which provided for the possible application of the "provisions of private law" in the context of bidding contracts. Subsequently, the arbitrability of disputes involving the government was overcome with the reform of the Arbitration Law, which occurred in 2015. She eventually confirmed the understanding that "[direct and indirect] public administration may use arbitration to resolve disputes relating to available property rights" (art. 1, §1).

Regarding to the objective arbitrability of disputes involving the public authorities, the new Bidding Law – in a very positive way – also aligns with the consolidated arbitration practice. The law brings a list of hypotheses in which disputes related to bids will deal with available property rights, such as issues related to:

• restoring the economic and financial balance of the contract;
• non-termination of contractual obligations by any of the parties; and
• calculation of indemnifications.^[1]

However, if this list is merely an example, other disputes arising from the bidding agreements, provided that they also see on available property rights, may also be resolved by arbitration.

The legislator made a point of providing that any arbitration proceeding involving public procurement under the aegis of the new Bidding Law should always be lawfully and will comply with the guidelines of the principle of advertising. This provision also goes against what the Arbitration Act provides since 2015: "[a] arbitration involving public administration shall always be lawfully binding and shall respect the principle of publicity" (Art. 2§3).

The new Bidding Law establishes that bidding contracts may be added to allow the adoption of alternative means of conflict resolution. At this point, the legislator's intention converges with statements 10 and 18 of the 1st Administrative Law Day, which have, respectively, on the possibility of:

• the Public Administration proposes an additive to administrative contracts arising from bidding in order to include alternative methods to the Judiciary for conflict resolution; and
• inclusion of arbitration clause in administrative contracts, although there is no provision in the notice for this.

Again, therefore, the current Bidding Law has well-walked towards favoring the adoption of arbitration in disputes arising from bidding agreements.

If the new law does not present any further news in arbitration scope, what certainly draws attention is the possibility of using a committee for dispute resolution, the disputes boards, which may deal with any issues relating to available property rights that are departing from the bidding agreements. The use of dispute boards its main objective is to prevent the emergence of disputes during the execution of the contract from impacting the performance of the parties or resulting in the waste of resources destined for contractual execution.

The dispute boards are a board, usually appointed at the beginning of the performance of the contract and composed of impartial professionals whose objective is:

• monitor the progress and development of the project;
• encourage the prevention of disputes; and
• to assist in the resolution of any disputes by issuing recommendations or decisions, which in turn shall be binding on the Contracting Parties.

The idea is that the committee intervenes quickly and effectively, to prevent or resolve an impasse, allocated responsibilities based on an independent interpretation of the contractual clauses, according to the technical and technical peculiarities of each case.

The dispute resolution committee is composed of three members, who, pursuant to Article 154 of the new Bidding Law, shall be appointed per "isonomic, technical and transparent criteria." It is advisable that the choice of professionals should be based, above all, on their technical knowledge, without leaving aside that the panel merges professionals whose know-how has a direct relationship with the characteristics of the project and those whose knowledge may be useful in the legal interpretation of the contractual clauses.

the dispute boards may be characterized as permanent, remaining in operation throughout the contractual relationship, even if no disputes arise between the parties, or ad hoc, when they will be formed only if contractual disagreements arise, remaining active until the decision is made.

The parties may establish what will be the rules applicable to the committee, and may choose, to give greater security to those involved, by a specialized institution whose specific regulation will have the attribute of guiding the out-of-court procedure.

Depending on the nature of the decision to be given, the dispute boards can be classified in the following modalities:

• the Dispute Review Boards, recommendations of a non-binding nature;
• the Dispute Adjudication Board, whose decisions are mandatory adoption by the parties, however, subject to the right of one party, after communication to the other, to question the decision before the judiciary or in the context of arbitration, as the case may be; and
• the Combined Dispute Boards, which merge the previous modalities, issuing recommendations and decisions, depending on the circumstance.

In cases of disputes potentially arising from contracts to be signed under the new Bidding Law, especially those whose object is the construction of public works and infrastructure projects, in which the level of complexity is known to be higher, one of the main advantages of dispute boards is to prevent the work from being paralyzed or even unfeasible due to technical disputes. This concern had already been expressed by the Federal Council of Justice in 2016, through statement no. 80 of the 1st Day on Prevention and Out-of-Court Settlement of Disputes, which recommended "[the] use of dispute resolution committees (Dispute Boards), with the insertion of the respective contractual clause, (...) for construction contracts or infrastructure works", in order to allow "the immediate resolution of conflicts arising in the course of the execution of contracts".

On that same occasion, the legality of the dispute boards, in the manner provided for in Paragraph 3 of Article 3 of the Code of Civil Procedure,^[2] and the appropriate binding of the parties to the decisions given by the committee until the judiciary or the competent arbitral tribunal is issued a new decision or confirms it, if provoked by one of the parties.^[3]

The forecast of disputes boards in the new Bidding Law, in addition to being innovative at the federal level, it is commendable and follows the trend that had already been observed in the municipal and/or state spheres. This is the case of the municipality of São Paulo, which, in attention to the importance that has been attributed to this resource, enacted Law No. 16,873/18, recently regulated by Decree No. 60,067/21. Such regulation allows parties involved in continued contracts signed with the municipality to provide for the dispute boards as a way to prevent and resolve, in a practical and efficient manner, any disputes that may arise during the relationship between the parties, so that it is not necessary to interrupt the progress of the project and, thus, can maintain due continuity in the execution of contracts.

Generally speaking, therefore, it is verified that the legislator took into account, in the drafting of the new Bidding Law, all the development of alternative means of dispute resolution in the public sphere – which, year after year, does not stop growing – and rightly included a specific chapter to deal with the subject. This provision expressly, in addition to offering greater security to all involved, will certainly bring greater efficiency to companies interested in contracting with the Public Administration, given all the speed and specificity that extrajudicial means can provide to stakeholders. The insertion of dispute boards points out, above all, the continuous effort to consolidate the use of extrajudicial means of conflict resolution.

^[1]    These provisions follow what has already been discussed in the 1st Administrative Law Day, through the statement no. 19, which highlights that "the controversies about the economic and financial balance of administrative contracts are part of the category of those relating to available property rights" and, therefore, the "appropriate extrajudicial means of prevention and resolution of disputes will be admitted , notified by conciliation, mediation, dispute resolution committee and arbitration."

^[2]    Set out No. 49: "Dispute Resolution Committees (Dispute Boards) are a method of consensual settlement of conflict, as provided for in § 3 of Art. 3 of the Brazilian Code of Civil Procedure."

^[3]    Paragraph 76: "Decisions made by a Dispute Resolution Committee (Dispute Board), when the contractors have agreed to their mandatory adoption, bind the parties to their compliance until the judiciary or the competent arbitral tribunal issue a new decision or confirm it, if they are provoked by the dissatisfied party."

Category: Environmental

After 17 years in discussion, the general text for the General Environmental Licensing Law – Bill No. 3,729/04 – has been approved in the House of Representatives last May.

The new licensing model proposed by the bill aims to reduce environmental licensing proceedings bureaucracy, ensuring greater legal certainty in the vast and decentralized environmental legislation in Brazil.

The intended flexibilization of environmental licensing proceedings despite being the biggest innovation of Bill No. 3,729/04, it is, in fact, an old concern that has accompanied natural resource managers in Brazil for years and that has been dragging on throughout the history of the Brazilian environmental licensing system itself.

This system refers to the beginnings of Portuguese planning (marked by fragmented authorizations issued by a central government for access to natural resources, such as suppression of vegetation, hunting, fishing, use of water resources, etc.), extending until the early 1970s (with the emergence of a modern environmental licensing system).^[1]

In a second moment, there was a movement led by the state governments of Rio de Janeiro and São Paulo, which proposed the first rules on environmental licensing (especially those that dealt with the issue of pollution in large cities). However, it was only after the Federal Decree No. 88,351/83^[2] – which at the time regulated the National Environment Policy (Federal Law No. 6,938/81) – and, more specifically, with the edition of the Resolution of the National Council for the Environment (Conama) No. 01/86 – which established guidelines and basic criteria for the preparation of Environmental Impact Assessments and Environmental Impact Reports (Estudos de Impacto Ambiental and Relatórios de Impacto Ambiental - EIA/RIMA) – that the structuring of environmental licensing proceedings began as we know it today, regarded as rigid and inflexible, founded on a three-phase system of licenses (Preliminary License, Installation License and Operating License) and preceded by large and complex environmental impact studies.

This second moment of licensing proceedings extends until the end of the 1990s, when the first reflections of the CONAMA’s Resolution No. 237/97 can be observed, which, in addition to establishing more detailed guidelines for environmental licensing proceedings, set forth evident incentives for the simplification of these proceedings in Brazil.^[3]

After 2011, with the approval of Complementary Law No. 140/11, there was an intense movement of decentralization of environmental licensing proceedings, also including municipal environmental bodies (in case of activities or enterprises of local environmental impact). However, even though environmental licensing has been adopted for decades, to this day the procedure is based on infralegal and local standards, especially legal resolutions enacted by CONAMA and local legislation (state and municipal).

Since then, environmental licensing has undergone a continuous process of bureaucracy reduction, adapting at each level of the federation to different types of activities and the political-institutional context to which it is submitted. This continuous movement of adaptation and decentralization of environmental legislation has resulted in an increasingly complex system, characterized by hundreds of licensing modalities and arrangements, with the assessment of environmental impacts by the Federal Government, the State Governments and  more than 5,500 municipalities that make up Brazil, often generating greater legal uncertainty for the entrepreneur.

The text of Bill No. 3,729/04 approved in the House of Representatives seems to follow the tendency to enable the flexibilization of bureaucratic requirements for environmental licensing proceedings, with the objective of essentially increasing administrative efficiency and legal certainty.

The proposal intends to insert significant changes in the licensing proceedings currently practiced, among which we can mention the following:

• Licensing exemption of various activities: according to the proposed Bill, for example, agriculture, livestock and forestry activities are now exempted from environmental licensing, in addition to 13 other activities^[4] that, by current rules, are considered to have an environmental impact subject of licensing proceedings, such as basic sanitation works, maintenance on roads and ports, distribution of low voltage energy, as well as those considered of negligible size by the licensing authority;
• License by Acceptance and Commitment (Licença por Adesão e Compromisso – LAC): the proposed Bill provides for the modality of self-declaratory licensing, on the Internet, which, in practice, allows that the certificate issued according to data entered into the system by the entrepreneur to be considered sufficient document for the environmental licensing of certain activities. According to the text, the modality of licensing by acceptance and commitment will be subsidized by the drafting of an Enterprise Characterization Report (Relatório de Caractrização do Empreendimento - RCE), containing the technical information for its installation and operation. Such licensing modality would apply to: (i) activities or undertakings that do not fall on the category of potentially causing significant environmental impact; and (ii) when previously known the characteristics of the region, conditions of installation and operation, environmental impacts of the typology of the activity or enterprise and the necessary environmental control measures. It will be up to the environmental licensing body to verify, analyze and inspect the information provided on the RCE, even if only by sampling;
• Single Environmental License (Licença Ambiental Única – LAU): the proposed Bill provides for the simplification of three-phase licensing proceedings for a single-phase licensing proceeding, in which the licensing authority must define the scope of the necessary environmental study;
• Rural Environmental Registry (Cadastro Ambiental Rural – CAR): under the proposal, enterprises and activities established in rural properties may submit the CAR – even if pending approval – for application for environmental licensing, even if there are issues involving overlapping with special protection areas (such as indigenous lands, quilombola lands and conservation units, for example);
• Responsibility of financial institutions: the project provides for the exclusion of responsibility of financial institutions from projects with high risk of environmental impact; and
• Intervening bodies: the current proposal unties the environmental licensing proceedings from previous consent of other intervening bodies (such as Incra, Funai, Iphan and ICMBio).

The approved Bill was sent to the Senate and it is worth monitoring its approval and submission for presidential sanction or return to the House of Representatives with proposed amendments.

^[1] It can be recalled the application of the first Environmental Impact Assessment (Estudo de Impacto Ambiental - EIA) in Brazil, not in a context of environmental licensing itself, but as a condition of the World Bank for financing the works of the Sobradinho Hydroelectric Power Plant, in the state of Bahia.

^[2] Repealed by Federal Decree No. 99,274/90.

^[3] "Art. 12. The competent environmental agency will define, if necessary, specific procedures for environmental licenses, in view of the nature, characteristics and peculiarities of the activity or enterprise, and also the compatible of the licensing process with the planning, implementation and operation stages. §1. It may be established simplified procedures for activities and projects with a small potential of environmental impact, which should be approved by the respective Environmental Councils."

^[4] "Art. 8º The following activities or undertakings are not subject to environmental licensing: I – activities of military nature, as set forth in Complementary Law No. 97/99; II – activities considered of insignificant size by the licensing authority; III – activities not included in the lists of activities or undertakings subject to environmental licensing established in the form of §1 of Art. 4 of this Law; IV – works and emergency interventions to respond to the collapse of infrastructure works, cities or disasters; V – urgent works and interventions that aim to prevent the occurrence of imminent environmental damage or to interrupt a situation that generates risk to life; VI – public service works of distribution of electricity up to the voltage level of 69 Kv (sixty-nine kilovolts), carried out in urban or rural areas; VII – water and sewage treatment systems and stations; VIII – services and works aimed at the maintenance and improvement of infrastructure in pre-existing installations or in domain and servitude strips, including maintenance dredging; IX – voluntary or similar delivery points covered by reverse logistics systems, pursuant to Law No. 12,305/10; X – solid waste sorting plants, mechanized or not, whose waste must be sent for environmentally appropriate final destination, pursuant to Law No. 12,305/10; XI – patios, structures and equipment for composting organic waste; XII –recycling plants of civil construction waste, that must be sent for environmentally appropriate final destination; and XIII – ecopoints and ecocenters, understood as places of voluntary delivery of household or similar waste, in a segregated and orderly manner in stalls or buckets, prepared for recycling or other forms of environmentally appropriate final destination."

Category: Capital markets

As of August 1^st, it will be possible to establish the first Investment Funds in Agroindustrial Production Chains (Fiagros) based on the CVM Resolution No. 39/21 recently issued by the Brazilian Securities Commission (CVM). Created through Law No. 14,130/21, Fiagro is a collective investment vehicle aimed at private agribusiness financing, in the assets listed below:

• properties, which may be leased or disposed of by the fund;

• participation in companies that explore activities that are part of the agro-industrial production chain;

• financial assets, credit securities or securities issued by individuals and legal entities that are part of the agro-industrial production chain (including the Rural Product Note (CPR), the Agribusiness Credit Rights Certificate (CDCA), the Agribusiness Letter of Credit (LCA), the Agricultural Deposit Certificate (CDA), the Warrant Agricultural (WA), the Rural Real Estate Note (CIR);

• agribusiness credit rights and securitization securities issued with ballast in agribusiness credit rights, including Agribusiness Receivables Certificates (CRAs) and quotas of Investment Funds in Credit Rights (FIDCs) – standardized and non-standard – that apply more than 50% of their equity in said agribusiness credit rights;

• real estate credit rights related to rural real estate and securitization securities issued with ballast in these credit rights, including CRAs and quotas of FIDCs – standardized and non-standard – that apply more than 50% of their assets in said real estate credit rights; and

• investment fund quotas that apply more than 50% of their equity to the assets listed in the assets listed

With the new resolution issued by the Brazilian Securities Commission – which has normative powers to regulate the form of constitution, operation and administration of investment funds, pursuant to Article 1,368-C of the Brazilian Civil Code – doubts were dispelled as to whether, in order to shorten the regulatory process, the public agency would allow the Fiagros to use CVM Instruction No. 472 regime, which regulates the functioning of real estate investment funds.

CVM Resolution No. 39/21 did not create a specific discipline for Fiagro, but, more quickly and without the opening of a public hearing, it admitted that, depending on the assets that will make up the fund's portfolio, it will be possible to use the existing regulations applicable to credit rights investment funds, real estate investment funds or equity investment funds, whichever is more appropriate. That is, the administrator must register the Fiagros with the Brazilian Securities Commission in one of the three categories indicated below:

1. Credit rights investment fund, which should include in its name the expression "FIAGRO – Direitos Creditórios" (FIAGRO – Crédit Rights). CVM Instruction No. 356 will be applied to these funds and their registration will not be accepted in the category of non-standardized credit rights investment fund, a modality that the Brazilian Securities Commission is about to terminate, as indicated in the recent Public Hearing SDM 08/20;

2. Real estate investment fund, which should include in its name the expression "FIAGRO - Imobiliário" (FIAGRO – Real Estate). CVM Instruction No. 472 will be applied to these funds, which can also invest in Agribusiness Receivables Certificates (CRA) and Agribusiness Letters of Credit (LCA); or

3. Equity investment fund, which should include in its name the expression "FIAGRO - Participações" (FIAGRO – Holdings) and will be submitted to CVM Instruction No. 578.

The Brazilian Securities Commission also informed that the regulation is temporary and experimental. This indicates that the public agency will be able to edit a specific rule to discipline Fiagro in the future, even taking advantage of this experience, which will probably have a more extended regulatory process, with the participation of the market in a public hearing.

Fiagro’s tax incentives can expand credit for agribusiness

Created in a scenario of growing shortage of public resources, which are currently the main source of financing for Brazilian agribusiness, Fiagro aims to build a channel to expand the flow of private credit in financing the national productive sector, including allowing the participation of retail investors. Among the tax attractions of Fiagro, the following stand out:

• Withholding Income Tax exemption for incomes earned by Fiagro whose quotas are traded on a stock exchange or over-the-counter market and are distributed to individuals, provided that the fund has at least 50 quota holders, and the individual enjoying the benefit may not have (i) quotas representing 10% or more of all quotas issued by Fiagro or (ii) quotas entitled to receive income greater than 10% of the total income earned by Fiagro;

• deferral for payment of income tax arising from the capital gain on quotas paid with rural property by natural or legal person to (i) the date of sale of these quotas or (ii) the date of redemption of these quotas, in the case of liquidation of the fund. The payment of such deferred tax shall be proportional to the amount of quotas sold. This provision is a great stimulus for the payment of Fiagro quotas with rural properties, allowing the structuring of Fiagro by rural owners in a less costly way, once there will be no need for payment by the quotaholder of the capital gain at the time of the payment of the quotas with the rural property (but only at the time of sale or redemption of the quotas);

• investment, through the Fiagro structure, in Agricultural Deposit Certificate (CDA), Warrant Agricultural (WA), Credit Rights Certificate (CDCA), Agribusiness Letter of Credit (LCA), Agribusiness Receivables Certificates (CRA) and Rural Product Note (CPR) with the same Withholding Income Tax exemption applicable to the individuals.

In addition to these incentives, the taxation of Fiagro's earnings and income may be postponed to the time of amortization, redemption or disposal of its quotas, since, unlike the Real Estate Investment Fund, Fiagro is not obliged to distribute to its quota holders a minimum of 95% of the profits earned, calculated according to the cash regime, based on balance sheet or semiannual balance sheet.

Therefore, we will soon see the creation of the first Fiagros in Brazil, initiating the realization of the idea of ​​operating a transition in the Brazilian agribusiness financing model that motivated the creation of this legal instrument, in addition to allowing the use of such fund for estate and succession planning, among other possibilities that the market can explore.

For more information on the characteristics of Fiagro, please visit our articles: Fiagro: new alternative of private financing for Brazilian agribusiness and Fiagro: after overturning vetoes in the National Congress, agribusiness gains financing mechanism with fiscal attractiveness for investors.

Category: Banking, insurance and finance

Eduardo Castro, Flávia Ferraz, Melissa Moreira and Tathiana Bussab

In addition to the Annual Census of Foreign Capital in Brazil, legal entities and investment funds incorporated in Brazil must report to the Central Bank of Brazil the investments in their quotas and/or shares held by foreign investors, or the outstanding short term trade debts due to them, in order to comply with the Quinquennial Census of Foreign Capital in Brazil, which relates to the years terminated in 0 or 5.

The reporting under the Quinquennial Census must be submitted to the Central Bank by:

1. Legal entities incorporated in the country, with direct ownership held by non-resident investors in their capital stocks, regardless of the amount, on December 31, 2020;

2. Investment funds having their quotas directly held by non-resident investors on December 31, 2020; and

3. Legal entities incorporated in the country, with an outstanding balance in short-term trade debts (due within 360 days), granted by non-resident lenders, equivalent to or above USD 1 million on December 31, 2020.

The reporting obligation mentioned above does not apply to the following persons and administrative bodies:

• individuals;

• direct administrative bodies of the Federal Government, states, the Federal District and municipalities;

• legal entities that are debtors under on-lending foreign credit transactions granted by institutions headquartered in the country; and

• not-for-profit entities maintained by the contribution of non-residents.

The Quinquennial Census reporting must be electronically submitted to the Central Bank through the website www.bcb.gov.br from July 1^st, 2021, through 6 PM of August 16, 2021.

The manual containing detailed information on the content and requirements of the reporting is available on the website www.bcb.gov.br.

Those responsible for this report must store the documentation that supports the information provided for five years and make them available to the Central Bank upon request.

Failure to submit the report (or submitting it without complying with the applicable regulations) subjects the violator to a fine of up to BRL 250,000.00, under article 60 of BCB Circular No. 3,857, of November 14, 2017.

Sources: Law No. 4,131, of September 3^rd, 1962; BCB Circular No. 3,795, of June 16, 2016; BCB Circular No. 3,857, of November 14, 2017.

Category: Real estate

The Municipality of Rio de Janeiro published, at the beginning of the year, Decree No. 48,378/21, creating an accessory tax obligation for IPTU taxpayers of properties located in the city. From the fiscal year 2021, it would be mandatory, according to the standard, the presentation of the Annual Register Data Statement (DeCAD) of all residential and non-residential urban properties that, in principle, should be submitted until the last business day of June of each fiscal year.

The measure, which aims to create an updated database and facilitate changes in registration data of real estate properties in the city of Rio de Janeiro, could not be implemented in a timely manner for taxpayers to meet the deadline initially set for the current fiscal year. As a consequence, Decree No. 48,985/21 was published in June, which, in addition to establishing new deadlines for the presentation of DeCAD, provides for the following main changes:

• Optional character: The presentation of DeCAD is no longer mandatory and became a faculty of the owner of the property, avoiding the application of the penalties previously provided for in Article 8 of Decree No. 48.378/21 in case of non-compliance with the deadline for filing the declaration.

• Tax benefits: Article 5 of Decree No. 48,985/21 suggests that the presentation of DeCAD allows the application of tax benefits. Although the standard did not specify what such benefits would be, the municipal Secretary of Finance and Planning reported in an official communication vehicle of the municipality that those who provide the information updated spontaneously will be able to benefit from a 5% discount on the IPTU for the following financial year.

• form: the DeCAD form, which would previously be made available on the website of the Municipal Department of Finance and Planning, can now be accessed through the Carioca Digital portal, on the Internet.

The intention of the Municipal Department of Finance and Planning is to encourage Rio's taxpayers to make the declaration spontaneously. Thus, those who did not update their information with the tax will have the opportunity to regularize their registration without being penalized or suffer retroactive charges, except in the case of proven falsehood, insufficiency, or inaccuracy of any declared information.

The IPTU taxpayer must confirm the following information regarding his properties in the city of Rio de Janeiro: current real estate property registration number, full address, taxpayer data, clarification about his legal link with the property, fiscal exercise to which refer the information provided at DeCAD, whether the property is built or not, built area and nature of use (whether residential or non-residential), including specifying the nature of the specific use of the property and its typology and constructive characteristics.

According to article 34 of the National Tax Code (CTN), the taxpayer of the IPTU is the owner of the property, the owner of its useful domain or its owner in any capacity. By owner, it is understood that he has the option of using, enjoying, and disposing of the property (art. 1.228 of the Civil Code). The useful domain covers the rights of the foreiro, of use and disposition in relation to the emphytêutico building. As for ownership, it is understood that only the possessor with Domini animus, i.e. a definitive spirit of dominance, may be a contributor to the IPTU. The lessee, for example, does not qualify as a taxpayer, as he only holds direct ownership of the property, without Domini animus. Therefore, in the case of leased properties, the obligation to submit to DeCAD will, as a rule, be the lessor.

If it is necessary to correct the DeCAD already transmitted, the taxpayer may submit a rectifying declaration in accordance with the deadlines established by Resolution SMFP No. 3.245/21, being delayed the presentation of rectifier related to exercises prior to the declaration.

In view of the decree entered into force on the date of its publication, June 17, 2021, IPTU taxpayers from the AP1 and AP2 are to be scheduled to broadcast DeCAD by July 31, 2021. At the end of this article, we present a table with the geographic areas of the municipality of Rio de Janeiro and the dates for the transmission of DeCAD (the neighborhoods of each area can be found in the Annex V of Complementary Law No. 1/11).

As it is perceived, the Institution of DeCAD intends to transfer to taxpayers an instrumental tax burden of self-declaration of the information necessary for the municipal tax office to calculate the IPTU due. This is undoubtedly another measure that increases the already high tax cost of taxpayers, not to mention the operational difficulties that many of them will face in fulfilling this instrumental duty.

If the taxpayer chooses to submit to DeCAD and has the 5% discount on the IPTU of the following year, it will be necessary to do so within the deadline established for your neighborhood.