ARBITRATION CLAUSE IN THE BYLAWS IS CHALLENGED, by Gilberto Osser and Raissa Fini

As from the date the Brazilian Corporate Law permitted companies to include in the bylaws the arbitration clause for resolution of conflicts (article 109, paragraph 3, of the Brazilian Corporate Law), such arbitration clauses are more frequently included in the companies’ articles of association. However, due to the increase in the use of this method...

CORPORATE - Gilberto Osser and Raissa Fini

ARBITRATION CLAUSE IN THE BYLAWS IS CHALLENGED

As from the date the Brazilian Corporate Law permitted companies to include in the bylaws the arbitration clause for resolution of conflicts (article 109, paragraph 3, of the Brazilian Corporate Law), such arbitration clauses are more frequently included in the companies’ articles of association. However, due to the increase in the use of this method, several discussions arose regarding the effectiveness and addition of such arbitration clauses, mainly with respect to the obligation of a minority shareholder to be submitted to the arbitration clause, although such minority shareholder had not voted in favor of its inclusion in the company’s bylaws.

Accordingly, the minority shareholder would have limited legal access, against his/her wish, as set forth in the arbitration clause, and the Judiciary Power would have their authority reduced to resolve such conflicts involving the parties subject to arbitration.

Another controversial matter relates to the shareholders that adhered to the shareholding structure of a company that already provided for the arbitration clause in its bylaws. Would such shareholder be subject to such clause?

Such matter is still under discussion by the publicly-held companies, in which the investors are not normally aware of the bylaws when purchasing shares.
In this case, although for the most part investors in the stock exchanges do not read the bylaws before acquiring the shares of a specific publicly-held company, we emphasize that the bylaws is always available for consultation. Therefore, it is not reasonable to consider that an investor acquiring the shares of a publicly-held company would be able to elect the clauses to which suchinvestor intends to be bound, taking into consideration that when acquiring shares, the investor is automatically adhering to all rights and obligations related to such shares, which, in turn, are governed by the company’s bylaws. 

In this regard, the Board of Trade of the State of São Paulo (JUCESP) resolved, in August 2012, to issue a public meeting (JUCESP Ordinance 17), which provides for that the bylaws of the company that established the arbitration as a way to resolve the conflicts will solely be registered if approved by all shareholders.

Accordingly, JUCESP accepts the assumption with respect to the adherence to the terms of the bylaws and, therefore, the acceptance of the arbitration clause, by those investors that purchase shares in the stock exchanges.

Such decision further increased the discussion on the matter, under the allegation that JUCESP should have not exceeded its authority. We also emphasize that Brazilian Corporate Law prohibits the creation of a majority quorum in publicly-held companies, in addition to the events already considered. Legislators also understand that JUCESP could not require unanimous acceptance, taking into consideration that the corporate legislation has not defined any exception to the principle that governs it, namely, the majority principle.

Such JUCESP decision is not accurate, in view of the current arbitration scenario in Brazil, considering that the arbitration procedure has been further accepted by the Brazilian companies and their shareholders. This is confirmed by the requirement for the inclusion of the arbitration commitment to obtain the differentiated corporate governance levels of BM&FBovespa (Novo Mercado, Level 2 and Bovespa Mais). The need of unanimous approval for the arbitration clause in the bylaws, not considering the acceptance assumption by an investor, would increase the uncertainty level of a company that includes the arbitration clause in its bylaws, once the unanimous acceptance would not be possible. In addition, such understanding limits the access of the companies to the differentiated corporate governance levels, which is contrary to the development of the Brazilian capital market.

TAX – Diogo Martins Teixeira and Tatiana Martines

Exposure of the values of imported goods in the invoices is challenged

In order to avoid the ICMS tax incentives on the import transactions, the Federal Resolution 13 was enacted to reduce to 4% the interstate ICMS rate on the operations with imported goods or whose imported content is greater than 40%.

The SINIEF Adjustment 19/2012, which governs the Resolution, informed about the import value/imported portion of the invoice for purposes of calculation of the import content and definition of the applicable rate, with respect to the manufactured goods.

The legislation does not expressly indicate the exceptions to the obligation of informing the import value or imported portion of the invoice; however, there are cases in which such obligations are not reasonably defined, such as the sale of finished products. In this case, the import value/imported portion is not relevant to the purchaser that does not perform manufacturing transactions with the product acquired and is not obligated to recalculate the import content.

With respect to the goods without similar products in Brazil or manufactured in accordance with the Basic Productive Process (PPB), it is possible to consider that the import value/imported portion of the invoice must not be reported. This because the rate of 4% is not applicable to these cases, and the product must be considered as domestic, inclusive for purposes of calculation of the import content by the purchaser, if applicable.

Accordingly, the obligation to inform the acquisition cost can be challenged and is not applicable to several cases, and it may be challenged by the taxpayers based on the economic confidentiality, free competition and the Resolution itself, with good chances of a favorable outcome.

INFRASTRUCTURE – Leonardo Miranda

Oil and gas: how to be prepared for Turn 11

The discussions on the apportionment of the royalties of the oil are in progress in the National Congress. This is a political matter, which should not affect the investment decisions of the companies developing and producing oil.

With respect to Turn 11, the bidding process is in progress and the auction will take place on May 14 and 15, with the execution of the respective concession agreements in August.

Accordingly, the companies that intend to participate in the auction, operators or not, and mainly those entering in Brazil, must comply with the sector rules, and the requirements of the Turn 11, as well as arrange their commercial and financial aspects, such as tax planning, partnership agreements, personnel hiring, financial agreements etc.

The foreign companies, specifically, must consider the time and costs involved with the sworn translation of the documents into Portuguese, as well as eventual requirements that are not compatible or that are not considered in the jurisdictions of origin.

There are a number of documents and information to be prepared by all bidding companies (consortium or individually) for the presentation during the qualification stage. The volume of documents depends on the condition of the bidding company (operator, nonoperator, Brazilian, foreign). Similarly, in addition to the production of documents, there are also financial and technical requirements that vary depending on the condition of the company in the bidding process and its appetite, which will determine the guarantees to be provided and, eventually, the signature bonus to be paid.

In this regard, in addition to confirm its financial condition, the company must also be prepared for the significant disbursements before the bidding process (offer guarantees, participation fee, among others), in addition to other responsibilities to be assumed, once the activities are commenced with the development stage.
In addition, with respect to the companies that intend to establish partnerships to attend to the bidding process, it is necessary to understand the types of agreements that will govern such partnerships, and commence the commercial discussions that will be reflected in these agreements. In this context, the companies will address essential matters, such as the partnership governance, terms and conditions for participation in the bidding process, specifically with respect to the values, among others.

LABOR - Sólon Cunha, Rodrigo Takano and Jorge Gonzaga Matsumoto

Legislation adopts new hazardous duty premium

In December 2012, the Official Gazette published Law 12.740/12, which amended the Brazilian Labor Code (CLT), in article 193, providing for the new conditions (persons, compensation methods and payment) for the concession of the hazardous duty premium.

Previously, except for the requirements set forth in the collective rule, such hazardous duty premium – in the percentage of 30% on the base salary – is applicable to the groups of employees involved with high risk activities, that is, those arising from the exposure to explosive material, fuel or electric power, representing physical risks against the employees (e.g., gas station clerks and electric power operators).

The new wording significantly amended article 193 of CLT by including the definition of dangerous activity in the work of “personal or equity security that, due to its nature or method, would represent significant risks of robbery or other types of violence against the employee”.

With respect to these activities and professionals, the hazardous duty premium was defined at the rate of 30% on the base salary, whose value can be offset against other additions of the same nature eventually granted through the collective agreement.

However, this legislation allows inquiries by the companies with respect to the immediate effects to the extent that it requires the Ministry of Labor to govern the import aspects related to the application of this addition. The legislation provides for the definition of “dangerous activities or operations” and the subsequent parameters, such as exposure level, mitigation agents (or also procedures to eliminate the significant risk) and, finally, the definition of the plaintiffs and defendants related to the new obligation of payment.

In addition, Law 12.740/12 is not applicable retroactively with respect to the additional payment granted to the employees on the previous years; however, it is applicable to the current labor agreements, as from the enactment of such Law, in the event the Judiciary Power does not consider it as an effective rule – subject to regulation. The effects of the hazardous duty premium and its related effects on the payroll of these companies must also be considered.

Therefore, taking into consideration these gaps, the law will cause discussions in the labor relationships, considering that such omissions could represent uncertainties with respect to the hazardous duty premium and significant burdens against the company’s owners of the personal or equity security sector. Accordingly, its application must be analyzed in detail, in order to prepare the regulation proposal of the legislative changes, as a priority assumed by the Labor Health and Security Department (DSST).