COVID-19 AND ITS LEGAL IMPACTS IN BRAZIL

EXTRAORDINARY ALERT

APRIL 2, 2020

INTRODUCTION

Our partners and associates continue to keep a close watch on the legal impacts of the COVID-19 pandemic in Brazil. This week, you will have access to our analyses spanning across 24 areas of the Brazilian Law:

1. Timeline Coronavirus 2019/2020

2. Administrative law and public contracts

3. Antitrust

4. Aviation

5. Banks

6. Capital markets

7. Contracts and M&A

8. Construction, Engineering and Infrastructure Project Contracts

9. Consumer relations

10. Data protection

11. Environment

12. Healthcare – Healthcare plans

13. Insolvency

14. Insurance

15. Intellectual Property

16. International Trade and Customs

17. Judicial and Arbitral Proceedings

18. Labor

19. Life Sciences

20. Maritime law and port regulations

21. Oil & Gas and other Regulated Activities - Regulatory

22. Real Estate Contracts

23. Restrictions on freedom of movement

24. Social Security

25. Tax

26. COVID-19 Legislation Clipping

27. Final remarks

In the end of this material you can find a COVID-19 legislation clipping that covers the main legislation published by the Federal Government and by the most affected states and municipalities.

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1. Last JM, editor. A dictionary of epidemiology, 4th edition. New York: Oxford University Press; 2001. Available at: https://www.who.int/bulletin/volumes/89/7/11-088815/en/ ; Conceitos e Definições da Saúde e Epistemiologia usados na Vigilância Sanitária. 2004. http://www.cvs.saude.sp.gov.br/pdf/epid_visa.pdf

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TIMELINE CORONAVIRUS 2019/2020

DECEMBER 2019

Pneumonia cases in Wuhan, China are reported to the WTO.

7 JANUARY 2020

The WTO identifies the nCoV-2019 virus as responsible for infections in China. The novel coronavirus (nCov-2019) is part of a large virus family (CoV) that causes from an ordinary cold to more severe diseases.

30 JANUARY 2020

■ The WTO declares the novel coronavirus outbreak as a Public Health Emergency of International Concern (PHEIC).

■ The WTO’s PHEICs are declared for extraordinary events that may potentially demand a coordinated international response, or else pose a public health risk to other States on account of cross-border spread of the disease. At this point, the novel coronavirus infection was treated as an epidemic, i.e. occurrences were clearly excessive when compared to what was expected for certain regions1.

3 FEBRUARY 2020

Brazil declares the novel coronavirus as a Public Health Emergency of National Concern (local acronym, ESPIN), as per Ministry of Health Ordinance No. 188 of 2020. The ESPIN status applies to an outbreak or epidemic that poses risk of spreading nationwide; originates from unexpected infectious agents; reintroduces an eradicated disease; have a high level of severity; or exceed the ability of the state management units of the Unified Health System (SUS) to respond to such event.

6 FEBRUARY 2020

Brazil promulgates Law No. 13,979 of 2020, establishing the measures to respond to the PHEIC deriving from novel coronavirus.

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11 FEBRUARY 2020

The WTO labels the novel coronavirus disease as COVID-19. Common symptoms of COVID-19 are respiratory problems, fever, cough, breathing and respiratory difficulties. In more severe cases, the infection may evolve into pneumonia, SARS, kidney failure, and death. The novel coronavirus is transmitted from person to person, by the air or personal contact with contaminated secretions (saliva, sneeze, mucus)2.

13 FEBRUARY 2020

The Ministry of Health publishes the National Contingency Plan for Human Infection by Novel Coronavirus, defining the level of response and the command structure to be adopted. The plan will be updated from time to time according to risk assessments, and also considering the development of scientific knowledge and the existing circumstances, so as to ensure an active level of response and the timely implementation of effective measures.

11 MARCH 2020

■ The WTO declares the COVID-19 as a pandemic, i.e. the disease dissemination reaches global level, crossing international borders and affecting a large number of people. A pandemic status has nothing to do with the severity of a disease or its mortality rate3.

■ The Ministry of Health publishes Ordinance No. 356 of 2020, establishing isolation measures that seek to segregate persons under clinical and laboratory investigation to avoid the dissemination of the infection and its local transmission, as well as the quarantine, which seek to ensure the maintenance of health services at a given place. Isolation must be determined by medical prescription or by recommendation of a health surveillance agent; quarantine is determined by a formal administrative act, duly substantiated.

26 FEBRUARY 2020

The first case of COVID-19 in Brazil is confirmed.

13 MARCH 2020

■ The Federal District publishes Decree No. 40,520 of 2020, suspending collective activities in movies and theaters, as well as educational activities in schools and universities of the public network.

2. https://www.who.int/health-topics/coronavirus ; http://coronavirus.saude.gov.br/3. https://www.who.int/csr/disease/swineflu/frequently_asked_questions/

pandemic/en/ ; Leon Gordis. Epidemiology. Elsevier, 5th edition. p. 72

■ The states of São Paulo and Rio de Janeiro issue decrees containing temporary and emergency measures in response to the novel coronavirus outbreak (Decree No. 64,862 of 2020 and Decree No. 46,970 of 2020, respectively). Among other measures, public events with in-person audience above 500 persons were suspended, and gradual suspension of classes at elementary and high schools and universities is recommended.

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16 MARCH 2020

The city of São Paulo and the state of Rio de Janeiro declare a state of public emergency (Decree No. 59,283 of 2020 and Decree No. 46,973 of 2020, respectively). The state of emergency stands for any extraordinary condition or circumstance prompted by disasters and causing losses or damage that imply a partial impairment of the affected government authority’s ability to respond to the event4.

MARCH 20, 2020

■ The Federal Executive issues Decree 10,282 of 2020 (as amended by Decree No. 10,292 of 2020), defining essential activities and public services as those indispensable to cater to unavoidable community needs, which must thus remain active so as not to put at risk the survival, health, safety or security of the population (e.g., transport, telecom, public lighting, water impounding, collection and treatment or sewage or garbage).

■ The National Congress declares the state of national public calamity, in Legislative Decree No. 6 of 2020, i.e. when an extraordinary situation causes damages and injuries that may substantially impair the public authorities’ ability to respond.

■ The states of São Paulo and Rio de Janeiro declare the state of public calamity (Decrees 64,879 and 46,984, respectively),

MARCH 22, 2020

The state of São Paulo is put in quarantine, upon enactment of Decree No. 64,881 of 2020, to avoid a possible contamination or spread of the coronavirus. Some establishments involved in healthcare, supply and security activities, among others, remain open. Food services are permitted only in the delivery and take-away modes.

4. Decree No. 7,257 of 2010

MARCH 23, 2020

The Federal District publishes Decree No. 40,550 of 2020 establishing measures to cope with the public health emergency of international concern caused by coronavirus, among which the closure of shopping malls, gyms and the suspension of classes, while supermarkets, establishments engaged in the sale of food, healthcare facilities, building materials stores remain open.

MARCH 27, 2020

The state of Rio de Janeiro publishes Decree No. 47,006 of 2020 extending the suspension of certain activities (as set out in Decree No. 46,970 of 2020) to April 12, 2020, while supermarkets, establishments engaged in the sale of food and healthcare facilities remain open.

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ADMINISTRATIVE LAW AND PUBLIC CONTRACTS

ADMINISTRATIVE CONTRACTS IN PROGRESS

In government procurement contracts (for goods, services or works), the risks arising from an event of force majeure or act of God are generally ascribed to the principal. For their part, in public service concession contracts, public private partnerships (PPPs), and public utility concessions, among others, the allocation of risks may establish otherwise (i.e., by allocating the respective risks to the contractor).

Contractors should verify in each contract how risks are allocated and the need of formally notifying the government entity about the occurrence of an event of force majeure or act of God. By so doing, the contractors will seek to safeguard their rights in terms of rescheduling the original milestones and events, renegotiating the original economic and financial conditions of the contract, or even declaring termination of the contract due to the impossibility of performing it. These and other precautions will mitigate the risk of penalties being imposed by the government entity (such as fines or suspension of the right to take part in public bidding procedures).

NEW EMERGENCY CONTRACTS WITH BIDDING WAIVER

Recent Provisional Measure 926 has introduced detailed rules on the bidding waiver process to cope with the COVID-19 emergency. These rules have largely streamlined the waiver process.

Prior studies, term sheets and price estimates were simplified – price estimates can be even dispensed with. The acquisition of used items is permitted. For the first time ever, it is permissible to contract companies which have been complying with the penalty of suspension or which have been declared disreputable. In addition, certain qualification documents will not be required either.

The emergency contracts may be effective for up to six months, extendable where necessary to deal with the state of public health emergency. Amendments may provide for additions to or exclusions from the scope of the contract, by up to 50% of the initial updated value of the contract.

This streamlined process for emergency contracts is likely to be strictly monitored by control bodies (e.g. Public Prosecutor Office and Court of Accounts). The contractor should certify that the principal is conducting the waiver process in accordance with applicable rules, under penalty of joint liability being imputed to the contractor.

GOVERNMENT REQUISITION OF PRIVATE GOODS AND SERVICES

Law 13,979 provides for the possibility of government requisition of goods and services of individuals or legal entities, upon payment of compensation a posteriori, pursuant to article 5, XXV of the Federal Constitution. This involves very exceptional government intervention in private property to cope with imminent danger situations.

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However, Law 13,979 does not contain specific parameters for government requisition. There have been situations of abuse of authority, specifically in government requisition of medications, medical equipment, and other inputs. In this context, illegal situations occur, for example (i) if the goods so seized have already been sold or are about to be delivered to the private health sector, or even to public health entities of other spheres; and (ii) where the goods can be acquired via emergency bidding waiver, without resorting to government requisition, which must be the last resource of government authorities. Cases have already been taken to the judiciary, which issued injunctions against abusive government requisitions.

CLOSURE

Many rules have been issued at federal, state and municipal levels to restrict operation of commercial and industrial establishments and offices alike as part of the efforts to contain the COVID-19 outbreak. The most common measure is to restrict non-essential activities. However, what constitutes essential activities is oftentimes a point of divergence. There are cases of compulsory closure of establishments engaged in activities ancillary to essential services, industries engaged in manufacturing inputs for essential products, distribution centers, and so forth. There is also a growing and controversial discussion over the social and economic impacts from closure orders, which seek a balance between the virus containment and economic survival. Companies have resorted to the judiciary as a means of obtaining authorization to operate, even partially.

Ricardo Levy | rlevy@pn.com.br

ADMINISTRATIVE LAW AND PUBLIC CONTRACTS

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ANTITRUST

On March 25, 2020, the Brazilian antitrust authority (CADE) released a statement suspending the time periods for defendants involved in investigations into:

■ anticompetitive conduct (e.g., cartels and other unfair trade practices); ■ merger, acquisition and joint venture transactions that have not been reported to CADE for prior

review (the time periods for review of merger filings already notified or yet to be duly reported have not changed so far);

■ omission and release of misleading information; ■ unlawful pre-merger coordination between the parties to an M&A transaction (gun jumping).

Further, on April 1, 2020, CADE announced it changed its internal rules to remote activity. These changes established the methods for scheduling and holding virtual meetings with CADE officials and experts and virtual judgment sessions of administrative proceedings.

CADE continues working regularly and would be responsive to the effects of COVID-19 when examining its cases. On March 23, 2020, CADE issued a statement informing that it:

■ continues to function normally, with most of its officials working remotely (face-to-face meetings are being replaced with conference calls);

■ “will be reasonable and thoughtful when analyzing specific demands.” Therefore, CADE has indicated that it will carry out a contextual analysis of the cases, due to the challenges created by COVID-19.

Analysis of more complex mergers, acquisitions, and joint ventures may be delayed. CADE’s General Superintendence continues to receive merger filings and to review transactions (Concentration Acts), as usual. However, companies should consider possible delays in the analysis, starting this week, especially for cases whose examination depends on responses from other companies, which in turn may take longer to respond to CADE’s requests for information. CADE may opt for issuing special authorizations for cooperation among competitors (e.g., product distributors) to meet the demands from the COVID-19 pandemic.

CADE is monitoring the healthcare markets to punish possible anticompetitive behavior. CADE has initiated an investigation involving companies in the healthcare sector, such as hospitals, laboratories, distributors and manufacturers of surgical masks, alcohol-based handrub, and manufacturers of drugs to treat the symptoms of COVID-19. CADE has issued more than 70 official notices to companies in this segment, asking them to present historical and current data and invoices aiming at identifying possible abuses.

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Companies remain prohibited from adopting anticompetitive conducts and CADE continues to receive whistle-blowing reports and requests for execution of leniency agreements. It is expected that CADE will continue to act and take appropriate legal measures, including preventive measures, against those who unjustifiably try to take advantage of the current situation to engage in anticompetitive conducts.

Leonardo Rocha e Silva | lrochaesilva@pn.com.br

Alessandro P. Giacaglia | agiacaglia@pn.com.br

ANTITRUST

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AVIATION

Below is a round-up of the most important measures announced by the Federal Government to preserve flights and airline operations in Brazil during the COVID-19 pandemic:

■ Provisional Measure 925 published by the Federal Government on March 19, 2020 (MP 925 of 2020) provides for emergency measures to be adopted in the civil aviation industry in an effort to mitigate the impacts caused by the COVID-19 pandemic in this industry, following the plunge in the demand for domestic and international flights. Three are the measures aimed at preserving flights in Brazil and airline operations: (i) For airport concession contracts signed with the Federal Government, the fixed and variable concession fees due in 2020 may be paid until December 18, 2020; and (ii) Airlines will have 12 months to provide a refund of air tickets purchased until December 31, 2020; in exchange, no contractual fines or penalties will apply to consumers opting for conversion of the refund value into a credit for future use. MP 925 of 2020 is valid for 60 days from its publication date, extendable for a further 60 days, during which it must be converted into law or else become ineffective.

■ Decree 10,284 of March 20, 2020, as regulated by Ordinance 402/GC3 issued by the Air Force Command and published on March 25, 2020, also authorized an extension of the deadline for payment of air navigation fees due in March-June 2020 to help industry companies weather the difficult economic conditions during the COVID-19 pandemic. Such dues were postponed to September-December 2020.

■ Against this backdrop, the National Civil Aviation Agency (ANAC) has also resolved to waive the cancellation of slots for non-attainment of the regular flight levels (i.e., use of slots below a minimum level). This waiver of slot requirements is valid until October 24, 2020. This ANAC decision is in keeping with decisions made by other civil aviation authorities across the globe, which seek (even if temporarily) to accommodate slot rules to the plunge in demand.

■ Further, the ANAC published Ordinance 880 of March 27, 2020, which allowed cargo transportation by air taxi companies, without the need for prior consent. This measure aims to contribute to greater efficiency in the carriage of items that can be used by the healthcare area in the fight against the COVID-19 pandemic.

■ Finally, the Federal Government monitored the air network planning devised by airlines Gol, Azul and Latam to secure the provision of essential air services to Brazil during the COVID-19 pandemic. The Federal Government has sought to ensure a continuous integration of the country’s air network by implementing certain adjustments so that all states have at least one

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air connection. The capitals of the 26 Brazilian states and the Federal District, in addition to other 19 cities across the country, will be covered. Flights started on Saturday March 28, 2020, and should occur until the end of April, at the following weekly frequencies: 723 flights in the Southeast region; 153 flights in the Northeast region; 155 flights in the South region; 135 flights in the Center-West region; and 75 flights in the North region.

Adolpho Julio C. De Carvalho | ajcarvalho@pn.com.br

Caroline Guazzelli Queiroz Gomes | cqueiroz@pn.com.br

Antonio de Paula S. Filho | afilho@pn.com.br

Mariana Grande | mgrande@pn.com.br

AVIATION

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BANKS

As the financial and capital markets around the globe falter (the Ibovespa market index, for instance, has plunged over the last weeks), the effects of the COVID-19 pandemic should be carefully analyzed by lenders and borrowers alike.

Within this context, financial contracts in general should be reviewed for the identification of clauses that would justify, for instance, (i) non-disbursements by lenders; (ii) a change in the terms and conditions originally agreed between lenders and borrowers; (iii) early maturity of existing transactions; (iv) margin calls; and (v) demand for additional collateral, among others. In this regard, expressions and defined terms in contracts such as Material Adverse Effect, Market Flex , Margin Call, Financial Covenants, Acts of God, and Force Majeure (primarily adopted for fixed-income and funding transactions in the capital markets) should be reviewed on a case-by-case basis vis-à-vis the terms and conditions of each financial transaction.

In terms of systemic risk, there has been no sign that local or foreign financial institutions are facing liquidity problems like those occurring during the 2008 financial crisis. However, the current crisis may have an adverse bearing on the businesses of financial institutions, from an increase in cash withdrawals and in credit defaults to a slowdown in new business origination.

During the last weeks, the National Monetary Council (CMN) has issued several bailout rules to ease the impact of COVID-19 on the country’s economy, according to itemized list below. Detailed information on each of these measures can be found at this link.

MEASURES IMPLEMENTED IN RECENT MONTHS

■ The reserve requirements on time deposits was reduced from 31% to 25%. ■ The Liquidity Coverage Ratio (LCR) was relaxed to provide the financial system with greater

liquidity. ■ The rules on provisioning were relaxed for the “rollover” of existing credit transactions and to

avoid an increase in bank provisions. ■ The Capital Buffer requirement was reduced to expand the banks’ ability to grant new credit

transactions. ■ Repos on USD denominated sovereign securities were entered into between the Central Bank

and financial institutions (i) to reduce market volatility on the markets where such securities are traded, and (ii) to offer greater liquidity in USD to national banks.

MORE RECENT MEASURES (IMPLEMENTED ON MARCH 23, 2020)

■ Time Deposits Backed by Special Guarantees (DPGEs), replicating the model adopted in the past for deposits secured by the Credit Guarantee Fund (FGC).

■ Reserve requirements were further reduced from 25% to 17% on time deposits. Such measures is valid, in principle, until December 2020, depending on how the country’s economic conditions evolve along the year.

■ The rules applying to Agribusiness Credit Bonds (LCA) were relaxed.

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■ Debentures backed loans will be granted by the Central Bank to financial institutions. ■ The financial bills repurchase limits were increased. ■ Overhedge rules concerning equity investments abroad were flexibilized. ■ The Central Bank will act as fund donor for up to one year, via repos backed by federal

government bonds as a liquidity tool; ■ The liquidity leveling spread was reduced from +65 bps to +10 bps.

MORE RECENT MEASURES (IMPLEMENTED ON MARCH 20, 2020)

Direct lending fintech companies (sociedades de crédito direto) were given permission to (i) issue post-paid instruments (credit cards), (ii) obtain funds for further lending in BNDES-originated onlending and loan transactions, (iii) arrange for portfolio assignment to other types of funds (not only to FIDCs), and (iv) be controlled by investment funds separately, subject to certain regulatory criteria. Further details into each of these measures are available at http://www.pinheironeto.com.br/publicacoes/cmn-amplia-escopo-das-fintechs-com-o-objetivo-de-ajudar-a-economia-a-enfrentar-os-efeitos-da-covid19

MEASURES TAKEN BY THE BNDES

The Brazilian Social and Economic Development Bank (BNDES) has also announced measures to inject circa BRL 55 billion in the country’s economy. The first measure consists in suspending the loan repayment terms for a maximum period of six months. This suspension applies to principal and interest on direct and indirect transactions.

Moreover, the BNDES has announced the transfer of approx. BRL 20 billion from the PIS/PASEP Fund to the FGTS Fund. In addition, BRL 5 billion in credit will be targeted at microbusinesses and small- and medium-sized companies, by expanding the credit facility known as “BNDES Crédito Pequenas Empresas”, which will now be available to companies with up to BRL 300 million in annual revenues, at a maximum of BRL 70 million per borrowing and a five-year repayment term (with a 24-month grace period).

MEASURES IN PROGRESS

■ The Central Bank and the BNDES announced an emergency credit facility to support for up to two months the payroll of small and medium businesses with annual revenues ranging between BRL 360 thousand and BRL 10 million. This credit facility will support the payment to employees earning up to two minimum wages a month. In exchange, the employer must refrain from dismissing those employees during the two-month facility period. Companies adhering to this program will be entitled to a six-month grace period and a 30-month period for loan repayment plus interest at 3.75% per annum (the current Selic benchmark rate). As announced by the Central Bank, private financial institutions may also qualify for the program.

■ The Central Bank is considering the possibility of granting loans to financial institutions through financial bills (letras financeiras) collateralized by their own credit portfolios.

BANKS

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■ The BNDES is also studying support measures targeted at specific segments (airlines, states and municipalities).

José Luis Homem de Mello | jhmello@pn.com.br

Bruno Balduccini | bbalduccini@pn.com.br

Fernando Mirandez | fgomes@pn.com.br

Leonardo Baptista Rodrigues Cruz | lcruz@pn.com.br

Ricardo Binnie | rbinnie@pn.com.br

BANKS

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CAPITAL MARKETS

During the last weeks, the Federal Government and the Brazilian Securities Commission (CVM) have taken action to mitigate the negative impact of COVID-19 on the capital markets as a whole.

The key measures already put in place are outlined below.

RESOLUTION CVM 848

On March 25, 2020, the CVM issued Resolution 848 (Resolution CVM 848) containing measures to help investment funds and securitization companies by extending regulatory deadlines for disclosure of financial statements as well as other information and documents required under applicable regulations.

Further into the efforts to encourage economic activity, Resolution CVM 848 stayed for four months the effectiveness of article 9 of Ruling CVM 476 of January 16, 2009, by which one same issuer is prohibited from making a new public offering under restricted efforts for the same type of securities within four months from the date of termination or the cancellation of the erstwhile offer (unless the offer is submitted for registration with the CVM).

For more insight into Resolution CVM 848 and its implications for investment funds:

Article: Investment funds and COVID-19: impacts and guidelines

PROVISIONAL MEASURE 931

On March 30, 2020, the Federal Government published Provisional Measure 931 (MP 931) with measures involving essential activities of publicly-held companies, closely-held companies and cooperatives. Among other aspects, MP 931 extended the deadlines for holding general meetings and for obtaining approvals of financial statements, having also vested the CVM with powers – exceptionally during the year 2020 – to extend the deadlines prescribed by Law No. 6,404 of 1976 for publicly-held companies, especially those relating to disclosure of financial statements.

In addition, considering the limited operations of commercial registries (boards of trade) on account of the restrictive measures implemented by state governments in the fight against the COVID-19 pandemic, MP 931:

■ established that the 30-day period for filing the registrable acts and documents signed as from February 16, 2019 will count from the date on which the commercial registries resume their activities, so that any such acts and documents may retroact their effects towards third parties back to the corresponding execution date; and

■ suspended, during the effective term of MP 931, the prior filing requirement for issuance of securities.

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MP 931 also clarified that the general shareholders’ meetings must be held at the company’s headquarters or elsewhere in the same municipality, even if the shareholders are allowed to attend and/or vote remotely. MP 931 further clarified that the CVM may waive the face-to-face rule for general shareholders’ meetings of publicly-held companies.

For further information on MP 931:

Alert: Provisional Measure 931 extends deadlines for annual general meetings and for filings at commercial registries

RESOLUTION CVM 849

On March 31, 2020, the CVM issued Resolution 849 (Resolution CVM 849) in furtherance of MP 931, extending the deadlines for presentation of financial statements and other periodic disclosures such as the reference form (information statement), registration form, and reports on the Brazilian Corporate Governance Code.

Specifically with regard to investment funds, Resolution CVM 849 allows general meetings of investment funds to be held virtually, regardless of specific provision to that end in the fund bylaws, and also authorizes the financial statements of investment funds to be considered automatically approved, provided that (i) the corresponding meeting, convened as provided in Resolution CVM 849, it is not instated due to the absence of any investors and (ii) the respective audit report does not contain a modified opinion.

As yet another measure to foster the secondary market for fixed-income securities, the CVM also put on hold for four months the effectiveness of article 13 of Ruling CVM 476, which sets out a 90-day lock-up period for trading in securities acquired within the context of restricted offers (if the buyer is a professional investor and/or the securities in point are issued by a company registered with CVM).

For additional information on MP 931 and on Resolution CVM 849:

Alert: Provisional Measure 931 extends deadlines for annual general meetings and for filings at commercial registries

Article: Brazilian securities commission (CVM) adopts Resolution 849 extending the deadlines for periodic disclosure by listed companies

OFFICIAL NOTICE-CIRCULAR NO. 6/2020/CVM/SIN

On March 26, 2020, the Institutional Investor Relations Authority (SIN) issued Official Notice-Circular No. 6/2020/CVM/SIN (Official Notice SIN 6/2020) to help the market navigate through some regulatory provisions applicable to investment funds in face of the COVID-19 pandemic.

In this sense, the CVM advises the managers of securities portfolios, investment funds and other investment fund service providers regarding:

■ non-observance of investment fund portfolio allocation requirements; ■ temporary replacement of the method for calculation of the fund unit value (cota do fundo); ■ holding, cancellation or postponement of general meetings of investment funds; ■ exchange of documents between investment fund service providers; and

CAPITAL MARKETS

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■ provisioning of credit rights (receivables) in receivables investment funds (FIDCs).

For additional information on Official Notice SIN 6/2020:

Article: Investment funds and COVID-19: impacts and guidelines

Henrique Lang | hlang@pn.com.br

Enrico Jucá Bentivegna | ebentivegna@pn.com.br

Caio Ferreira Silva | csilva@pn.com.br

Thaís Lorenzi Ambrosano | tambrosano@pn.com.br

Felipe Tucunduva van Heemstede | fheemstede@pn.com.br

CAPITAL MARKETS

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CONTRACTS AND M&A

■ In the wake of measures that have been taken across the globe to avoid the spread of COVID-19, and also considering the severe financial implications of this pandemic, some companies may find difficulty in fulfilling some contractual obligations. For this reason, it is important to carefully assess the legal consequences of non-fulfillment and, more particularly, whether the event that has given rise to such condition could be regarded as an act of God/event of force majeure or undue hardship.

■ Whether the doctrine of force majeure/act of God applies to given contractual relations will depend on an analysis of the specific contracts to verify the unavoidability of the events and of the impacts caused by the COVID-19 pandemic, without any fault being attributable to the party concerned (to the extent that it has taken the expected mitigation measures) and considering the existence of a causal link leading to the impossibility of performing the contract (i.e. by considering the non-existence of other events that could have given cause to the inevitable non-performance). As for undue hardship, it will be necessary, among others, to prove that the COVID-19 pandemic has created a manifest imbalance between the obligations to be fulfilled by each of the parties.

■ This analysis must consider not only case-specific elements but also the type of non-fulfilled obligation, the time and circumstances underlying the assumption of obligations, the event that has given rise to non-fulfillment and its expected duration, and the financial, social and business implications for the parties involved.

■ More specifically within the context of M&A deals, the COVID-19 pandemic implies several changes in the modus operandi and in the dynamic of such deals, starting from the special attention that must be devoted to the potential implications of this pandemic for the obligations and rights of the target company, which must be ascertained throughout the due diligence works. As for negotiation of purchase contracts, special attention must be given as well to certain clauses, such as the representations and warranties (R&Ws) concerning the ordinary course of business, fulfillment of obligations, and continuity of the target company’s operations. Another example are the drop dead date clauses, which set a deadline for deal closing or else the contract will be undone. These clauses should be drafted already considering the potential adverse impacts that the pandemic and government containment measures may cause on the timing.

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■ It is no less important to carefully analyze the MAC or MAE clauses, respectively dealing with material adverse changes or material adverse effects that may take place between the execution and closing dates. For closed deals, it must be assessed whether the COVID-19 pandemic falls within the agreed MAC/MAE definitions and, if so, the resulting implications must be considered. For deals still under negotiation, the MAC/MAE clauses must be carefully analyzed against the current global backdrop and its repercussions for the parties involved, whether in terms of deal certainty or the availability of funds for closing. Finally, it must be kept in mind that several M&A deals are denominated in foreign currency, which may entail relevant currency risks in light of the sharp currency volatility that certain externalities may bring (as in the case of the COVID-19 pandemic).

Joamir Müller Romiti Alves | jalves@pn.com.br

Lucas Simão | lsimao@pn.com.br

CONTRACTS AND M&A

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CONSTRUCTION, ENGINEERING AND INFRASTRUCTURE PROJECT CONTRACTS

The COVID-19 pandemic has had a significant impact on contracts for construction, engineering and infrastructure projects in general, including funding contracts classified as project finance:

DIRECT AND EMERGENCY IMPACTS

■ The work schedule may be severely impaired due to a number of elements that are essential to performance of the intermediate contractual milestones established in the schedule.

■ Supply chains are likely to be interrupted as a result of the measures taken to control the disease outbreak, which could affect the availability of steel and other essential materials used in construction, as well as the supply of imported materials and equipment.

■ Federal, state or local rules may order the stoppage or suspension of all or any portion of works, services and supplies.

■ Moreover, measures such as quarantine, self-isolation and transport restrictions may have a severe impact on the contractors’ capacity to complete projects within the time limit and budget originally agreed, due to the lack of labor - especially in public works at places where a state of ‘emergency’ or ‘public calamity’ has been declared.

SPECIFIC LEGAL AND CONTRACTUAL RULES

■ In addition to specific legal provisions, contracts for construction, engineering and infrastructure projects in general have clauses specifically dealing with acts of God and/or force majeure, and with excessively burdensome (undue hardship) conditions. In infrastructure funding contracts, the concepts of “market flex”, “material adverse effect” or “material adverse change” are also applied. Such clauses tend to (i) define what should, or should not, be considered as acts of God and/or force majeure events, excessively burdensome conditions or “material adverse change”; (ii) establish deadlines and procedures for notifications from one party to the other in case of such events; (iii) address the duty to mitigate the impacts of these events; and (iv) deal with the consequences of the events (the possibility or not of suspending the works, of extending the deadlines, of adjusting the contractual price and terminating the contract, as well as of suspending payment obligations, and so forth).

■ This also holds true for international contracting standards. The FIDIC Silver Book model (2017 edition), for example, presents the “Exceptional Event” clause. Although not specifically dealing with a pandemic, the clause states that an exceptional event is one that (i) is beyond a party’s

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control; (ii) the party could not reasonably have provided against before entering into the contract; (iii) having arisen, such party could not reasonably have avoided or overcome; and (iv) is not substantially attributable to the other party.

STATE DECREES ON THE SUSPENSION OF SERVICES AND ACTIVITIES1

BRAZILIAN STATE DECREE

PROVISIONS SPECIFICALLY APPLYING TO CIVIL CONSTRUCTION, PUBLIC WORKS OR PRIVATE WORKS

Acre (AC) Decree 5,603 of March 25, 2020

Article 1. - Decree 5,496 of March 20, 2020 becomes effective with the following amendments: “Article 2. Paragraph 2. The following shall remain in operation: (...) j) civil construction”

Alagoas (AL)

Decree 69,541 of March 19, 2020, extended by Decree 69,577 of March 28, 2020

Article 1. – Under extraordinary circumstances, and in light of the need to maintain the restriction measures set out in State Decrees 69,529 and 69,530, both of March 18, 2020, due to the emergency situation declared in State Decree No. 69,541 of March 20 2020, the following activities are suspended throughout the state territory, for eight (8) days starting at zero (0) hour on March 30, 2020 (extendable at the end of such period):

(...) I – stores selling construction materials and those used in fire prevention activities, for acquisition of products necessary for performance of urgent services, via home delivery and/or take-away.

Amazonas (AM)

Decree 42,106 of March 24, 2020 N/A

Amapá (AP) Decree 1,415 of March 22, 2020

Article 2, Paragraph 3. - During the effective term of this Decree, the following activities are also permitted: (...) II - public and private building, paving and infrastructure works, provided that measures are taken to avoid the crowding of people on the site, e.g. by reducing the number of workers at the same service site, in the activities of feeding and in other types of gatherings at the work sites;

Bahia (BA)

Decree 19,586 of March 27, 2020 as amended by Decree 19,598 of March 30, 202, by Decree 19,600 of March 31, 2020, and by Decree 19,603 of April 1, 2020

N/A

CONSTRUCTION, ENGINEERING AND INFRASTRUCTURE PROJECT CONTRACTS

1. Tabela atualizada com base nos decretos estaduais publicados até 31.03.2020.

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BRAZILIAN STATE DECREE

PROVISIONS SPECIFICALLY APPLYING TO CIVIL CONSTRUCTION, PUBLIC WORKS OR PRIVATE WORKS

Ceará (CE)

Decree 33,519 of March 19, 2020, extended by Decree 33,530 of March 28, 2020

Article 1. - On an extraordinary basis (...), the following is suspended, throughout the state territory, for ten (10) days as from zero (0) hour of March 21, 2020, (...) the operation of: (. ..) VIII - industries, except those in the pharmaceutical, food, beverage, hospital or laboratory products, blast furnace, civil construction, chemical, gas, energy, mineral water, cleaning and personal hygiene products, as well as the respective suppliers and distributors.

Distrito Federal (DF)

Decree 40,583 of April 1, 2020

Article 5. – The operation of industrial activities is hereby authorized. Sole Paragraph – At civil constrution, activities are hereby authorized throughout the production chain from manufacturing to sales.

Espírito Santo (ES)

Decree 4605-R of March 20, 2020, updated by Decree 4606-R of March 21, 2020 and by Decree 4607-R of March 22 ,2020

N/A

Goiás (GO)

Decree 9,633 of March 13, 2020, as amended by Decree 9,644 of March 26, 2020

Article 2, Paragraph 3. - The suspended activities dealt with in this article do not include: (...) IX - civil construction works related to electricity, basic sanitation, hospitals, penitentiaries, works at juvenile penitentiary facilities, infrastructure works of the government and those of community interest, as well as commercial and industrial establishments that provide them with the respective inputs;

Maranhão (MA)

Decree 35,677 of March 21, 2020, as amended by Decree 35,678 of March 22, 2020

Article 2. – The suspension dealt with in article 1 of this Decree does not apply to: (...) XIV - the distribution and marketing of alcohol-based hand rub, cleaning products and building materials for essential public works.

Article 3, Paragraph 2. – For essential public works and services, the head of the pertinent State Office shall decide on continuity of activity on an extraordinary basis, making such decision known to the Head of the Chief of Staff Office.

Mato Grosso (MT)

Decree 425 of March 25, 2020

Article 4. - The following operations are permitted: XIII - establishments that sell automotive parts, electrical and construction materials, preferably attending via home delivery, except for emergency situations;

Mato Grosso do Sul (MS)

State Decree 15,391 of March 16, 2020, as amended by Decree 15,396 of March 19, 2020

N/A

CONSTRUCTION, ENGINEERING AND INFRASTRUCTURE PROJECT CONTRACTS

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BRAZILIAN STATE DECREE

PROVISIONS SPECIFICALLY APPLYING TO CIVIL CONSTRUCTION, PUBLIC WORKS OR PRIVATE WORKS

Minas Gerais (MG)

COVID-19 Extraordinary Committee Resolution 17 of March 22, 2020, as amended by COVID-19 Extraordinary Committee Resolution 21 of March 30, 2020, issued as per authorization from Decree 47,886 of March 15, 2020, as amended by Decree 47,889 of March 15, 2020

Article 1, Paragraph 1. – The measures provided for in this resolution, when adopted, should safeguard the access to public or private services and goods that are essential to maintain the daily routine of people and society.

Pará (PA)

Decree 40,135 of March 20, 2020, as amended by Decree 40,141 of March 26, 2020

N/A

Paraíba (PB) Decree 40,141 of March 26, 2020

Article 1, Paragraph 5. - Suspension of activities referred to in article 3, V of Decree 40,135 of 2020 does not apply to establishments that sell construction materials, which may work exclusively for the purchase of products necessary for carrying out urgent services, through home delivery service and/or as a takeaway point, without the gathering of people, effective from March 27, 2020.

Paraná (PR)

Decree 4,317 of March 21, 2020, as amended by Decree 4,318 of March 21, 2020 and by Decree 4,388 of March 30, 2020

Article 2. – In the private initiative sphere, the suspension of non-essential services and activities that do not meet the urgent needs of the population should be considered, without interfering in essential services and activities.

Sole Paragraph – The following are regarded as essential activities and services: (...) XXIV – the industrial and civil construction segments in general.

CONSTRUCTION, ENGINEERING AND INFRASTRUCTURE PROJECT CONTRACTS

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BRAZILIAN STATE DECREE

PROVISIONS SPECIFICALLY APPLYING TO CIVIL CONSTRUCTION, PUBLIC WORKS OR PRIVATE WORKS

Pernambuco (PE)

Decree 48,833 of March 20, 2020, as amended by Decree 48,836 of March 22, 2020 and by Decree 48,857 of March 25, 2020

Article 4. – Effective March 22, 2020, activities related to the civil construction sector throughout the State of Pernambuco are suspended.

Sole Paragraph – The main section of this article does not apply to: I - urgent activities, i.e. those that must be carried out immediately, under penalty of serious and immediate risk or of difficult repair; II - activities resulting from private works contracts that are related to the emergency situation referred to in this Decree; III - activities resulting from public works contracts; IV - activities provided by public utility service concessionaires.

Piauí (PI)

Decree 18,902 of March 23, 2020, extended by Decree 18,913 of March 30, 2020

N/A

Rio de Janeiro (RJ)

Decree 47,006 of March 27, 2020, as amended by Decree 47,014 of March 31, 2020

N/A

Rio Grande do Norte (RN)

Decree 29,524 of March 17, 2020, as amended by Decree 29,541 of March 20, 2020

N/A

CONSTRUCTION, ENGINEERING AND INFRASTRUCTURE PROJECT CONTRACTS

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BRAZILIAN STATE DECREE

PROVISIONS SPECIFICALLY APPLYING TO CIVIL CONSTRUCTION, PUBLIC WORKS OR PRIVATE WORKS

Rio Grande do Sul (RS)

Decree 55,154 of April 1, 2020

Article 5. – In view of the scientific evidence and analysis of strategic health information, it is prohibited to observe what is indispensable for the promotion and preservation of public health, for the purpose of preventing and fighting the epidemic caused by COVID-19 (new Coronavirus), based on article 3 of Federal Law 13,979 of February 6, 2020, the opening for public service, on an extraordinary and temporary basis, of commercial establishments located in the territory of the State of Rio Grande do Sul.

Paragraph 2. – The provisions in the main section of this article do not apply to: (...) III –industrial establishments of any kind, including civil construction, in any case, it is forbidden to serve the public that involves agglomeration or a large flow of customers; IV - commercial establishments that supply inputs to essential activities or to industry, including civil construction, in any case, it is forbidden to serve the public that involves agglomeration or a large flow of customers.

Rondônia (RO)

Decree 24,887 of March 20, 2020, as amended by Decree 24,891 of March 23, 2020 and by Decree 24,911 of March 30, 2020

Article 3. – The following measures are hereby established for a period of fifteen (15) days, counting from the publication of this Decree, in view of the scientific evidence and analyzes on strategic health information, and may be extended for equal periods, according to Federal Law 13,979 of February 6, 2020 and Ordinance 356 of March 11, 2020, of the Ministry of Health:

I - the prohibition: (...) f) non-essential private activities and services and the operation of stores and shops, shopping centers, shopping centers, with the exception of butchers, bakeries, supermarkets, wholesalers, distributors, lotteries, cashiers electronics, funeral services, health care clinics, clinical analysis laboratories, pharmacies, veterinary offices, agricultural products trade, pet shops, gas stations, industries, engineering works and services, mechanical workshops, auto parts, maintenance, hotels and guesthouses, accounting offices, building materials, restaurants on the side of the highways, and must comply with the obligations set forth in article 4.

Roraima (RR)

Decree 28,635 of March 22, 2020, as amended by Decree 28,636 of March 23, 2020

Article 2. - (...) Paragraph 1. - The suspensions referred to in this article do not apply to essential services and activities, such as filling stations, supermarkets, bakeries, pharmacies, emergency construction services and health services, such as hospitals, clinics, laboratories and similar establishments;

CONSTRUCTION, ENGINEERING AND INFRASTRUCTURE PROJECT CONTRACTS

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BRAZILIAN STATE DECREE

PROVISIONS SPECIFICALLY APPLYING TO CIVIL CONSTRUCTION, PUBLIC WORKS OR PRIVATE WORKS

Santa Catarina (SC)

Decree 525 of March 23, 2020, as amended by Decree 534 of March 26, 2020 and by ecree535 of March 30, 2020

Article 8. - The operation of industrial activities throughout the territory of Santa Catarina can only occur by reducing, at least, fifty percent (50%) of the company’s total headcount, per work shift.

(...) Paragraph 3. – The permission set out in the main section of this article shall not apply to civil construction activities.

São Paulo (SP)

Decree 64,881 of March 22, 2020, and Resolution 2 of March 23, 2020, and Resolution 5 of March 27, 2020 of the COVID-19 Extraordinary Administrative Committee dealt with in article 3 of 64,864 of 2020

II. -the Committee also clarifies that, in addition to those mentioned in Decree 64,864 of 2020 (article 2, paragraph 1), the following essential activities are not covered by the quarantine measure:

a) civil construction and industrial establishments, to the extent that they entail no in-person servce to the public;

Sole item: The Committee clarifies that, in addition to those mentioned in Decree 64,881 of 2020 (art. 2, para. 1) and complemented in Deliberations 2 and 3, the building material stores, considering that they supply the products necessary for carrying out of emergency civil repairs, as well as to maintain the functioning of the civil construction and industry, both set out in item II(a) of Deliberation 2 of March 23, 2020 of this Committee, are not covered by the quarantine measure, provided that sanitary rules are observed in the context of Covid-19.

Sergipe (SE) Decree 40,567 of March 24, 2020

Article 3. - Activities related to the industrial and civil construction sectors, throughout the State of Sergipe, may be carried out provided that the following provisions are observed, in a mandatory manner (...)

Tocantins (TO)

Decree 6,072 of March 21, 2020 N/A

MAIN RECOMMENDATIONS

■ In view of the current scenario, it is essential that the parties examine their construction, engineering and funding contracts to identify events that may fall under the categories of acts of God and/or force majeure, excessively burdensome conditions or “material adverse change”, as well as what the applicable rules are regarding (i) the extension of deadlines for completion of the intermediate contractual milestones and the date of completion of the works, (ii) the price adjustment events, (iii) the impact on payment obligations, and (iv) the applicable insurance.

■ In addition to the contractual provisions, the parties should evaluate the applicable federal legislation and the decrees issued by the states in which the works are being carried out, in order to verify whether or not there is a ban on the continuity of public works and/or check which services and activities are considered essential there.

CONSTRUCTION, ENGINEERING AND INFRASTRUCTURE PROJECT CONTRACTS

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■ Within this context, the parties must remain attentive to the notice and communication requirements set out in the pertinent contracts. It is important to observe closely the dynamics of the relationship between the parties, even within such a disruptive context as this of the COVID-19 pandemic.

■ The current scenario calls for cooperation and openness among the parties. Any measures of greater impact – notably at the court or arbitration spheres – must always be preceded by careful consideration and review to avoid impairing the parties’ relations and conditions going forward. A careful analysis of the alternatives for settlement of potential conflicts is necessary and highly advisable.

■ Therefore, the assessment of consequences and impacts of the COVID-19 pandemic for the performance of contractual obligations by the parties may vary from case to case, and will depend on a legal analysis of all premises and clauses in existing contracts. For possible new contracts executed after the declaration of WHO stating that COVID-19 is a global pandemic, it is recommended that the parties should establish the situation of COVID-19 as already having been assessed and duly considered for the performance of their respective obligations under the contract.

Júlio César Bueno I jbueno@pn.com.br

Thaís Fernandes Chebatt I tchebatt@pn.com.br

Patrícia Mendonça de Almeida I palmeida@pn.com.br

CONSTRUCTION, ENGINEERING AND INFRASTRUCTURE PROJECT CONTRACTS

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CONSUMER RELATIONS

Vendors should provide consumers with clear and accurate information about the potential impact of COVID-19 on their products and services.

Vendors have strict and joint liability towards consumers. Exoneration from liability is legally possible under specific circumstances only. The occurrence of an act of God or force majeure may lead to exoneration from liability, but it is extremely important that the vendor has taken mitigating measures when the provision of services or the delivery of products as originally contracted is impossible.

CANCELLATION OF A PRODUCT OR SERVICE

If the vendor cancels the contracted provision of products or services, the consumer is entitled to a refund or to rescheduling of the service or product delivery. If such cancellation is made by the consumer, the vendor must analyze the specific case. Whenever possible, the parties should try to reach the least common denominator to avoid complaints at the consumer protection bodies or even court disputes. If an amicable solution is not reached, the vendor should consider the possibility and advisability of imposing contractual fines vis-à-vis the potential inevitability of contract cancellation.

On March 24, 2020, the Executive Office of PROCON-SP issued a technical note by which consumers were recommended to preferably convert contracted services into a credit for future use, without incurring any break-up fees, fines or other penalties. In the opinion of PROCON-SP, services that can be provided remotely need not be halted.

Specific rules apply to certain products or services (air transport, shipping, on-line purchases, etc).

TOURISM

More specifically for the tourism industry, the National Consumer Office (SENACON) acknowledged in a press release ‘the force majeure and act of God status’ of ‘trips to domestic or international destinations manifestly showing a high level of virus contagion.’ The SENACON also recommends ‘prudence’ to consumers, who ‘should avoid simply asking for a refund.’

THE AIRLINE INDUSTRY: REFUND AND CANCELLATION

For the airline industry, Provisional Measure 925 published on March 18, 2020 establishes that ‘the refund of air ticket prices must take place within 12 months’ and that ‘consumers will be exonerated from contractual penalties by accepting a credit for use within 12 months from the original flight date.’ Also, a Settlement Agreement (TAC) was entered into among the Ministry of Justice and Public Security, through the National Consumer Office (SENACON), the Public Prosecutor’s Office for the Federal District and Territoris (MPDF), and the Brazilian Airlines Association (ABEAR) to lay down some premises on cancellation of air carriage of passengers on account of the COVID-19 pandemic (e.g., waiver of the duty of airlines to provide material assistance to passengers in case

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of flight delays or cancellations due to closing of borders which prevents them from keeping regular flights to affected areas).

EDUCATION

The SENACON issued Technical Opinions 1 and 14 of 2020 with recommendations for day-care centers, nurseries and educational institutions that had their classes suspended due to the COVID-19 pandemic. For day-care centers and nurseries, it is recommended that ‘consumers consider the alternatives given by the establishment (...) before making any direct proposal for monthly fee reductions’ and, if this is not possible, ‘a monthly free reduction request is recommended (...) with regard to unused value-added services, such as unused catering.’ As for the other educational institutions, it is recommended that ‘consumers avoid requesting a monthly fee reduction in order not to cause a disruption to schools that have already made their annual programming’, opting instead for ‘online tools and/or additional classes.’ In all cases of unilateral cancellation and refund requests, the applicability of contractual fines should be considered.

ABUSIVE PRICING

Another relevant point is to avoid the characterization of abusive pricing, which has been under close inspection by SENACON and by the state and local consumer protection bodies (PROCONs). In that regard, SENACON issued Technical Note No. 8 of 2020 providing guidance to consumer protection authorities for review of potential pricing abuse during the COVID-19 pandemic. Within the limits of free competition and supply and demand conditions, prices may be freely established by vendors; further, there is no legal definition of abusive pricing. What must be avoided is to push prices up with a view to obtaining a manifestly excessive advantage as a direct result of the COVID-19 pandemic.

RECALLS – AUTOMOTIVE INDUSTRY

Under Order 266 of 2020, the SENACON (in response to ANFAVEA’s request), established that:

■ for defects verified until March 10, 2020, a two-step recall campaign should preferably be adopted (notice and then corretive/recall measures);

■ for verified after March 10, 2020, the deadlines for submitting the risk assessment report and recall campaign are suspended.

CONSUMIDOR.GOV.BR

The SENACON also issued Ordinance 15 of 2020 establishing the registration of companies on the consumer.gov.br platform to enable on-line mediation. Registration is compulsory, provided that certain requirements are met, for:

■ companies with national or regional operations in sectors that involve essential activities and public services as defined in Decree 10,282 of 2020;

■ digital platforms for on-line services related to individual or collective transportation of passengers or to food delivery activities, or else to the promotion, offer or sale of own or third-party products to end consumers; or

■ market players listed by Sindec among the two hundred companies receiving most complaints in 2019.

CONSUMER RELATIONS

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LAWS AND BILLS

The State of Rio de Janeiro issued Ordinary Law 8,767 of 2020 establishing, among other issues, the possibility of rescheduling or cancelling travel packages and air tickets (without ay charge or penalty being payable by consumers).

The following are worth highlighting among the several bills that have been proposed recently:

■ Bill (PL) 1,200 of 2020, sponsored by Senator Rodrigo Cunha, which puts a moratorium on essential, banking, insurance and educational contracts in favor of consumers economically affected by the COVID-19 pandemic; and

■ Bill (PL) 1,179 of 2020, sponsored by Senator Antonio Anastasia, providing for ‘Emergency and Transitional Legal Regime for Private Legal Relations (RJET)’ with a proposal to relax the consumer’s right of repentance during the COVID-19 pandemic.

Maximilian Fierro Paschoal | mpaschoal@pn.com.br

Lucas Simão | lsimao@pn.com.br

CONSUMER RELATIONS

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DATA PROTECTION

■ Public and private entities are taking actions to contain and mitigate the spread of the COVID-19 pandemic. All of these actions must ensure the protection of personal data and the confidentiality of corporate information.

■ In terms of data protection, companies have taken several measures that involve or may involve the processing of all sorts of personal data, notably those relating to persons suspected of or diagnosed with COVID-19. Despite the exceptional circumstances involved, it is important to assure that the data processing is respecting the rights of data subjects, more particularly when health data are into play.

■ Federal Law No. 13,979 of 2020 has recently set out the emergency public health measures to be implemented in response to the COVID-19 pandemic. Article 6 of this law establishes that federal, state, Federal District and local government bodies must share essential personal data to identify suspected or confirmed cases, solely for purposes of preventing the spread of novel coronavirus. This also goes for private companies, which must share personal identification data at the request of public health authorities (article 6, paragraph 1).

■ Under any other circumstances, every caution must be taken to avoid discriminating against or stigmatizing any person who may have been diagnosed with COVID-19, and companies must also strive to protect the health of employees, clients, business partners and other stakeholders at corporate level. Even though companies may (and actually must) notify the occurrence of diagnosed cases among their employees, it is important to preserve the identity of all persons involved – whose personal data should only be shared with third persons to the extent indispensable for public health protection.

■ As for the confidentiality of corporate data, adopting the work-from-home system will call for extra care with the safety, security and confidentiality of information. Companies must instruct their employees to follow the internal policies, standards and procedures aimed at ensuring the confidentiality of communications and of personal data they may have had access to.

Larissa Galimberti | lgalimberti@pn.com.br

Marcel Leonardi | mleonardi@pn.com.br

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ENVIRONMENT

SERVICES AT ENVIRONMENTAL AGENCIES

Most environmental bodies and agencies have announced the suspension of services on their premises and the countdown for administrative proceedings, and the number of states and municipalities suspending their opening hours and services has intensified over the last few days. However, not all environmental bodies have yet regulated the suspensions and the new conditions for compliance with obligations and terms related to licensing and renewal requirements. Because of this, the conditions applying to each body that is yet to regulate its procedures during the suspension must be confirmed directly with it. As a rule, activities such as in-person meetings and services or field inspections are impaired in most environmental bodies and agencies. The recommendation remains that, where it is possible, for example, to comply with official letters, the terms of licensing conditions and the renewal of licenses by electronic means (such as electronic systems for environmental licensing or even e-mails), the original deadlines must be observed. In cases where it is not possible to meet the original deadline, the body or agency must be notified and the impossibility (caused by force majeure or for reasons beyond the interested party’s control) must be specifically justified, for the purposes of reserving rights, extending deadlines or extending the effectiveness of an administrative act while the non-compliance persists.

■ The Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA) issued Ordinance No. 827 of 2020 stating that its officials will work remotely while the state of emergency lasts, save for essential, strategic and police power activities, which may be performed in person. Further, deadlines were suspended for an indefinite period days starting March 16, 2020, in physical and electronic proceedings (Ordinance No. 826 of 2020). The IBAMA website informs that filings may be made by e-mail1.

■ The São Paulo Environmental Agency - CETESB informed on its website that (i) in-person services at its units is suspended for 30 days starting March 17, 20202, while essential activities will be provided by on-site teams; (ii) the countdown of procedural terms has also been suspended from March 16, 2020 until April 30, 20203; and (iii) all general needs of the population may be addressed through the entity’s website or by mail (return receipt requested).

■ As long as the authorized activities remain in operation, the conditions established in environmental licenses must be necessarily fulfilled. However, if operations are affected by the COVID-19 pandemic, the halt must be notified to the environmental body, after previously checking the possibility of sending notification via electronic systems, by e-mail or even by mail.

■ More specifically, the Rio Grande do Sul State Environmental Foundation (FEPAM) issued Normative Ruling 001 of 2020 suspending for 30 days the deadlines for submitting documents, reports and answers to conditional requests made in licensing processes, provided that they do not affect the environmental condition or harm the environment. This ruling expressly points out that the suspension does not affect the monitoring activities necessary for quality control

1. https://www.ibama.gov.br/notas/2171-medidas-preventivas-contra-o-coronavirus-orientacoes-sobre-protocolo-de-documentos-no-ibama2. https://cetesb.sp.gov.br/comunicado-sobre-o-atendimento-ao-publico/3. https://cetesb.sp.gov.br/suspensao-dos-prazos-processuais/

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of the impacts from installation or operation of an enterprise (which monitoring activities must be maintained if the activity remains operative). Finally, the ruling notes that the countdown will resume if and when the state of public calamity decreed in the State of Rio Grande do Sul is terminated.

■ The Federal Public Prosecutor’s Office has restricted its public services (Ordinance 60 of 2020), and its website further informs that services are available only through the electronic systems; there is no stay of proceedings, so citizens must use electronic means for submissions, requests, inquiries and filings, including the submission of document (as per guidance available at http://www.mpf.mp.br/pgr/noticias-pgr/como-medida-de-prevencao-ao-covid-19-servico-de-protocolo-do-ministerio-publico-federal-e-feito-exclusivamente-por-meio-eletronico/view).

■ The São Paulo Public Prosecutor’s Office issued Resolution No. 1,199 of 2020 instituting telework (work from home) until April 30, 2020, and further extending to April 30, 2020 a stay in the course of disciplinary administrative proceedings, civil inquiries, criminal investigation procedures, filings and other procedures chaired by a member or body of the Public Prosecutor’s Office.

André Vivan | avivan@pn.com.br

Milena Bastos | mbastos@pn.com.br

ENVIRONMENT

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HEALTHCARE HEALTHCARE PLANS

Healthcare plan operators, policy owners in collective corporate contracts and beneficiaries must carefully heed to the provisions in Normative Ruling 453 (RN 453 of 2020) issued on March 13, 2020, which establishes that COVID-19 tests and exams are covered for all healthcare plan beneficiaries, in accordance with the MoH protocols and guidelines. Based on this regulation, the private healthcare industry players may better plan and implement the measures necessary to cope with the current situation.

It is worth noting that remote medical assistance may be offered (i) to provide information on COVID-19 related matters; (ii) to inform about the protective measures and care that may be adopted; and (iii) to assess the possibility of remote medical appointments under specific circumstances, subject to current telemedicine regulations.

It is important to monitor and mitigate the potential impact that COVID-19 related healthcare services will have on the collective corporate healthcare plan and on its respective loss ratios. The parties must analyze the measures that can be taken to instruct beneficiaries on use of the healthcare plan vis-à-vis the uncertainties surrounding the developments of the COVID-19 pandemic.

Given the recent media news that healthcare plan operators were purportedly denying coverage for the COVID-19 test set out in the list of procedures and events released by the National Private Health Authority (ANS), we recommend that further instructions be given to beneficiaries and service providers about the protocols and guidelines issued by the Ministry of Health concerning the compulsory coverage for those tests, as per the normative ruling recently issued by the ANS (RN 453 of 2020) and currently in effect.

As yet another relevant development, the ANS has recently instructed that medical appointments, exams or elective surgeries should be postponed. Along these same lines, the state of Santa Catarina has already ordered a temporary halt in elective surgeries and exams as well as in outpatient appointments, except for cancer related exams and other non-avoidable surgeries and medical procedures. During the meeting between the Ministry of Health, the ANS and healthcare plan operators, the Chair of the Confederation of Santas Casas and Philanthropic Hospitals (CMB), it was mentioned that such issue deserved great caution in that it may have a negative impact on the revenues of those institutions.

The ANS remains committed to effectively and quickly taking the measures necessary to keep the industry rules abreast of the COVID-19 challenges. On March 20, 2020, the ANS Full Board (DICOL) held a meeting and, among other measures, ordered the suspension or rescheduling of several time periods for compliance by healthcare plan operators with the ANS requirements. The new time periods are available at http://www.ans.gov.br/planos-de-saude-e-operadoras/espaco-da-operadora/avisos-para-operadoras/5445-ans-altera-prazo-de-obrigacoes-das-operadoras.

Also during this March 20 meeting, the DICOL relaxed the management of resources by healthcare plan operators. The DICOL meeting minutes will soon be published, further detailing which resources will be available for use by healthcare operators.

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Discussions over telemedicine matters have evolved at a fast clip. On March 19, 2020, the Federal Council of Medicine (CFM) sent Official Notice 1,756 of 2020 to the Ministry Ministry of Health (MoH), acknowledging on an extraordinary basis the ethics and feasibility of telemedicine pratice during the fight against COVID-19 under the following modes:

■ teleguidance to offer remote instructions and treatment to patients in isolation; ■ telemonitoring to check health conditions remotely; and ■ tele-sharing (store and forward), which enables healthcare professionals to share and exchange

information for diagnostic or therapeutic purposes.

Further, Ordinance 467 was published in the Official Gazette of the Federal Executive on March 23, 2020, by which the MoH regulated, on an extraordinary basis, the telemedicine actions with a view to making the COVID-19 containment measures feasible. Such measures could be adopted both at the Unified Health System (SUS) and at the private and supplementary health instances. The in-scope telemedicine actions comprise pre-clinical support services, medical appointments, monitoring and diagnosis activities, always with due regard for the integrity, safety and confidentiality of data.

On March 25, 2020, the ANS’s DICOL held another extraordinary meeting and resolved on acceptance of all forms of telemedicine service during the COVID-19 crisis, and on the adequacy of existing networks of healthcare plan operators to this reality, with due regard for the content of healthcare professional board resolutions and of the MoH ordinance. Protection must be given to a beneficiary who cannot afford to or lacks in the necessary skills to use this tool. This control will be made through direct questioning to the beneficiary. The ANS signaled that some adjustments will be required in regards to the TISS standard and interpretations arising from the contracting rules, which will be further discussed at the coming DICOL meeting.

Further, the ANS also released a table containing the exceptional time extensions for medical appointments, exams, therapies and surgeries that are not urgent. The table is available at http://www.ans.gov.br/aans/noticias-ans/consumidor/5448-ans-adota-medidas-para-que-operadoras-priorizem-combate-a-covid-19

Given the new regulation on telemedicine, it is important that principals, operators and providers keep a close watch on regulations issued by the Regional Councils of Medicine. On March 26, 2020, the CREMERJ published Resolution CREMERJ 305 of 2020, which provides for medical care by telemedicine during the COVID-19 pandemic. On that occasion, CREMERJ underscored that the tele-appointment mode is only authorized for patients who are already served by the respective doctor (the first medical appointment must necesssarily be in person).

In addition, the ANS released on its portal a guidance for all healthcare plan beneficiaries, reinforcing the guidelines for remote care and indicating that such mode should apply both to COVID-19 symptomatic patients and to people who may fall ill for other health problems than COVID-19 (as long as it is not an emergency situation). The ANS has not yet commented on any new guidelines or on the limitation of telemedicine only for situations entailing no first medical appointment.

In another DICOL extraordinary meeting (March 31, 2020), the ANS pointed out the need to adjust its regulations to the current scenario (temporary authorization for telemedicine). Among other measures, the ANS highlighted the need to adapt the rules on contracting between operators and service providers in relation to in-scope services and the place where they are provided.

In the ANS view, operators should previously agree on the provision of telemedicine services with the service providers; such agreement could be formalized by e-mail, electronic messages

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exchanged through the portal of operators, or any other form of communication already existing between the parties (among others) and allowing at least to identify the type of service permitted for a given service provider through telehealth care, the corresponding service fees, and the service billing procedures. This instrument should also contain the unequivocal statement of both parties on the use of this type of service. This change will last as long as the fight against the COVID-19 pandemic lasts.

The ANS also addressed the inclusion, in the list of healthcare procedures and events, of coverage of remote medical appointments using the technologies that enable non face-to-face assistance. It should also be noted that it is only a form of non face-to-face service, not a new procedure, which is why it is not necessary to update the current resolution. It is not classified as home care, as the professional does not go to the place where the beneficiary is located. Healthcare operators, along with accredited professionals, should endeavor to ensure adequate conditions for remote services.

The ANS underscored, however, that in-person services remain compulsory for healthcare operators if the beneficiary does not have the resources for remote attendance or did not have the necessary skills for teleservice.

The ANS also established that March 25, 2020 will be the start date for the measures related to RN 259 of 2011, which will last until May 31, 2020 (subject to review depending on the country’s situation).

In an effort to continue looking for alternatives to help healthcare operators cope with the COVID-19 crisis, the ANS also announced that measures making resources management more flexible are at the final review stage, and will be discussed at the meeting scheduled for April 8, 2020. The proposals already presented by ANS refer to the easing of requirements for provisioning in 2020 and to regulatory capital rules.

Among the measures adopted to fight the COVID-19 pandemic (in addition to the aforementioned RN 453 of 2020), the latest notable regulations issued by the ANS are briefly described below:

RN 454 of 2020 amended article 19 of RN 85 of 2004 to state that the ANS will provide a personal data registration updating system in lieu of the flows set out in the main section and paragraph 1 of that article 19; such system will become mandatory for keeping the registration data current. In addition, RN 454 of 2020 established that a healthcare operator willing to act in the private healthcare market must use the Federal Government Services Portal to file an application, duly substantiated with the documents listed in Annex I, and coupled with a application form available on the ANS website.

RN 455 of 2020 voided the sole paragraph of article 17 of RN 195 of 2009, in response to a court order in Public Civil Action No. 0136265-83.2013.4.02.51.01. The referred article 17 of RN 195 of 2009 read that “the contracts for private group healthcare plans by adhesion or for corporate healthcare plans can only be terminated without cause after twelve months and upon prior notice given to the other party at least sixty days in advance.”

In response to a decision handed down by the 2nd Lower Federal Civil Court in the Federal District on Case No. 0074233-60.2015.4.01.3400, RN 456 of 2020 suspended article 12, paragraph 2 of RN 363 of 2014 and article 6 of RN 364 of 2014, both referring to monetary adjustment of contracts between healthcare operators and service providers.

At Legislative level, Bills (PL) were introduced on March 26, 2020 in the House of Representatives to amend Law 9,656 of 1998 during the state of public calamity declared in Brazil on account of the COVID-19 pandemic, namely:

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■ PL 1,117 of 2020, sponsored by Representative Capitão Wagner (PROS-CE), which prohibits the private healthcare operators from (i) adjusting the monthly fees for all types of healthcare plans (including due to the change in age bracket) while the state of public calamity is in force, and (ii) suspending or terminating contracts with customers in default on monthly installments for up to 90 days, also setting conditions for debt payment; and

■ PL 1,720 of 2020, sponsored by Representative Benedita da Silva (PT-RJ), which prevents private healthcare operators from adjusting monthly fees during major epidemics, such as COVID-19 .

These legislative measures are meant to avoid a general default on and cancellation of healthcare plans, causing the defaulting population to migrate the already over-saddled public healthcare system.

Théra van Swaay De Marchi | tdemarchi@pn.com.br

Maria Silvia L. A. Marques | msmarques@pn.com.br

Luciana Sakamoto | lsakamoto@pn.com.br

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INSOLVENCY

CNJ RECOMMENDATION TO THE COURTS WITH JURISDICTION OVER JUDICIAL REORGANIZATION AND BANKRUPTCY CASES WITH A VIEW TO MITIGATING THE IMPACT OF THE COVID-19 CRISIS

On March 31, 2020, the National Council of Justice (CNJ) approved a Recommendation to the courts with jurisdiction over corporate reorganization and bankruptcy actions of measures to mitigate the impact of the COVID-19.

The CNJ recommended that judges adopt such measures as (i) prioritizing decisions about the release of sums; (ii) suspending in-person general meetings of creditors and, when necessary, authorizing the holding of virtual meetings; (iii) extending the stay period for lawsuits and enforcements when postponement of the general meeting of creditors is necessary; (iv) analysing the convenience of authorizing the submission of an amended reorganization plan under specific circumstances; (v) considering the occurrence of force majeure or unforeseeable circumstances to defer the conversion of judicial reorganization into bankruptcy for contempt of the judicial reorganization plan; and (vi) carefully assessing the granting of urgent relief measures, eviction for non-payment, and enforcement acts affecting assets and properties in default-based lawsuits during the state of public calamity.

Partner Luiz Fernando Valente de Paiva is one of the members of the working group created by the CNJ in December 2018 (under the chairmanship of STJ Justice Luis Felipe Salomão) to discuss and suggest measures aimed at updating and improving the effectiveness of the Judiciary role in judicial reorganization and bankruptcy proceedings.

Further information is available here.

BILL TO CUSHION MARKET PLAYERS FROM THE ECONOMIC CRISIS ARISING FROM THE COVID-19 PANDEMIC

Federal Representative Hugo Leal (PSD-RJ) intends to introduce a new bill providing for emergency measures to help market players weather the economic difficulties caused by the COVID-19 pandemic. Those measures would remain in effect until December 31, 2020, or while the legislative decree recognizing a state of public calamity on account of the COVID-19 pandemic is in force. The following emergency measures are worthy of note:

Stay period: Suspension, for 60 days from the date of publication of the law, of lawsuits and enforcement claims against market players (any individual or legal entity exercising or engaging in an economic activity in their own name) revolving around the existence or fulfillment of obligations overdue after March 20, 2020. During this period, the following is prohibited: (i) judicial or extrajudicial foreclosure of real, fiduciary, personal and co-obligation guarantees; (ii) bankruptcy decree; (iii) eviction for non-payment; (iv) unilateral termination of bilateral contracts; and (v) collection of fines of any kind and levied during such period. Debtors and their creditors must seek during the stay period to renegotiate their obligations in a non-judicial and consensual manner.

Collective negotiation: At the end of the stay period, the debtor may file a collective negotiation procedure only once, as long as it proves a reduction equal to or above 30% in its revenues

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compared to the corresponding average of the last activity quarter in the previous period. Once the collective negotiation procedure is assigned, this triggers (i) prompt suspension of those same lawsuits covered by the stay period, and (ii) a prohibition against the pursuit of those same measures prohibited during the stay period. Negotiations may last up to 60 days, and the debtor may request the appointment of a negotiator to conduct them. At the end of negotiation period, the debtor (or the negotiator) will put forward a report on the outcome of negotiations, and the judge will order the shelving of the respective case records.

TRANSIENT CHANGES TO SOME PROVISIONS OF THE BRAZILIAN BANKRUPTCY LAW. THE NEW BILL ALSO AIMS AT AMENDING, DURING ITS EFFECTIVE TERM, SEVERAL PROVISIONS IN LAW 11,101 OF 2005, AMONG WHICH:

The obligations set out in the judicial or extrajudicial reorganization plans already approved by the court will not be enforceable on the debtor for 120 days.

■ The presentation of a new plan by the debtor will be authorized if such debtor has already had its judicial or extrajudicial reorganization plan approved in court, and this may also reach the claims supervening a judicial or extrajudicial reorganization petition already approved by the court.

■ 50% of the debtor’s receivables will be released to it, whatever the type of security falling on them; those securities should be gradually replenished as from the sixth month from presentation of the new petition (not exceeding 36 months).

■ The same claims eligible for judicial reorganization will qualify for extrajudicial reorganization as well. The petition in extrajudicial reorganization may be submitted upon evidence of the consent given by creditors representing at least 1/3 of all in-scope claims coupled with a commitment to reach the legal quorum for approval within a non-extendable period of 90 days, which quorum will be extraordinarily reduced to half plus one of all claims of each type covered by the plan.

Partner Luiz Fernando Valente de Paiva is taking part in discussions related to the aforesaid bill.

The firm will continue to keep a close watch on the legal developments surrounding the COVID-19 pandemic before the pertinent bodies, and will bring new information and comments in due course.

André Marques | amarques@pn.com.br

Giuliano Colombo | gcolombo@pn.com.br

INSOLVENCY

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INSURANCE

■ Few insurance rules deal with the treatment to insurance coverage in case of epidemic and pandemic declared by the competent government entities (e.g., exclusions on benefits in micro-insurance – SUSEP Circular No. 440 of 2012). This is generally handled on a case-by-case basis, in the contract clauses for products offered by each insurance company (mostly providing for express exclusion of coverage within this context).

■ For big risks, discussions usually revolve around whether or not an event or condition of force majeure could be claimed as an impairment to performance, frustration of the contract purpose, or else trigger a request for renegotiation. Generally, force majeure dispenses from the obligation to perform, with a few exceptions, and may also entail the non-activation of the insurance coverage (see, for instance, the attachments to SUSEP Circular No. 477 of 2013). To avoid disputes, it is essential to read carefully the insurance contract clauses, keep a detailed record of technical and documentary evidence to substantiate the facts and circumstances, and promptly advise the counterparty of any relevant facts and events, in addition into keeping the insurance company aware of any expected losses.

Diógenes Gonçalves | dgoncalves@pn.com.br

Carlos Eduardo Azevedo | ceazevedo@pn.com.br

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INTELLECTUAL PROPERTY

Amid the COVID-19 pandemic around the world, effective from March 20, 2020 the National Industrial Property Institute - INPI set up a work-from-home policy for its public servants. Now communications with the public are to be made electronically.

Although INPI’s headquarters in Rio de Janeiro and regional offices have closed down with no in-person assistance at this time, services will be provided remotely as close as possible to normal.

No date has been stipulated for the servants to come back to the INPI units, which is expected to occur when the sanitary conditions so permit.

In addition to the work-from-home policy, the INPI Chairman, Cláudio Furtado, also issued Ordinance No. 120 of March 16, 2020, suspending all deadlines between March 16, 2020 and April 14, 2020. The time periods will count again as from April 15, 2020.

Any time periods to comply with INPI requirements during the suspension period will start to run only as from April 15, 2020. In contrast, for time periods already initiated before the suspension period, but otherwise stayed, the remaining period will count as from April 15, 2020.

Though deadlines are suspended, interested parties can at their discretion submit a petition electronically to comply with them.

José Mauro Decoussau Machado | jmachado@pn.com.br

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INTERNATIONAL TRADE AND CUSTOMS

Over the last few days, the Federal Government has taken two measures to facilitate the control the flow of foreign trade for products used in the fight against the COVID-19 pandemic.

The measures already taken by the Federal Government to facilitate the control over the flow of foreign trade for products used in the fight against COVID-19 are outlined below:

■ On Tuesday March 17, 2020, the Ministry of the Economy’s Foreign Trade Chamber (CAMEX) issued Resolution No. 17 of 2020, temporarily reducing to zero the import duty on 50 medical and hospital products and devices, including ethyl alcohol with a concentration at or above 70%, and protection masks and gloves. Imports of such items will be accorded priority treatment by the Federal Public Administration bodies in charge of licensing, control and inspection activities.

■ Further, the Foreign Trade Office (SECEX) published Ordinance No. 16 on March 20, 2020, establishing a Special Export License for products used in the fight against the COVID-19 pandemic. The corresponding application must be made through the LPCO module on the Single Foreign Trade Portal. Among the in-scope products are, again, the ethyl alcohol with a concentration at or above 70%, and protection masks and gloves. The full list of products can be found at this link.

■ Also with regard to exports, Resolution RDC No. 320 of March 20, 2020 established a temporary need of prior approval from ANVISA for exporting a list of products subject to sanitary surveillance and falling into the class of cleaning products and healthcare products, as well as chloroquine and hydroxichloroquine.

■ Normative Ruling RFB No. 1,927 of 2020 added articles 47-B, 47-C and 47-D to Normative Ruling SRF No. 680 of 2006 (which regulates customs clearance at imports), by which, on general terms, the products used in the fight against COVID-19 pandemic may be delivered to the importer before the customs check is completed, while also giving priority treatment to the transit of those goods at customs. Based on article 17, VIII of that same Normative Ruling SRF No. 680 of 2006, the Customs Unit at the International Airport of Viracopos authorized, within its area of authority, the advance registration of a Declaration of Import (DI) (that is, even before arrival of the cargo) for goods used in the diagnosis and/or combat of the COVID-19 pandemic.

■ For its part, Ordinance SECEX No. 18 of March 20, 2020 suspended the Import License requirement for imports of certain products subject to antidumping rights, such as plastic tubes for vacuum blood collection originating from Germany, USA, UK and China (Resolution CAMEX No. 26 of 2015) as well as disposable general-purpose plastic syringes originating from China (Resolution CMEX No. 58 of 2015), while the public emergency of international concern endures.

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■ Decree No. 10,285 of March 20, 2020 reduced the IPI tax rate on in-scope sanitizing products and healthcare products to zero, effective until September 30, 2020.

■ Resolution CAMEX No. 22 of 2020, published on March 26, 2020, temporarily reduced to zero percent the Import Duty (II) rate applicable to NCMs 9018.39.99, 9018.31.11 and 9018.31.19, comprising several medical and hospital products.

■ Resolution CAMEX No. 23 of 2020, published on March 26, 2020, suspended the application of antidumping rights on imports of 1ml, 3ml, 5ml, 10ml or 20ml disposable general-purpose plastic syringes, with or without needles, usually classified under codes NCMs 9018.31.11 and 9018.31.19 and originating from China, as well as on imports of blood collection tubes usually classified under codes NCMs 3822.00.90, 3926.90.40 and 9018.9.99 and originating from Germany, China, UK and USA, due to the public interest involved, and effective until September 30, 2020.

■ Ordinance SECEX 21 of 2020 regulates the notifications and communication with interested parties in trade defense proceedings while the public health emergency circumstances prevail (due to the COVID-19 pandemic). According to this ordinance, the interested parties will be notified on the initiation of a proceeding through electronic mail and, during the proceedings, through both electronic mail and DECOM Digital System. The authorities will assume that interested parties acknowledged the documents three days after their transmission.

■ Normative Ruling RFB 1,929 of March 26, 2020, through its sole annex, changed the list of goods that, under article 47-B of Normative Ruling SRF 680 of 2006, may be delivered to the importer before completion of the customs check, while the Public Health Emergency of National Concern (PHENC) declared by the Ministry of Health endures.

■ Ordinance RFB 601 of March 27, 2020 established, within the ambit of the RFB, the Customers Operations Center for Management of the Crisis generated by the COVID-19 Pandemic (Cogec-Covid-19), whose objective is to promote an institutional interface to enable and monitor the Customs Administration activities necessary to meet the demands of society on account of this pandemic. The Cogec will be tasked with (i) receiving, classifying and handling emergency demands related to the fight against the COVID-19 pandemic when originating from a government body or entity or even from the private sector; (ii) calling on teams composed of Customs Administration employees to assess and meet emergency demands at RFB administrative units; and (iii) proposing to the Special Secretary of the Brazilian Federal Revenue Office emergency measures to solve problems related to the flow of goods and persons during the fight against COVID-19.

■ Resolution CAMEX 22 of 2020, published on March 26, 2020, added to the sole annex of Resolution 17 of 2020 a list of other items qualifying for a temporary reduction of Import Duty (II) to zero percent, as a means to facilitate the fight against the COVID-1 pandemic (the list is available at http://www.camex.gov.br/resolucoes-camex-e-outros-normativos/58-resolucoes-da-camex/2675-resolucao-n-22-de-25-de-marco-de-2020).

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■ Decree 10,302 of April 1, 2020 temporarily reduced to zero the IPI tax rates on products classified under the following IPI taxation codes: 3926.90.40 (laboratory or pharmacy items), 4015.19.00 (gloves, mittens and the like, save for surgery) and 9025.11.10 (clinical thermometers). The rates previously levied on such products will be reinstated on October 1, 2020.

Mauro Berenholc | mberenholc@pn.com.br

Renê Medrado | rmedrado@pn.com.br

INTERNATIONAL TRADE AND CUSTOMS

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JUDICIAL AND ARBITRAL PROCEEDINGS

■ Whether in court litigation or in arbitration, litigants have to abide by rules, standards and, in particular, specified time periods oftentimes not extendable, as a way of securing the guiding principles of due process.

■ The administrative conduct of judicial proceedings, mainly in respect of deadlines, times or manner for submission of procedural documents, generally rests with state courts, regional federal courts, regional labor courts and regional electoral courts, as well as with higher courts, within the limits of their respective jurisdictions. At federal level, the National Council of Justice (CNJ) sometimes issues administrative orders relating to the conduct of judicial proceedings.

■ By contrast, the administrative conduct of arbitral proceedings relies primarily on mutual agreement of the litigants, generally via the adoption of regulations and where arbitration chambers or centers have the role of administering arbitration (the so-called institutional arbitrations).

■ Amid the current scenario, where established procedures are substantially changing and so are the general standards of conduct in an effort to contain the spread of COVID-19, it is essential that persons and entities that may face or are already facing disputes (including those disputes that will inevitably result from the current scenario) keep track of the resolutions that have been issued by the judiciary and by arbitration chambers and centers with respect to (i) calculation of procedural time periods; (ii) restrictions on conduct of hearings and other in-person acts; and (iii) increment in digital process.

■ For example, the São Paulo State Court of Justice has changed from an ordinary to a special working regime at the São Paulo trial and appellate court levels. This regime was further detailed in Joint Communiqué No. 249 (for trial courts) and at Joint Communiqué No. 37 (for appellate courts) of March 24 and 25, 2020, respectively and as amended by subsequent communiqués, by which all judges, servants and trainees will work from home until April 30, 2020, thus reducing their in-person activities to a minimum indispensable for ordinary operations. Further details on electronic requests and submissions during this period are provided. In an unprecedented iniative, the Chief Justice of the Court rolled out, on March 31, 2020, an expenditures contingency plan aimed at balancing the Court budget and expenditures for the coming months on account of the COVID-19 pandemic (tjsp.jus.br/coronavirus).

■ For its part, the Rio de Janeiro State Court of Justice issued Joint Normative Ruling 04 of March 12, 2020, ordering the adoption of “temporary measures to avoid the spread of the novel coronavirus (COVID-19).” Under Joint Normative Ruling 05 of March 16, 2020, it instituted the “Special Regime for Urgent Services – RDAU” at the Rio de Janeiro courts, as further detailed in Joint Normative Rulings 06 and 07 of March 17, 2020. Joint Normative Rulings 08 and 09, dated March 28 and 31, 2020, respectively, have brought new instructions and guidance on this matter. (http://www.tjrj.jus.br/).

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■ At federal level, the National Council of Justice (CNJ) issued Resolution 313 on March 19, 2020 establishing ‘an extraordinary service system to harmonize the delivery of judiciary services and ensure the access to Justice during this emergency period, with a view to avoiding the spread of novel coronavirus – Covid-19.” All procedural terms are suspended until April 30, 2020, without prejudice to “procedural acts necessary to preserve urgent rights.” This resolution does not apply to the Federal Supreme Court and to the Electoral Court. (https://www.cnj.jus.br/coronavirus/atos-normativos/)

■ According to recent statistics, the work from home sytem has not affected the productivity of the courts. A survey carried out by the Superior Court of Justice on March 30, 2020 has shown that “the court managed to keep its productivity levels during the first weeks of work from home by justices and servants, and the number of decisions handed down between March 16 and 26 has actually increased.” (http://www.stj.jus.br/sites/portalp/Inicio).

■ As for arbitration, a number of national and international arbitration chambers and centers, which administer arbitrations in Brazil and abroad, have already issued resolutions and communiqués with guidelines and revisions of procedures, both for initiation of new arbitrations and for conduction of those already ongoing, in an effort to meet current needs amid the COVID-19 outbreak. Generally speaking, measures comprise the suspension of physical filing (including for documents, which must be sent electronically), remote service by secretaries, and a recommendation for virtual hearings.

■ However, it is necessary to watch closely the arbitrations already in course, as the resolutions issued thus far differ as to the possibility of a sole arbitrator or a panel to order the stay of proceedings, whether on their own initiative and/or at the parties’ request.

■ In brief, it is essential to keep abreast of resolutions, ordinances, communiqués and other rules issued by both the judiciary and arbitration institutions.

■ It is also important to devote greater attention to other alternative dispute resolution mechanisms, such as negotiation, conciliation, mediation, dispute resolution boards, among others as yet little known but which are likely to gain prominence. This is the case, for instance, of the Online Dispute Resolution (ODR) and of the brand-new Blockchain Arbitration, besides hybrid methods devised for a specific dispute. More than ever, the parties and attorneys are urged to seek greater efficiency in the way disputes are settled.

Gilberto Giusti | ggiusti@pn.com.br

Douglas Catarucci | dcatarucci@pn.com.br

JUDICIAL AND ARBITRAL PROCEEDINGS

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LABOR

SUSPECTED CASES AND MEDICAL CERTIFICATES

Workers who exhibit the COVID-19 symptoms are encouraged to seek medical advice. Bill 702 of 20 pending vote in the Federal Senate does not require the presentation of a medical certificate to justify the absence of a worker infected with coronavirus or who has had contact with patients. This benefit must remain in effect while the state of public calamity endures.

SUSPENSION OF ACTIVITIES DURING STATE OF CALAMITY

State decrees have implemented measures restricting the movement of persons. At federal level, Decree No. 10,282 of 2020 defined the concept of essential activities and public services that must continue even in light of these restrictions. It is recommended that all activities be compliant and, to the extent possible, be carried out without the employees being in person at the company’s premises.

WORK FROM HOME

Under Provisional Measure No. 927 of 2020, during the state of public calamity the employers may change the in-person labor mode to the work-from-home regime. In this case, the employer will pay the employee’s salary in full, and it will also be necessary to adapt the rules on reimbursement of expenditures (infrastructure, power, internet costs, etc.) via internal employment policies or amendment to the independent service contract entered into until 30 days after the change in the labor mode. It must be kept in mind that no changes may be detrimental to existing employment conditions and contracts. The rules on work period and overtime controls remain unchanged (as applicable);

SUSPENSION OR REDUCTION IN OPERATIONS

Companies that have reportedly reduced or suspended their activities may avail themselves of some tools. Against this backdrop, MP 927 of 2020 permitted those companies to (i) advance individual vacations; (ii) grant collective vacation to employees, with greater flexibility vis-à-vis the existing rules; (iii) advance non-religious holidays; and (iv) use the hours in stock at hour banks to compensate the shutdown periods.

REDUCTION IN WORKING HOURS AND WAGES

MP 936 of 2020 regulated the possibility of reducing wages and working hours through an individual agreement with all employees. In addition, under MP 936 of 2020, wages and working hours may be reduced by 25%, 50% or 70%, via individual agreement, for employees earning up to BRL 3,117.00 and for those with a higher education diploma and earning more than twice the maximum social security benefit (ie, BRL 12,202.12). Reductions in other conditions or percentages are possible, but only by way of collective agreement. Once the salary is reduced, the Federal

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Government will make a supplementary payment based on the unemployment insurance amount. Employees who have their working hours and wages reduced will enjoy a provisional tenure while the measure lasts, and for a like period after its end.

TEMPORARY SUSPENSION OF EMPLOYMENT CONTRACTS (FURLOUGH)

MP 936 of 2020 also provides for suspension of employment contracts (furlough) by means of an individual agreement, for employees earning up to BRL 3,117.00 and for those with a higher education diploma and earning more than twice the maximum social security benefit (ie, BRL 12,202.12); or through collective agreement for other employees. Furloughed employees will be entitled to the full amount of unemployment insurance. Employers who posted gross revenues above BRL 4.8 million in 2019 must grant a compensatory aid in the amount of at least 30% of the employees’ salaries during the furlough period. This measure has a maximum duration of 60 days, which can be broken down into up to two periods of 30 days. Employees placed on furlough will enjoy a provisional tenure while the measure lasts, and for a like period after its end.

In addition, CLT article 476-A establishes a similar mechanism, where employment contracts can be suspended for employee training or retraining activities, subject to their consent and upon agreement with the workers’ labor union. The legislation also provides for the possibility of cutting working hours and wages proportionately, also upon negotiation with the labor union of the category concerned.

DEFERRAL OF FGTS CONTRIBUTIONS

Provisional Measure 927 of 2020 authorized the deferral of FGTS contributions related to March, April and May 2020. Such contributions may be paid in up to six installments falling due on the 7th day of each month starting in July 2020, without any monetary adjustment, fine and default charges.

EMERGENCY ALLOWANCE (‘CORONAVOUCHER’)

PL 1,066 of 2020, which provides a BRL 600.00 emergency aid for informal low-income workers, was approved by the Plenary of the Federal Senate. The main requirements for entitlement to this allowance (known as ‘coronavoucher’) are: (i) being over 18 years of age; (ii) not having a formal job, or being in an intermittent contract with no calls for work; and (iii) having a monthly income of up to half a minimum wage (BRL 522.50), and a monthly family income of up to three minimum wages (BRL 3,135.00). Other requirements also apply, such as exercising an activity as Individual Microentrepreneur (MEI) or being an individual or optional contributor to the General Social Security System (RGPS). This PL is pending presidential sanction.

PUBLIC PROSECUTOR’S OFFICE FOR LABOR AFFAIRS (MPT)

The MPT issued technical opinions providing guidelines for prosecutors, companies, labor unions and workers. Among the listed measures is a recommendation for companies to make the working hours of employees exposed to very high, high or medium risk of infection more flexible. The MPT also recommends that companies abide by contingency plans adopted by local authorities,

LABOR

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allowing absence from work, work from home, or social distancing of employees at the work environment. The MPT informs that they may carry out on-site visits and inspections, which may in turn give rise to several measures, including the filing of public civil actions.

CONTRIBUTIONS TO THE THIRD-SECTOR ENTITIES (‘SYSTEM S’)

The items outlined aove apply to third-sector entities. Some of them may engage in essential activities, though. Consequently, it is highly recommended that such entities keep a healthy labor environment and monitor the cases of symptomatic employees. They should also release volunteers from carrying out in-person activities and, to the extent possible, should migrate to smart work.

Luis Mendes | lmendes@pn.com.br

Maurício Guidi | mguidi@pn.com.br

Thais Galo | tgalo@pn.com.br 

Alexandre O. Jorge | ajorge@pn.com.br

Ariane Gomes dos Santos | agsantos@pn.com.br

Dérick Mensinger Rocumback | drocumback@pn.com.br

Rennan Gil Alvez Nascimento | rnascimento@pn.com.br

LABOR

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LIFE SCIENCES

ANVISA RELAXES REGULATORY REQUIREMENTS

■ Compounding of antiseptic or sanitizer products: (i) Drug manufacturers holding a license to operate for the company from the Brazilian Public Health Agency’s (ANVISA) and a license to operate for the establishment (“Health Licenses”) are authorized to manufacture and sell ethyl alcohol 70%, glycerin-ethyl alcohol 80%, alcohol gel, glycerin-isopropyl alcohol 75%, and chlorhexidine digluconate 75% without ANVISA’s registration until September 16, 20201; (ii) Manufacturers of cosmetics and cleaning products holding Health Licenses are authorized to manufacture and sell ethyl alcohol 70% without registration until September 16, 20202; (iii) Any company is authorized to manufacture and transport ethyl alcohol 70%, without Health Licenses and ANVISA’s product registration, exclusively for donation to the Integrated Health System, provided that the establishments meet the good manufacturing practice requirements and have a technician in charge3. This authorization has no expiry date.

■ Priority medical devices: Any company is authorized to manufacture and import priority medical devices (surgical masks, particulate respirators N95, PFF2 or similar products, safety glasses, face shields, disposable hospital garments, caps, surgical shoe covers, breathing valves, circuits and connectors), without Health Licenses and ANVISA product registration until September 19, 2020, to the extent that the Brazilian Technical Standards Association’s (ABNT) technical standards applicable to the products are met4.

IMPORT FOR OWN USE5

■ Healthcare products are subject to sanitary inspection6 and, if shipped by mail, must be accompanied by a declaration of the package content.

■ Non-controlled medications, foods, household cleaning procuts, cosmetcs, personal care and hygiene products and perfumes are dispensed from ANVISA authorization or from othre specific procedures when imported through SISCOMEX7.

1. Resolution RDC 350 of 2020 (ANVISA).2. Resolution RDC 350 of 2020 (ANVISA).3. Technical Opinion 3 of 2020 (ANVISA). 4. Resolution RDC 356 of 2020 (ANVISA).5. Resolution RDC 358 of 2020 (ANVISA).6. Resolution RDC 358 of /2020 (ANVISA) does not specify how such inspection will take place. However, according to ANVISA Resolution RDC 81 of

2008, on importing products subject to sanitary inspection, the technical and legal responsible persons of the importing company must sign a document to substantiate the Application for Sanitary Inspection and Release. The template applictaion form can be found in Resolution RDC 81 of 2008.

7. Even without prior authorization, the products remain subject to the health surveillance regime, authorizing healthcare officials to open any imported package to check its content, being able to release it for delivery to the recipient or determine its return or interdiction. It should be noted that importing products in quantities and frequencies compatible with the duration and purpose of treatment, or that does not characterize trade or provision of services to third parties, is regarded as an import for their own use. For medicines, if the healthcare authorities believe there is a possibility that the products are intended for sale, a prescription and/or report issued by a competent professional and/or a declaration with additional information describing the imported medicines and charactering the intended use of products may be requested.

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SUSPENSION OF ADMINISTRATIVE DEADLINES8

ANVISA suspended procedural deadlines for fulfillment of requirements of public acts under ANVISA’s responsibility, and also the deadlines set out in laws on health violation up to July 21, 2020. Deadlines for fulfillment of requirements related to application for registration of inputs, medicines and biological products, post-registration changes of medicines and biological products, certification of bioequivalence centers, qualification of pharmaceutical equivalence centers, and consent and modification in clinical trials of medicines and biological products; in these cases, the companies should request the temporary shelving of the application if it is not possible to provide the information and documents requested by ANVISA.

SUSPENSION OF ADMINISTRATIVE DEADLINES

ANVISA suspended procedural deadlines for fulfillment of requirements of public acts under ANVISA’s responsibility, and also the deadlines set out in laws on health violation up to July 21, 2020. Deadlines for fulfillment of requirements related to application for registration of inputs, medicines and biological products, post-registration changes of medicines and biological products, certification of bioequivalence centers, qualification of pharmaceutical equivalence centers, and consent and modification in clinical trials of medicines and biological products; in these cases, the companies should request the temporary shelving of the application if it is not possible to provide the information and documents requested by ANVISA.

ADVANCED THERAPY PRODUCTS

ANVISA anticipated the validity of Resolution RDC 338 of 2020, authorizing the use of advanced therapy products for the treatment of COVID-19 as long as such use has been authorized by ANVISA and takes place in a non-commercial manner. The product in question must be produced on a non-routine basis, for a specific patient, under imminent life-threatening condition, and under the responsibility of an accredited professional.

Postponement of deadlines for sanitary licensing renewal9

The State of São Paulo extended for an additional one year the validity of health licenses otherwise expiring between March 1, 2020 and May 31, 2020.

Preservation of the public order10

The National Public Security Force is authorized to act, aiming at the preservation of public order and the safety of people and property, in situations such as:

■ assistance to healthcare professionals so that they can safely serve all those suspected of being infected with the coronavirus;

■ reinforcement of police security measures that ensure the functioning of healthcare services; ■ ensuring security and assisting in the distribution and storage of medical and pharmaceutical

products and/or supplies, foodstuffs and hygiene products; ■ guarantee of safety and assistance in sanitary control carried out in ports, airports, highways

and urban centers;

8. Resolution RDC 355 of 2020 (ANVISA).9. Ordinance CVS 3 of 2020.10. Ordinance 151 of 2020 of the MInistry of Justice and Public Security.

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■ patrolling or overt guarding with the aim of preventing looting and vandalism; ■ carrying out campaigns to prevent or protect places where public healthcare agent may carry

out rapid tests; and ■ application of the coercive measures provided for in Law 13,979 of 2020, and in Interministerial

Ordinance 5 of 2020 (such as administrative requisition of assets, isolation and quarantine).

ENTRY RESTRICTION FOR FOREIGNERS11

According to ANVISA’s technical recommendation, the entry of foreigners coming from any country by air is restricted until April 30, 2020.

TELEMEDICINE ACTIONS12

The Ministry of Health authorized, in an exceptional and temporary manner, the practice of telemedicine, with a view to reducing the spread of COVID-19. Telemedicine actions include preclinical services, health care support, consultation, monitoring and diagnosis through information technology and communication in public and private networks, directly between doctors and patients so as to ensure information integrity, security and secrecy. Trade associations for nursing13, nutrition14 and physiotherapy15 professionals have also regulated this matter by allowing their members to engage in virtual and distance appointments.

RISK OF SHORTAGE OF SUPPLY16

Companies must report, until April 30, 2020, on the risk of supply shortage affecting medications, healthcare products and devices, specialty food, cleaning products and cosmetics on account of the COVID-19 pandemic (through notification forms to be made available by the Brazilian Public Health Agency – ANVISA).

MoH rules on isolation and quarantine (prevailing over the WHO guidance)17

■ Isolation: Symptomatic persons and asymptomatic persons under clinical and laboratory investigation must be segregated. This measure may only be taken (on medical prescription or at the recommendation of a disease surveillance agent) for a maximum period of 14 days, extendable for a like period or less;

■ Quarantine: It must be formally decreed in a substantiated manner by the head of the MoH or of the state, municipal or Federal District health offices, effective for a period of up to 40 days (renewable if necessary).

11. Joint Ordinance 152 of 2020 of the Chief of Staff of the Presidency of the Republic, the Ministry of Justice and Public Security, the Ministry of Infrastructure, and the Ministry of Health.

12. Ordinance 467 of 2020 of the Ministry of Health.13. Resolution 634 of March 26, 2020 of the Federal Council of Nursing. 14. Resolution 646 of March 18, 2020 of the Federal Council of Nutrition. 15. Resolution 516 of March 20, 2020 of the Federal Council of Physiotherapy and Occupational Therapy. 16. Call Notice 5 of March 13, 2020.17. https://www.who.int/docs/default-source/coronaviruse/getting-workplace-ready-for-COVID-19.pdf

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WHO guidance on workplace conditions18

■ surfaces and objects need to be wiped with disinfectant regularly (desks, chairs, phone sets, door handles, keyboards, turnstiles, elevators);

■ only persons who have exhibited symptoms or been in contact with infected persons should wear face masks, which the company has no legal obligation to provide;

■ employees must stay home if any symptom arises, including a mild cough or low fever, or if they have to take medications that could mask the infection symptoms (paracetamol, ibupofren, aspirin or the like);

■ employees must advise the company about any trips to risk countries. The employees should monitor themselves for symptoms (cough, headache, runny nose, sore throat, diarrhea, respiratory problems, fever, fatigue) during 14 days and, on becoming symptomatic, they must take their temperature twice a day;

■ events or travels should follow the intsructions from local authorities, there being no specific recommendation on cancellation of events or prohibition against domestic or international trips;

■ companies must seek to promote telework in light of the advice to avoid public transports and crowded places.

Angela Kung | akung@pn.com.br

Julia de Castro Kesselring | jkesselring@pn.com.br

18. https://www.who.int/docs/default-source/coronaviruse/getting-workplace-ready-for-COVID-19.pdf

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MARITIME LAW AND PORT REGULATIONS

NATIONAL WATERWAY TRANSPORTATION AGENCY (ANTAQ)

On March 20, 2020, ANTAQ informed that the public and private ports and other port facilities, as well as interstate and international waterway transportation activities, remain in operation. Shipping companies must comply with the measures for containment of the COVID-19 pandemic, following the instructions given by the public health authorities and by the Federal Government. Further, ANTAQ informed that unrestricted suspension of passenger transportation is not a measure suggested by ANVISA. In the ANTAQ’s opinion, full suspension of passenger transportation services could have a negative bearing on access to medical services, on commuting of healthcare professonals, and on the supply of vaccines, inputs and medications across Brazilian states.

In addition, Ordinance ANTAQ No. 80 of March 18, 2020 suspended the countdown for procedural terms from March 21, 2020 to April 30, 2020, extendable at the ANTAQ Board’s order.

PORT AUTHORITY – BRAZILIAN NAVY

The Brazilian Port Authority has issued no rule or guidance concerning the containment measures against the COVID-19 spread.

PORTS AND COASTS AUTHORITY

The Ports and Coasts Authority (DPC) informed in a communiqué that the validity of certificates and declarations of conformity expiring until July 7, 2020 will be extended for another 120 days. The same applies to defenses and administrative appeals, which had their terms extended for an equal period.

ADMIRALTY COURT

The Admiralty Court issued Ordinance 18 of 2020, extending the stay in procedural terms from April 2, 2020 to April 27, 2020. Under Ordinance 17 of 2020, the Admiralty Court also extended until August 15, 2020 the validity terms of shipowner registration certificates, as well as the certificates of enrollment in REB and Pre-REB otherwise valid until July 31, 2020.

CRUISE SHIPS

On March 13, 2020, the Brazilian Ministry of Health (MoH) suspended the cruise season, and announced that at least one cruise ship could serve as hospital for COVID-19 patients.

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OFFSHORE PLATFORMS

On March 19, 2020, the National Petroleum, Gas and Natural Fuels Agency (ANP), the Public Prosecutor’s Office for Labor Affairs – National Coordination Unit for Port and Waterway Transportation Work (Conatpa), the Ministry of the Economy – Labor Office, the Brazilian Navy – Ports and Coast Authority (DPC), the National Public Health Surveillance Agency (ANVISA) and the Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA), based on the Technical Cooperation Agreement termed Operação Ouro Negro, which gathers the regulatory bodies with jurisdiction over offshore activity, recommended to industry companies several preventative measures and others intended to secure the rights of workers and the security of operations, in light of the COVID-19 outbreak.

NATIONAL SANITARY SURVEILLANCE AGENCY (ANVISA)

Under Technical Opinion 47 of 2020, ANVISA recommended that vessels in international transit should present the Medical Logbook when requesting Free Practique. The cargo vessel on an international route, upon prior assessment, shall receive Free Practique to dock and operate, but no crew member can disembark for 14 days from the date of vessel departure from the last foreign port of call (save the disembarkation of a crew member that is indispensable for operations).

MERCHANT MARINE FUND (FMM)

The BNDES approved an emergency measure suspending the repayment of loans for up to six 6 months. This suspension may be extended to financing carried out by BNDES with funds from the FMM, subject to the maximum grace periods set out in pertinent legislation and considering the BNDES credit policies and rules.

Ricardo Coelho | rcoelho@pn.com.br

Luis Claudio Furtado Faria | lcfaria@pn.com.br

Erick Faustino | efaustino@pn.com.br

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OIL & GAS AND OTHER REGULATED ACTIVITIES - REGULATORY

Under the Regulatory Agencies Act (Law No. 13,848 of June 25, 2019), the drafts and proposals for amendment to normative rulings of general interest to market players, consumers or users of regulated services must be submitted to public consultation before a decision is made by the steering committee or full board of the regulatory agency concerned. Further, the regulatory agency may, by full board decision, call a public hearing to gather input for a seasoned decision on any matter of relevance.

Recently, the National Agency of Oil, Natural Gas and Biofuels (ANP), the National Electric Power Agency (ANEEL) and the National Waterway Transportation Agency (ANTAQ) have put all events and public hearings on hold, in the wake of the measures taken by the Federal Government to avoid the spread of the COVID-19 pandemic. Other regulatory agencies have taken similar measures to limit public access to their premises and to discourage in-person meetings.

SUSPENSION OF TIME PERIODS IN ADMINISTRATIVE PROCEEDINGS

■ The jurisdictional activity of regulatory agencies will possibly be impacted by the COVID-19 pandemic as well, with a possible decision to suspend the countdown in administrative proceedings, as already determined by several courts and administrative tribunals across the country. In this sense, the National Agency for Petroleum, Natural Gas and Biofuels (ANP) enacted Resolution No. 812 of March 23, which suspended procedural periods up to April 30, except for cases of urgent processing.

■ The National Electric Energy Agency (ANEEL) enacted Ordinance No. 6,310 on March 25, suspending procedural periods for 30 days, explaining that during this period, ANEEL decisions will continue to be published regularly in the official media, and that documents will be received exclusively by electronic means. While the exceptional measure is in force, there will be no in-person service. Another measure adopted by ANEEL is related to the board meetings, which will be virtual-only meetings up to April 28, and oral statements of the agents of the sector must be video recorded by the party and sent to the Agency.

■ The National Agency for Waterway Transportation (ANTAQ) suspended the periods from March 21 to April 30, through Ordinance 80 of March 19, 2020. For its part, the National Land Transport Agency (ANTT) suspended the deadlines of its administrative processes for 90 calendar days (Resolution 5,878 of March 26, 2020), and eased the deadlines for compliance with contractual and regulatory obligations in the ambit of infrastructure and rail freight transport and road freight and passenger transport services (Resolution 5,879 of March 26, 2020).

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ANP SPECIFIC MEASURES WITH RESPECT TO COVID-19

ANP Resolution No. 812 of 2020 emphasized that regulated agents are responsible for supplying fuels, so that any acts that cause damage to supply will be subject to penalties by ANP. ANP determined that any changes in the operational routines able to affect, in whole or in part, the domestic supply of oil, its by-products, natural gas and biofuels shall be communicated to ANP, with the respective action plans, with a view to keeping up with provision of services and consequently, domestic supply. The electronic addresses for this communication depend on the agent’s activity: incidentes.movimentacao@anp.gov.br and incidentes.abastecimento@anp.gov.br

As for public consultations and hearings, ANP indicated in the Resolution that the measures provided for in the rule may be changed at any time, and that other necessary measures may be adopted, exceptionally without the need for public consultation and public hearings. The basis for such exceptional measure would be the “current emergency situation” and “its general power of precaution, in order to protect the domestic fuel supply”. Failure to comply with the requirements provided for in the Law of the Regulatory Agencies, although understandable in view of the current situation, may raise questions due to the fact that administrative acts are formal, particularly if regulatory agencies fail to observe the strictly necessary and reasonable measures.

Finally, it is worth mentioning that ANP decided to waive or postpone certain inspections provided for in ANP Resolution No. 52 of 2015 (oil handling facilities and oil by-products) and in ANP Resolution No. 734 of 2018 (biofuel production facilities).

POSTPONEMENT OF ENERGY AUCTIONS

The Ministry of Mines and Energy (MME) published Ordinance 134 of March 28, postponing for an indefinite term the following energy auctions:

■ Existing Energy Auctions “A-4” of 2020 and “A-5” of 2020, as referred to in Ordinance MME 389 of October 14, 2019;

■ New Energy Auction “A-4” of 2020, which is dealt with in Ordinance MME 455 of December 6, 2019;

■ New Energy Auction “A-6” of 2020, as provided in Ordinance MME 151 of March 1, 2019; ■ Auctions for the Public Electricity Transmission Services Concession as mentioned in Ordinance

MME 15 of January 13, 2020; and ■ Auctions for Contracting Solutions for the Supply of Isolated Systems, as dealt with in

Ordinance MME 67 of March 1, 2018.

The acts resuming the aforementioned energy auctions will define the new deadlines for the stages that were in progress until March 30, 2020 and other measures necessary to cope with the impacts of any such postponement, including a repeat of stages already concluded.

NO INTERRUPTION OF ESSENTIAL SERVICES

It is important to note that several Bills, at the Federal and State levels, intend to prohibit the interruption of essential services, including public services, due to lack of payment. Some recent examples of this type of initiative are ANEEL Normative Ruling 878 of March 24, 2020, Rio de Janeiro State Law 8,769 of March 23, 2020, and Resolution 973 of March 26, 2020 of the São Paulo State Energy Regulatory Sanitation and Energy Agency (ARSESP).

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DECREES ISSUED BY THE STATE OF RIO DE JANEIRO ON OIL & GAS MATTERS

In view of the order given by some municipalities to halt economic activities, State Decree 47,002 of March 20, 2020 established that, during the duration of the state of public calamity and on an exceptional basis, as a guarantee of human dignity and the right to the supply of fuel and gas to the population, the activities of the onshore oil and gas industry are authorized throughout the state of Rio de Janeiro, provided that crowding in the performance of activities is avoided. It is worth mentioning that ‘oil production and production, distribution and sale of fuels, liquefied petroleum gas and other petroleum products’ are activities expressly classified as essential under Presidential Decree 10,282 of March 20, 2020.

Although not directly linked to the COVID-19 pandemic, State Decree 47,007 of March 30, 2020 set up the Petroleum, Natural Gas and Biofuels Commission, with the objective of preparing a study, opinion and proposal for reform of the state legislation applicable to the oil, natural gas and its derivatives industry in the next 24 months. Thus, the State of Rio de Janeiro is investing in a state policy of economic development for the commercialization of oil, natural gas, biofuels and their derivatives compatible with the commercial and technological innovations of the sector, bringing legal certainty for its economic players, as yet another effort to to mitigate the future impacts of the COVID-19 pandemic.

Ricardo Coelho | rcoelho@pn.com.br

Marcello Lobo | mlobo@pn.com.br

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REAL ESTATE CONTRACTS

Like in many other practice areas and economic sectors, the COVID-19 pandemic brings and will continue to bring relevant impacts on the real estate industry. The oversight boards of the São Paulo and Rio de Janeiro State Courts of Appeals published instructions authorizing notary services, such as notary offices, real estate and deeds and documents register offices and other notary units to suspend their regular services and operate under standby regime, with reduced working hours. The same should occur with notary services in the other Brazilian States.

The city halls of most of municipalities in Brazil have been enacting similar rules, reducing the service hours and staying deadlines for issuance of licenses, permits and certificates. The São Paulo State Government officially suspended the activities open to the public, except those considered essential; this measure may impact the economic activities of real estate nature throughout the state (as has already been happening, for example, in the shopping center sector, which in the São Paulo State was expressly affected by State Decree No. 64,881).

In case of real estate contracts – especially lease agreements – allegations and discussions may arise on grounds of unforeseen circumstances or force majeure or excessive burden, claiming the termination, suspension or even justifying the default. As a general rule, the contracts were made to be fulfilled (pacta sunt servanda), accordingly, every situation should be analyzed case by case to verify whether a claim is actually needed or possible to rebalance or suspend the obligation given the impact the pandemic caused on each specific contractual relationship.

The same line of reasoning should be adopted in case of contractual relationships involving civil construction, building contracts, real estate developments and built-to-suit agreements in progress. Each case should be analyzed individually, based on the relevant circumstances and in light of applicable legislation to verify and assess the concrete impacts on the contractual rules.

In all scenarios of divergence resulting from the pandemic, it is always important that the matter is resolved through negotiations based on a spirit of partnership and good faith between the parties involved.

Franco Grotti | fgrotti@pn.com.br

Guilherme de Toledo Piza | gpiza@pn.com.br

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RESTRICTIONS ON FREEDOM OF MOVEMENT

■ Law No. 13,979 published on February 6, 2020 listed several measures that can be adopted in response to the public health emergency ensuing from the COVID-19 pandemic. Given the reputational and criminal exposure from contempt of any such measures, companies should carefully follow the official guidelines and keep their employees duly posted.

■ The following measures have been implemented, among others: (i) the Brazilian Ministry of Health (MoH) may set out the conditions and periods for isolation and quarantine; (ii) the MoH and the Ministry of Justice and Public Security (MJPS) may jointly provide for extraordinary and temporary restrictions on the movement of persons to and from Brazil; (iii) local health officials may order specific medical exams, laboratory tests, collection of clinical samples, vaccination or medical treatments. Persons are required to comply or else face liability (article 3, paragraph 4).

■ On March 17, 2020, the MoH and the MJPS issued a joint ordinance explaining that the contempt of an isolation, quarentine or other compulsory order for specific medical exams, laboratory tests or medical treatments may be viewed as a crime of ‘breach of preventive public health orders’ (Criminal Code, article 268) or ‘contempt’ (Criminal Code, article 330).

■ It was further established that the offender who signs a commitment to appear in proceedings and comply with the public health measures then in place will not be imprisoned. Besides, the police official may take the offenders to their residence or to a hospital establishment for compliance with the stated measures.

■ On March 20, 2020, the MoH declared the state of community transmission of COVID-19 nationwide, determining the home isolation of people with respiratory symptoms and those residing in the same address, for a period of 14 days; isolation must be prescribed by a doctor.

■ Also on March 20, 2020, the President of the Republic issued Provisional Measure 926 of 2020 amending Law 13,979 of 2020 in an effort to preserve, among other matters, the continuity of essential services and activities by determining that (i) all restrictive measures provided for in Law 13,979 of 2020 should ensure the functioning of essential activities and public services; (ii) quarantine, social isolation or temporary lockdown measures, when affecting essential activities and public services, can only be adopted in a specific act and provided that it is previously discussed with the regulatory body; (iii) the restriction of workers that may affect the functioning of essential activities and public services or otherwise impair the circulation of cargo leading to a supply shortage is prohibited.

■ At federal level, Decree 10,282 of 2020 provides a list of essential activities. Generally speaking, essential activities and public services are those indispensable for meeting the urgent needs of the community, as well as those that, if not met, would put at risk the

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population’s survival, health or safety1. Ancillary and support activities and the availability of the necessary inputs to the production chain for adequate exercise and functioning of essential activities and public services are also regarded as essential.

■ Moreover, Provisional Measure 926 of 2020 also expressly added to the rules on the circulation of people the possibility of controlling interstate and intrastate transportation. This Provisional Measure has already received several amendments from House Representatives and Senators, and has stirred up sheer controversy in that it could apparently strip state governors of the prerogative to define social isolation and quarantine measures. The Federal Supreme Court (STF) issued an injunctive relief ruling out this interpretation, in a decision rendered by STF Justice Marco Aurélio who made it clear that “legal writings and past STF rulings confirm the existence of concurrent jurisdiction.”2

■ Further into the objective of restricting the movement of people, the Chairman of the Federal Council of Justice (CNJ) recommended3 that judges across the country with criminal jurisdiction should suspend the provision of services to the community and to government entities on account of a sentence restricting rights, conditional termination of criminal suit, or criminal non-prosecution agreement.

■ On March 27, 2020, the restriction on entry to the country was extended to foreigners of all nationalities, for a period of 30 days (Ordinance 152 of the Chief of Staff), but no restrictions were placed on cargo transportation.

■ To support the Ministry of Health in actions to combat COVID-19, on March 30, 2020 the Ministry of Justice and Public Security authorized the use of the National Public Security Force. Concerning the movement of people, the National Force may assist in the application of coercive measures set out in Law 13,979 of 2020 and in Interministerial Ordinance 5, as well as in providing security and assistance in sanitary control activities carried out in ports, airports, highways and urban centers, coupled with overt patrolling or guarding to deter looting and vandalism.

■ Over the last week, Brazilian states and municipalities have concurrently rolled out specific rules on social distancing, isolation and quarantine measures.

1. Under Decree 10,282 of 2020, essential activities and public services encompass: (i) health care; (ii) public welfare and assistance to the vulnerable population; (iii) public and private security activities; (iv) national defense and civil defense activities; (v) intrastate, interstate and international passenger transportation and passenger transportation by taxi or ride hailing app services; (vi) telecommunications and internet; (vii) call center services; (viii) impounding, treatment and distribution of water; (ix) collection and treatment of sewage and garbage; (x) generation, transmission and distribution of electric power, including the provision of supplies for the operation and maintenance of the power stations and transmission and distribution system, in addition to production, transportation and distribution of natural gas; (xi) public lighting; (xii) production, distribution, trade and delivery, whether in person or through electronic commerce, of health, hygiene, food and beverage products; (xiii) funeral services; (xiv) storage, usage and control of radioactive substances, of nuclear equipment and materials; (xv) sanitary and phytosanitary surveillance and certifications; (xvi) prevention, control and eradication of vegetable pests and animal diseases; (xvii) inspection of foods, products and derivatives of animal or plant origin; (xviii) international agribusiness surveillance; (xix) air, water and land traffic control; (xx) payment, credit, withdrawal and deposit services provided by the institutions supervised by the Central Bank of Brazil; (xxi) postal services; (xxii) general cargo transport and delivery; (xxiii) services related to information technology and data processing (data center) to support other activities set forth in this Decree; (xxiv) tax and customs inspection; (xxv) production and distribution of cash to the population and maintenance of the technological infrastructure of the National Financial System and the Brazilian Payment Systems;; (xxvi) environmental monitoring; (xxvii) production of petroleum and production, distribution and commercialization of fuels, liquefied petroleum gas and other petroleum products; (xxviii) monitoring of constructions and dams that may pose a threat to security; (xxix) survey and analysis of geological data with the objective of ensuring collective security, notably by warning of natural risks and floods; (xxx) capital and insurance markets; (xxxi) care of captive animals; (xxxii) advisory activity in response to demands that are still in progress, as well as to urgent ones; (xxxiii) forensic medical activities related to social security, as provided for in article 194 of the Constitution; (xxxiv) forensic medical activities related to the characterization of physical, mental, intellectual or sensory impairment of people with disabilities; (xxxv) other forensic medical services inherent to Federal Medical Forensics as indispensable to meet the urgent needs of the community; (xxxvi) labor inspection; (xxxvii) research, scientific, laboratory or similar activities related to the pandemic; (xxxviii) judicial and extrajudicial representation, legal advisory and consulting activities performed by the public defenders in relation to the regular and timely provision of public services; (xxxix) any religious activities, subject to the determinations of the Ministry of Health; (lx) lottery retailers. On March 22, 2020, press related activities and services were also added to the list of essential activities (Decree 10,288 of 2020).

2. ADI 6,341, judgment dated March 24, 2020. 3. Recommendation 1 of March 25, 2020.

RESTRICTIONS ON FREEDOM OF MOVEMENT

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■ Current measures restricting the circulation of people are likely to be extended and/or new, more stringent measures are expected to limit even futher the movement of people in an effort to reduce the speed of COVID-19 spread.

Mário Panseri Ferreira | mpanseri@pn.com.br

Daniel Costa Rebello | drebello@pn.com.br

Natalia Lugero de Almeida | nlugero@pn.com.br

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SOCIAL SECURITY

■ Suspension of judicial procedural deadlines: Judicial deadlines for filing appeals and motions in general and administrative deadlines applicable in administrative litigation are suspended (except in the case of the Regional Federal Court, 4th Circuit, which encompasses the Brazilian states of Paraná, Santa Catarina and Rio Grande do Sul). Within the administrative sphere, CARF, the highest ruling court, issued Ordinance No. 7519 of 2020 postponing all judgment sessions.

■ Reduction in Contributions to Third Entities and Funds: Brazilian companies monthly pay Contributions to Third Entities and Funds (namely, FNDE, INCRA, SEBRAE, SESC, SENAC, SESI, SENAI, etc.) that are levied, on average, at a 5.8% rate on the entire payroll. The Brazilian Federal Revenue Office acts as a mere collecting agent of such contributions. The multimillion tax is collected and remitted directly to end beneficiaries, i.e. the third entities and funds. Provisional Measure 932 of 2020, recently issued to aid companies suffering from the significant economic impacts of the COVID-19 pandemic, has established a 50% reduction in the rates of contributions due to the so-called System S (save for INCRA and education allowance) from April 1, 2020 to June 30, 2020, which is likely to translate into savings at around BRL 2.2 billion.

■ Collection of federal debts: The Public Prosecutor’s Office for the National Treasury (PGFN) has recently issued Ordinances Nos. 7,820 and 7,821 of 2020, respectively suspending certain collection measures and enabling the negotiation of debts though extraordinary settlement, in response to the COVID-19 pandemic. More specifically, Ordinance No. 7,821 of 2020 allows companies to settle federal taxes already enrolled in the Federal Past-Due Liability Roster (CDA) by making a down payment of 1% of the total debt (in up to three monthly and successive installments) and the balance in up to 81 months (or 57 months, for social security contributions due by employers at 20% of the payroll).

■ Provisional Measure No. 905 of 2019: On March 17, 2020, the Joint Congressional Committee approved the Yellow and Green Employment Contract Provisional Measure that eases labor rules and establishes new rules on payment of Profit Sharing Plan amounts and awards, exempting them social security contributions. The Provisional Measure will now be taken to vote at a plenary session of the Senate and House of Representatives.

■ Ruling of leading cases postponed: The Federal Supreme Court (STF) has postponed the ruling scheduled for April 2, 2020 that was supposed to decide the matter involving the levy of social security contributions on maternity leave. Although the matter is of great social impact, the STF decided to exclude the leading case from its trial session. So far there is no indication as to the new date for judgment. The leading case related to the unconstitutionality of the contributions due to System S set to take place on April 30, 2020 has not been postponed yet.

■ Likely end of casting vote in CARF: The National Congress has approved a specific legal provision in Provisional Measure No. 889 of 2019 to end the casting vote in the highest administrative judgment sphere, CARF. This is a very positive measure, once many taxpayers lost the administrative litigation due to the casting vote that belongs to a representative of

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the Government. President Bolsonaro can still veto said provisional measure as approved. If he does not veto, the change will represent a chance for taxpayer to challenge in court past rulings of CARF involving social security assessments.

■ Possibility not to pay social security contributions during quarantine period: During the quarantine period, if employees are prevented from actually working (meaning, when home office is not possible or feasible, e.g. in the case of workers of an industrial plant), then based on Law 13,979 of 2020 a company could arguably not pay the social security contributions, which may result in tax savings of around 31.8% of its payroll. This is because the compensation paid under quarantine is converted into indemnification or cost assistance, and there is no effective work performed by the employees. Also, another argument is that the levy of payroll taxes should be suspended because we are facing a force majeure moment under an extreme crisis. We recommend filing a lawsuit to prevent the levy of said contributions.

■ Automatic extension of Clearance Certificates of Federal Taxes: The Brazilian Federal Revenue Office and the Public Prosecutor’s Office for the National Treasury (RFB/PGFN) issued Joint Ruling No. 555 of 2020 to extend for 90 days the validity of clearance certificates (certidões negativas) and of liability certificates with clearance effects (certidões positivas com efeitos de negativas) related to federal taxes. Therefore, companies with pending social security debts will continue with their certificates valid during such 90-day term, regardless of the debts.

Cristiane I. Matsumoto | cmatsumoto@pn.com.br

Mariana Monte Alegre de Paiva | mpaiva@pn.com.br

Lucas Barbosa Oliveira | loliveira@pn.com.br

SOCIAL SECURITY

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TAX

Amid the COVID-19 crisis, new tax measures were announced over the past week aimed at providing emergency assistance to companies, including by reducing and deferring the payment of certain taxes.

MEASURES IMPLEMENTED BY THE FEDERAL AUTHORITIES

IOF, PIS, COFINS AND IRPF TAXES – MEASURES ALREADY ANNOUNCED BY THE MINISTRY OF THE ECONOMY

In a press conference held last Wednesday April 1, 2020, the Ministry of the Economy announced the following measures:

■ The IOF rate was reduced to zero for 90 days; ■ The PIS, Pasep and Cofins contributions were deferred to August and October 2020 (instead of

April and May 2020); ■ Delivery of individual income tax returns (IRPF) was postponed to June 30, 2020 (formerly, April

30, 2020).

All of these measures are yet to be formalized in the coming days so that they may become effective.

IPI TAX – DECREE 10,302 OF 2020 AND DECREE 10,285 OF 2020

Another important measure adopted this Wednesday April 1, 2020 was the temporary reduction of IPI tax on products related to the fight against COVID-19 (Decree 10,302 of 2020).

Laboratory and pharmacy articles, gloves, mittens and clinical thermometers had their IPI tax rates reduced to zero. This reduction takes effect forthwith, and will extend until September 30, 2020.

Decree 10,285 of 2020 had already reduced on March 20, 2020 the IPI tax rate on alcohol-based hand rub, disinfectants, masks, protective clothing and several other products used in the fight against COVID-19.

Below is a list of the products subject to IPI tax at a zero rate (effective until September 30, 2020):

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ITEM CODE TIPI

Laboratory or pharmacy items 3926.90.40

Gloves, mittens and the like, except for surgery 4015.19.00

Clinical thermometers 9025.11.10

Ethyl alcohol with alcohol content at 70% or more, unfit for human consumption 2207.20.19

Disinfectants in forms or packaging exclusively for direct use in household cleaning applications, containing bromomethane (methyl bromide) or bromochloromethane, except those classified in Ex 01

3808.94.11

Other disinfectants in forms or packaging exclusively for direct use in household cleaning applications, except those classified in Ex 01 3808.94.19

Antiseptic gel, based on 70% ethyl alcohol, containing, among others, humectants, thickener and pH regulator, suitable for hand hygiene 3808.94.29

Plastic protective clothing and accessories 3926.20.00

Plastic loop for individual protection mask, suitable for attaching the tie rod to the user's head 3926.90.90

Plastic nasal clip, suitable for individual protection mask 3926.90.90

Clip nasal e grampos metálicos em ferro ou aço, próprio para máscara de proteção individual 7326.20.00

Safety glasses 9004.90.20

Goggles 9004.90.90

Electrodiagnostic devices for controlling hemoglobin saturation by oxygen in arterial blood, called oximeters 9018.19.80

Poly (vinyl chloride) catheters, for thermodilution 9018.39.23

TAX

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ITEM CODE TIPI

Laryngeal tube, plastic, suitable for routine anesthetic or surgical procedures, with spontaneous and/or controlled ventilation 9018.39.99

Ozone therapy, oxygen therapy, aerosol therapy devices, respiratory resuscitation devices and other respiratory therapy devices 9019.20

Protective masks and facial shields, against potentially infectious materials 9020.00.90

Clip nasal e grampos metálicos em ferro ou aço, próprio para máscara de proteção individual 7326.20.00

Safety glasses 9004.90.20

Goggles 9004.90.90

Electrodiagnostic devices for controlling hemoglobin saturation by oxygen in arterial blood, called oximeters 9018.19.80

Poly (vinyl chloride) catheters, for thermodilution 9018.39.23

Laryngeal tube, plastic, suitable for routine anesthetic or surgical procedures, with spontaneous and/or controlled ventilation 9018.39.99

Ozone therapy, oxygen therapy, aerosol therapy devices, respiratory resuscitation devices and other respiratory therapy devices 9019.20

Protective masks and facial shields, against potentially infectious materials 9020.00.90

ORDINANCE NO. 7,820 OF 2020

SCOPE

Sets out the conditions for extraordinary settlement of past-due debts owed to the Federal Government (DAU), in response to the impact of the COVID-19 pandemic in the cash generation capacity of DAU blacklisted debtors.

TAX

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ADHERENCE

The extraordinary settlement will occur by adhering to the PGFN proposal solely through the REGULARIZE platform (www.regularize.pgfn.gov.br).

BENEFITS

The extraordinary settlement of DAU will take place as follows:

■ a down payment corresponding to 1% of the total eligible debt may be broken down into up to three equal consecutive installments;

■ the outstanding debt may be paid in up to 81 months, or up to 97 months when the debtor is a natural person, sole proprietor, microenterprise or small-sized company (for employer or employee social security contributions, the term is 57 months);

■ the first installment under the debt rescheduling scheme is deferred to the last business day of June 2020.

VOLUNTARY DISMISSAL

As a condition to qualify debts under court dispute to the settlement proposal, the debtor must put forward a copy of the request for voluntary dismissal of lawsuits, defenses or appeals related to those debts, expressly moving for termination of the case with prejudice.

TAX LIENS

Adherence to the extraordinary settlement implies an automatic maintenance of the tax liens arising from listing of assets, precautionary measures in tax matters, and posting of bond in administrative proceedings or in tax enforcement claims (or other lawsuits).

EXISTING TAX RELIEF SCHEMES

For existing tax relief schemes, adhering to the extraordinary settlement is conditioned to voluntary termination of the program in course, and the down payment will be at 2% of the consolidated amount.

TERM

Adherence to the extraordinary settlement, originally subject to the March 25, 2020 deadline, may now occur throughout the effectiveness of Provisional Measure No. 899 of 2019, which the National Congress has already greenlighted for passage into law (pending presidential sanction only).

TAX

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ORDINANCE NO. 7,821 OF 2020This ordinary provides for suspension of the time periods and administrative collection measures, as detailed below:

SCOPE

Sets out temporary measures taken by the Attorney General’s Office for the National Treasury to prevent the spread of the COVID-19 pandemic declared by the WTO.

SUSPENDED PROCEDURES

The following are suspended for 90 days:

■ the period for defenses and appeals against decisions on an Administrative Liability Proceeding (PARR);

■ the period for presenting an opposition (manifestação de inconformidade) or appeal against decision on exclusion from the PERT tax relief scheme;

■ the period for advance posting of bond in tax enforcement claims; and ■ the period to file an application for review of past-due debt liability (PRDI) or to appeal against

an unfavorable decision.

SUSPENDED MEASURES

The following collection and enforcement measures are suspended for 90 days:

■ protest claims in a past-due debt liability certificate (CDA); ■ fling of new PARR; ■ procedures for exclusion of defaulting taxpayers from tax relief schemes administered by the

PGFN.

ORDINANCE NO. 103 OF 2020This ordinary sets out measures related to collection of past-due debts owed to the Federal Government, dealing with suspension, extension and deferral issues as follows:

SCOPE

Sets out the measures related to collection and enforcement of Federal Government past-due liability debts, including suspension, extension and deferral measures, in response to the COVID-19 pandemic declared by the WTO, and makes other provisions.

AUTHORIZED MEASURES

The PGFN is authorized to suspend for 90 days:

TAX

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■ the periods for taxpayer defense in administrative proceedings for collection and enforcement of past-due debts owed to the Federal Government (DAU);

■ presentment of DAU certificates for non-judicial protest; ■ filing of new proceedings against taxpayers for collection and liability purposes; and ■ procedures for termination of tax relief schemes in case of non-payment.

SETTLEMENT

The PGFN is authorized to offer a settlement proposal by adherence in connection with past-due debts owed to the Federal Government (DAU), in the form of a down payment at 1% of the debt plus a 90-day deferral of the other installments.

For ease of reference, the chart below compares the measures taken by the Ministry of the Economy and the PGFN:

ORDINANCE NO. 7,820 OF 2020

ORDINANCE NO. 7,821 OF 2020

ORDINANCE NO. 103 OF 2020

SCOPE

Sets out the conditions for extraordinary settlement of past-due debts owed to the Federal Government (DAU), in response to the impact of the COVID-19 pandemic in the cash generation capacity of DAU blacklisted debtors.

Sets out temporary measures taken by the Attorney General’s Office for the National Treasury to prevent the spread of the COVID-19 pandemic declared by the WTO.

Sets out the measures related to collection and enforcement of Federal Government past-due liability debts, including suspension, extension and deferral measures, in response to the COVID-19 pandemic declared by the WTO, and makes other provisions

TAX

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ORDINANCE NO. 7,820 OF 2020

ORDINANCE NO. 7,821 OF 2020

ORDINANCE NO. 103 OF 2020

BENEFITS

The extraordinary settlement will occur by adhering to the PGFN proposal solely through the REGULARIZE platform (www.regularize.pgfn.gov.br).

The following are suspended for 90 days:

■ the period for defenses and appeals against decisions on an Administrative Liability Proceeding (PARR);

■ the period for presenting an opposition (manifestação de inconformidade) or appeal against decision on exclusion from the PERT tax relief scheme;

■ the period for advance posting of bond in tax enforcement claims; and (iv) the period to file an application for review of past-due debt liability (PRDI) or to appeal against an unfavorable decision.

The PGFN is authorized to suspend for 90 days:

■ the periods for taxpayer defense in administrative proceedings for collection and enforcement of past-due debts owed to the Federal Government (DAU);

■ presentment of DAU certificates for non-judicial protest;

■ filing of new proceedings against taxpayers for collection and liability purposes; and

■ procedures for termination of tax relief schemes in case of non-payment.

TAX

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ORDINANCE NO. 7,820 OF 2020

ORDINANCE NO. 7,821 OF 2020

ORDINANCE NO. 103 OF 2020

BENEFITS

The extraordinary settlement of DAU will take place as follows:

■ a down payment corresponding to 1% of the total eligible debt may be broken down into up to three equal consecutive installments;

■ the outstanding debt may be paid in up to 81 months, or up to 97 months when the debtor is a natural person, sole proprietor, microenterprise or small-sized company (for employer or employee social security contributions, the term is 57 months); and

■ the first installment under the debt rescheduling scheme is deferred to the last business day of June 2020.

The following collection and enforcement measures are suspended for 90 days:

■ protest claims in a past-due debt liability certificate (CDA);

■ fling of new PARR; ■ procedures for exclusion

of defaulting taxpayers from tax relief schemes administered by the PGFN.

The PGFN is authorized to offer a settlement proposal by adherence in connection with past-due debts owed to the Federal Government (DAU), in the form of a down payment at 1% of the debt plus a 90-day deferral of the other installments.

BENEFITS

A adesão à proposta de transação relativa a débitos objeto de discussão judicial fica sujeita à apresentação, pelo devedor, de cópia do requerimento de desistência das ações, impugnações ou recursos relativos aos créditos transacionados, com pedido de extinção do respectivo processo com resolução de mérito.

TAX

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ORDINANCE NO. 7,820 OF 2020

ORDINANCE NO. 7,821 OF 2020

ORDINANCE NO. 103 OF 2020

BENEFITS

As a condition to qualify debts under court dispute to the settlement proposal, the debtor must put forward a copy of the request for voluntary dismissal of lawsuits, defenses or appeals related to those debts, expressly moving for termination of the case with prejudice.

BENEFITS

Adherence to the extraordinary settlement implies an automatic maintenance of the tax liens arising from listing of assets, precautionary measures in tax matters, and posting of bond in administrative proceedings or in tax enforcement claims (or other lawsuits).

BENEFITS

For existing tax relief schemes, adhering to the extraordinary settlement is conditioned to voluntary termination of the program in course, and the down payment will be at 2% of the consolidated amount.

TAX

JOINT ORDINANCE PGFN/RFB 555 OF 2020The Brazilian Federal Revenue Office and the National Treasury Public Prosecutor’s Office issued Joint Resolution 555 on March 23, 2020, extending for 90 days the validity of clearance certificates related to federal tax debts and federal past-due liabilities (dívida ativa da União Federal) and still valid on that date (March 23, 2020).

In addition to the recent measures taken by the Executive Branch (more particularly, by the Ministry of the Economy and by the National Treasury Public Prosecutor’s Office) to mitigate the evident impacts of the COVID-19 pandemic on the Brazilian economy, the Legislative has also followed suit by issuing a slew of measures and regulations, some of which are outlined below:

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INITIATIVE HOW IT HELPS

Approval of Bill 2/20 from conversion of Provisional Measure 899 of 2020 (MP of Legal Taxpayers).

*Pending presidential sign-off.

Gives taxpayers an opportunity to enter into a settlement for payment of federal tax or non-tax liabilities; keeps open the possibility of extraordinary settlement listed among the measures listed by the National Treasury Public Prosecutor’s Office (Ordinance 7,820 of 2020); and establishes that a tie result in administrative judgments must end the dispute favorably to taxpayers.

Approval of Bill 9/20 Permits a settlement arrangement for debts owed under the Simples taxation system.

Approval of Legislative Decree Bill 88 of 2020 (“PDL on State of Public Calamity”)

Relaxes the limitations set out in the Fiscal Responsibility Act and, by so doing, makes it easier for the Government to incur expenses and take additional measures in response to the COVID-19 pandemic, initially until December 2020. A joint congressional committee will keep close track (along with Economy Minister Paulo Guedes) on the fiscal condition and on the budget and financial implications of emergency measures.

MEASURES IMPLEMENTED BY THE STATE AUTHORITIES At state level, several measures were taken to postpone the fulfillment of ancillary obligations and to exempt products used in the fight against the COVID-19 pandemic.

ACRE

Decree 5,630 of 2020 extended the deadline for fulfillment of several ancillary obligations, as well as the validity of tax good standing certificates.

ALAGOAS

Normative Ruling 10 of 2020 suspended the term for tax administrative proceedings, and stayed the period for fulfillment of several ancillary obligations.

BAHIA

Decree 19,568 of 2020 exempted several hygiene products and hospital articles from ICMS tax.

TAX

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CEARÁ

Decree 33,526 of 2020 extended the deadlines for fulfillment of several ancillary obligations and stayed the time periods for state tax administrative proceedings.

FEDERAL DISTRICT

Law 6,521 of 2020 reduced the ICMS tax rate for several products involved the fight against COVID-19.

ESPÍRITO SANTO

Decree 4,603 of 2020 stayed the time periods for state tax administrative proceedings.

GOIÁS

Normative Ruling GSE 1,458 of 2020 extended the period for fulfillment of several ancillary obligations.

MARANHÃO

Ordinance GABIN 102 of 2020 stayed the time periods for state tax administrative proceedings.

MATO GROSSO

Decree 424 of 2020 exempted from ICMS tax several products involved the fight against COVID-19.

Decree 427 of 2020 exempted from ICMS tax other products involved the fight against COVID-19.

MATO GROSSO DO SUL

Decree 15,401 of 2020 extended the deadline for fulfillment of several ancillary obligations, as well as the validity of tax good standing certificates.

Decree 15,397 of 2020 stayed the time periods for state tax administrative proceedings.

MINAS GERAIS

Decree 47,898 extended the validity of tax good standing certificates.

TAX

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RIO DE JANEIRO

Decree 46,982 of 2020 extended the period of payment of installments related to past-due debts (dívida ativa).

RONDÔNIA

Decree 24,908 of 2020 extended the validity of tax good standing certificates.

Decree 24,909 of 2020 extended the deadlines for payment of ICMS tax under certain circumstances.

SERGIPE

Decree 40,566 of 2020 extended the deadline for fulfillment of several ancillary obligations, and changed the countdown for tax administrative proceedings.

MEASURES IMPLEMENTED BY THE MUNICIPAL AUTHORITIES

SÃO PAULO

Decree 59,283 of 2020 stayed the time periods for municipal tax administrative proceedings.

RIO DE JANEIRO

Decree 47,264 of 2020 stayed the time periods for municipal tax administrative proceedings, and extended the validity of tax good standing certificates

Tércio Chiavassa | tchiavassa@pn.com.br

TAX

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COVID-19 LEGISLATION CLIPPINGAs the novel coronavirus spreads across the country, new rules and administrative measures in response to the COVID-19 pandemic are published at all government instances. To help you keep abreast of legal developments, we have prepared a clipping on the main COVID-19 legislation issued by the Federal Government and by the most affected states and municipalities. Check it here

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FINAL REMARKS

Companies must continue to keep close track of the global developments related to the COVID-19 pandemic and consider the need of adopting additional measures or actions. We recommend that companies always seek legal advice on specific circumstances as they come up. We are following up closely on the facts and their developments, and are ready for any help or legal advice.

SÃO PAULO

R. Hungria, 1.100 01455-906 São Paulo . SP t. +55 (11) 3247 8400 f. +55 (11) 3247 8600

RIO DE JANEIRO

R. Humaita, 275 . 16° andar 22261-005 Rio de Janeiro . RJ t. +55 (21) 2506 1600 f. +55 (21) 2506 1660

BRASÍLIA

SAFS. Quadra 2 . Bloco B Ed. Via Office . 3° andar 70070-600 Brasília . DF t. +55 (61) 3312 9400 f. +55 (61) 3312 9444

PALO ALTO

228 Hamilton Avenue, 3rd floor CA 94301 USA t. +1 650-798-5068

TOKYO

1-6-2 Marunouchi Chiyoda-ku - 21st floor 100-0005 Tokyo – Japan tel: +81 (3) 3216 7191

pinheironeto.com.br

Pinheiro Neto