Brazilian provisional measures amidst the economic crises caused by CORONAVIRUS PANDEMIC
To curb the consequences in the midst of one of the worst health and economic crises in the world, President Jair Bolsonaro has already instituted several Provisional Measures “against” the Coronavirus, which are:
• MP 921/2020 published on February 10, 2020: release of R$ 11.2 million to the Ministry of Defense in order to cover expenses in connection with “Operation Rescue” to withdraw isolated Brazilians in Wuhan province.
• MP 924/2020 published on March 13, 2020: granting of extraordinary credit in the amount of R$ 5 billion to the Ministries of Health and Education, aiming at (i) the acquisition of hospital supplies and personal protective equipment; (ii) training and qualification of health agents; (iii) purchase of tests for COVID-19; (iv) availability of beds in ICUs; and (v) financial support to States, the Federal District and Municipalities to implement health care measures.
• MP 925/2020 published on March 19, 2020: institutes emergency measures for Brazilian civil aviation such as: (i) twelve-month deadline for returning value of trips purchased until December 31, 2020 and canceled due to the pandemic; (ii) reimbursement by means of a credit to be used within twelve months from the date of the contracted flight, exempting consumers from the contractual penalties; and (iii) postponement to December 18, 2020 of the deadline for the 22 airports under the private sector management to pay fixed and variable contributions.
• MP 926/2020 published on March 20, 2020: establishes the closure of airports and highways to be within federal jurisdiction, listing the definition of services considered as emergency.
• MP 927/2020 published on March 22, 2020: provides for labor measures to face the state of public calamity recognized in Legislative Decree No. 6 of March 20, 2020. The most controversial measure was the authorization for companies not to pay salaries to their employees for four months; however, in the face of serious criticism, a new MP was instituted shortly afterwards to suspend the text.
• MP 928/2020 published on March 23, 2020: the main matter was to revoke art. 18 of MP 927/2020, which authorized companies not to pay salaries to their employees for a period of 4 four months; it also, however, imposed restrictions to the Law of Access to Information (Law No. 13,979 of 02/06/2020), the main one being the suspension of deadlines for public administration bodies or entities to respond to requests for access to information.
• MP 929/2020 published on March 25, 2020: provides for the release of extraordinary credit in the amount of R$ 3.4 billion to the Ministries of Science Technology, Innovation and Communication, Defense and Citizenship, most of which was directed to the Bolsa Família (monthly cash aid to very low-income families). Highlighting that this Provisional Measure allows the President of the Republic to increase public expenditures (without describing their origin) and breach the fiscal target set for 2020.
• MP 931/2020, published on March 30, 2020: brings changes to corporate laws (Law 6,404/76 – Corporations Law, Law 10,406/02 – Civil Code and Law 5,764/71 – Cooperatives Law) relating to corporations (both closely- and publicly-held), limited liability companies and cooperatives, including State-owned and mixed-capital companies and their subsidiaries (not applicable to associations and foundations) to wit:
° Postponement of general meetings and terms of office: for the fiscal years ending between 12/31/2019 and 3/31/2020, it provides for the optional extension of the term for holding Ordinary General Annual Meeting from the original of 4 months as from of the end of each fiscal year to 7 months therefrom (and, consequently, an extension for the same period for the terms of office of the members of the corporate bodies (executive board, board of directors, fiscal council) that would expire, until the General Meeting or the Meeting of the Board of Directors, as the case may be, is held.
° Distance participations and voting in general meetings: authorization for distance participation and voting of general meetings of limited liability companies, closely-held corporations (to be regulated by the Board of Trades’ Regulatory Agency – DREI/ME) and publicly-held corporations (to be regulated by CVM – Brazilian Securities Exchange Commission).
° Filings at the State Boards of Trade: corporate acts filed at the Board of Trade, which normally are deemed effective on their date of execution as long as they are filed within the subsequent 30 days (retroactive effect), will have those 30 days counted as of the reinstatement of the services of the respective Board of Trade rather than as of the execution date (as provided for in art. 36 of Law 8.934/1994).
° Prior Filing Requirements: as of March 1st, 2020, the requirement of prior filing of an act for the issuance of securities and for other legal transactions is waived, which must be further carried out within 30 days after the reinstatement of the services of the corresponding Board of Trade.
° In the specific case of Corporations:
· Until the General Annual Meeting is held, the Board of Directors (or the Executive Board, if there is no Board of Directors) may declare interim dividends (Section 204), with no need to amend their bylaws for that purpose.
· The Board of Directors may also decide urgent matters subject to further approval (ad referendum) of the General Meeting, except if otherwise expressly provided for in the bylaws.
· Authorization to CVM to extend the deadlines provided for in the Corporations Law applicable to publicly-held corporations, including the date for submission of their financial statements.
