quinta-feira, 30 de julho de 2015

Never open a branch or representative office in Brazil. Incorporate a new company instead.

The option for incorporating a new company is almost always the best one. 

This happens because the oppening of a branch is burdened by several difficulties. The main ones being: 

i) branches are subject to previous authorization by the Federal Government, which must be obtained in Brasilia;

ii) the foreign entity that owns the branch must print, in an official newspaper in Brazil, all its financial statements and main board decisions. This is not required when a new company is incorporated;

iii) every year, the local branch must publicize, in an official newspaper in Brazil, its financial statements and L&P reports. This is not required for Brazilian Limited Liability Companies, except when they reach considerable size;

iv) branches are subject to direct overview by the public prosecutor's office;

v) registration procedures are lengthier and more complicated;

vi) according to Brazilian law, acts of the branch may generate direct liability to the controlling company, abroad. 

On top of that, there is no tax advantage in operating via a branch instead of using a 
new corporate vehicle.

quinta-feira, 23 de julho de 2015

New regulatory framework of the Brazilian Telecom infrastructure

A guest post by Monica Salles, esq. She is my classmate from college and a very succesful and respected lawyer, practicing on administrative and regulatory law. 

New regulatory framework of the Telecom infrastructure

Special article by Monica Salles, esq.

The new law provided a simplified licensing procedure of supporting infrastructure installation in urban areas.

Tuesday, July 7, 2015

On April 22 it was enacted the Federal Law 13,116 (General Law of antennas) which stablished general rules for the procedures of licensing, installation and sharing telecommunications infrastructure. The new law is the result of a long-standing demand of the mobile phone and internet market, which suffered from the diversity and divergence contained in more than 250 local laws on the matter.

Focusing on reducing bureaucracy, the new law provided a simplified licensing procedure for the installation of supporting infrastructure in urban areas. The license request will be sent to a single administrative unit of each organism and if an environmental licensing is necessary, this should occur in an integrated manner. Procedures must meet the deadline of 60 days within which the responsible administrative unit may request clarifications and additional information just once. States and municipalities have spoken about the failure of this term, considering that until then the processes demanded about 6 months. Nevertheless they will have to adapt themselves to the new rules.

In order to encourage investments in the sector, it was established that the term of the license may not be less than 10 years and it will be renewable for equal periods. Still, it was forbidden to charge, by the federal agencies, the right of passage of the structures in public roads and other public property of common use (even when they are delegated to private entities). The licensee shall pay only the costs of installation, maintenance and removal of the structures.

The optimization of the installed structures was also sought with the new law. Therefore, the sharing of the capacity in excess becomes mandatory, observed reasonable conditions and prices. The non-sharing will be possible only in cases of justified technical reasons. As for the new antennas, these should be designed to allow sharing the capacity in excess by the largest possible number of providers. In order to prevent the market reserve in the use of towers, sharing shall occur, moreover, in a "isonomic, non-discriminatory fair and reasonable prices and conditions."

The new regulation also provides about the preservation of the landscape and the urban aspects of cities. It started to be required, for example, that the structures cause the least possible impact on the landscape and respect the use of squares and parks and the movement of pedestrians, cars and cyclists. The expansion of the stations structures required, moreover, a concern with the health of people who are exposed to the electromagnetic fields generated. Therefore, it determined the establishment and the compliance with limits for human exposure to the fields.

It is interesting to note that six of the Law devices have been object of veto by the President: the item III of art. 4, item II of art. 13, the heading and § 2 of art. 21 and articles 22 and 23.

The item III of art. 4 predicted that the Government should promote the necessary investments and make the installation process or frequent replacement of the network elements and their supporting infrastructure. However, it was understood that this forecast could lead to the understanding that the Government would be responsible for bearing the investments required for the expansion of the facilities or for the replacement of the network elements and infrastructure, which would reverse the funding assumption of private investment on the sector.

Vetoes of caput and §2 of the art. 21, and of the articles 22 and 23 came from the understanding of the Ministry of Finance, that such devices would end up restricting excessively the freedom of the companies which provide the services in the definition of the investment strategies, what could hamper the implementation of technological innovation and the competition.

Finally, we refer to the veto of item II of art. 13, which would stablish the responsibility of the Federal Government body to grant the authorization for the installation of the antenna, if the municipality does not fulfill the deadline of 60 days. On one hand the veto had an important role to maintain the federal pact, considering the division of powers established in the Constitution, on the other hand, there remained a gap in the Law about the consequences of the failure to meet the deadline of 60 days by the municipality. This can be a source of disagreement about the consequences of disregard of deadlines by the federal entities, and even jeopardize the purpose of the standard to reduce the bureaucracy on the procedures.

Translated by Jessica Holl, from Brazilianlawblog
Original in Portuguese available at: