Finocchio & Ustra Sociedade de Advogados

KEYWORDS/SCOPE Shifting of the burden of proof, Brazilian judiciary, Civil procedure, Consumer Protection Code. SUMMARY The shifting of the burden of proof presents challenges to the defense and underscores the importance of legal strategies in Brazil. TEXT Foreign companies operating in Brazil must adapt not only to commercial and cultural differences, but also to the unique features of the local legal system. One such feature is the possibility of shifting the burden of proof - a legal mechanism that can significantly affect how companies should prepare to handle litigation in the country. This procedural dynamic is an exception to the traditional rule that each party must prove the facts it alleges, allowing, in certain situations, the defendant to be required to demonstrate the nonexistence of facts alleged against them. In Brazilian civil procedure, the general rule for the allocation of the burden of proof is set forth in Article 373 of the Code of Civil Procedure (CPC), which establishes that the plaintiff must prove the facts constituting their right, while the defendant is responsible for proving facts that prevent, modify, or extinguish the plaintiff’s right. However, this allocation can be modified by legal provision or by judicial decision, based on the principles of procedural effectiveness and access to justice. The most notable example of a legal provision for the shifting of the burden of proof is found in Article 6, item VIII, of the Consumer Protection Code (CDC). According to this provision, the judge may shift the burden of proof in favor of the consumer when the consumer’s allegations are plausible or when the consumer is at a disadvantage, whether technical, informational, or economic. In practice, this means that, when faced with a reasonable and plausible allegation by the consumer, the supplier may be required to demonstrate, for example, that the product was not defective, that the service was properly provided, or that the information given was clear and sufficient. Although the shifting of the burden of proof under the CDC depends on a reasoned judicial decision, Brazilian case law has shown a strong tendency to apply this mechanism broadly, in order to ensure consumer rights, as consumers are recognized as the vulnerable party in consumer relations. This creates a scenario in which companies must act preventively and strategically, considering that they may be required to produce evidence that, in other legal systems, would be the sole responsibility of the plaintiff. The Code of Civil Procedure, in turn, extends the scope of the shifting of the burden of proof beyond consumer relations. In Article 373, paragraph 1, the CPC provides that the judge may reallocate the burden of proof in cases where producing evidence would be excessively difficult for one party or when the other party is in a better position to produce it. This possibility, although dependent on a request by the parties and governed by the principle of adversarial proceedings, allows the judiciary to adapt the traditional structure of evidentiary allocation in pursuit of substantive justice in the specific case. For companies operating in Brazil, this characteristic of the procedural system is a significant point of attention. The shifting of the burden of proof can result in additional costs, both in the pre-litigation phase and during the course of judicial proceedings, and represents a concrete risk of an adverse judgment in cases where there is insufficient documentary evidence to refute the opposing party’s allegations. In disputes involving consumers, for example, it is common for the company to have to prove that it provided clear and adequate information, that there was no failure in product delivery, or that billing was correctly performed. The absence of evidence or disorganized documentation may lead to a judicial presumption of the company’s liability. For this reason, foreign companies operating in Brazil should adopt strict internal policies for recording interactions with customers, maintain effective systems for tracking products and services, invest in the formalization of contracts and terms of use, and train their legal and operational teams to handle litigation involving the shifting of the burden of proof. Prevention and organization are essential to mitigate risks and avoid losses resulting from an unfavorable allocation of the burden of proof. In summary, the shifting of the burden of proof in the Brazilian judiciary is a tool designed to promote procedural balance and effectiveness in judicial proceedings, but at the same time, it imposes concrete obligations and challenges on companies operating in the country. Understanding this mechanism and preparing accordingly is essential to ensure legal certainty, reduce contingencies, and protect the reputation and sustainability of business operations in Brazil. AUTHORS Raissa Simenes Martins – Partner (Corporate Litigation & Dispute Resolution) Ana Lígia Alves F. Fantinato – Coordinator (Corporate Litigation & Dispute Resolution) Luiza Pattero Foffano – Senior Associate (Corporate Litigation & Dispute Resolution) Isadora Proença Cruz – Intern (Corporate Litigation & Dispute Resolution)

Keywords: [secondary debtor; labor enforcement; Brazilian labor courts; labor liability; service provision; service contractor; TST;] Summary: Brazil’s Superior Labor Court now allows enforcement directly against subsidiary debtors once the main employer defaults, heightening companies’ financial exposure and demanding stricter oversight of third-party contractors. Text: In a recent virtual full-bench session, the TST reaffirmed 17 legal theses, transforming them into binding precedents in accordance with Article 896-C, paragraph 1 of Brazil’s Labor Code (CLT). This mechanism, enhanced by Internal Rule Amendment No. 7/2024, aims to standardize national case law and streamline proceedings on matters already consistently settled by the Court’s Panels and the Specialized Individual Disputes Section (SDI-1). Among the topics addressed was the enforcement of judgments against secondary debtors. The precedent was established in the judgment of Case No. RR 247-93.2021.5.09.0672 and reads as follows: “Labor enforcement may be redirected to the subsidiary debtor upon confirmation of default by the principal debtor, without the need to first exhaust attempts to collect from the primary employer or its shareholders.” This binding formulation now applies to all Brazilian labor courts and has significant implications for companies that outsource services. Specifically, it eliminates the requirement to first attempt collection from the primary debtor before pursuing enforcement against the company held secondarily liable. Broader Impact on Service Contracting Companies This new precedent reinforces an interpretation that has already prevailed within the TST, particularly after the cancellation of the former Precedent No. 12, which had previously required prior attempts at enforcement against the primary employer. The new understanding prioritizes the efficiency of labor enforcement by allowing immediate redirection to the secondary debtor — even in cases of partial default. While this is not a doctrinal innovation, the new binding nature of the rule drastically alters its legal force and imposes a stricter procedural obligation on lower courts. Judges at the trial and appellate levels are now required to apply this thesis without exception, barring extremely rare and well-justified circumstances. From a corporate perspective, the precedent requires companies to reassess the risks involved in outsourcing. Given that mere nonpayment by the service provider can now trigger direct enforcement against the contractor, the financial liability of companies — particularly those engaging with small or undercapitalized service providers—becomes more acute. Practically speaking, this removes from the secondary debtor the ability to challenge the order of liability during enforcement. Defense strategies must now focus on well-established arguments, such as the lack of fault in monitoring the service contract (when applicable) or procedural nullities in the earlier litigation phase. Strategic and Preventive Measures for Companies In light of the new binding precedent, companies must take a more proactive approach to managing labor risk in third-party engagements. Essential steps include: Strengthening third-party due diligence, including tighter selection, monitoring, and auditing procedures; Maintaining up-to-date documentation that proves the labor and contractual compliance of service providers; Drafting more robust contractual clauses, clearly allocating risks and obligations for cost reimbursement; Pursuing timely indemnification claims when early enforcement leads to financial loss. A Shift Toward Enforcement Efficiency in Labor Law The formal adoption of the thesis in RR 247-93.2021.5.09.0672 underscores a broader institutional trend: strengthening the effectiveness of labor enforcement at the expense of some traditional creditor protections found in civil law. For corporate counsel, this means adopting an even more preventive and strategic posture. While case law standardization may enhance legal predictability, it does not eliminate risk; rather, it calls for careful legal planning and proactive governance. In this new environment, companies must closely monitor outsourced contracts and act decisively during the early litigation phase to reduce the chance of being held financially liable. Finally, the procedural innovation introduced through Internal Rule Amendment No. 7/2024 — and the use of virtual sessions for jurisprudential reaffirmation — highlights the TST’s commitment to procedural modernization and consistent case law. However, it also signals the urgent need for companies to adapt their contractual and litigation strategies to avoid unnecessary liabilities. Veridiana Moreira Police – Partner (Labor, Employment and Social Security) Brunna Louise Spedro Arantes - Senior Associate (Labor, Employment and Social Security)

The corporate law team at Finocchio & Ustra Sociedade de Advogados advised A9 — a company founded with the mission of transforming agribusiness through innovation, agility, and trust — in the acquisition of strategic assets from Coplacana, one of the most traditional and respected agribusiness cooperatives in Brazil. Established in 1948, Coplacana is headquartered in Piracicaba, São Paulo. The transaction represents a strategic move to establish A9’s presence in the agro-industrial market and to consolidate its position as the largest dealership of a leading agricultural machinery brand in the state of São Paulo. Already present at Agrishow 2025 — one of the world’s largest agricultural technology trade shows and the leading agribusiness event in Latin America — A9 reaffirms its commitment to delivering solutions at the pace agribusiness demands, with ethics, ambition, and results. The transaction was conducted by partner of the corporate and M&A Andrea Tincani, with the participation of Marcelo Schwartzmann, partner of the environmental practice, Camila de Godoy Ferreira, Letícia Flaminio, Júlia Bueno da Conceição and Giovana Silva, all from Finocchio & Ustra.

International Research and Development (R&D) agreements have become increasingly significant worldwide, as companies pursue global competitiveness, technological advancement, and integration into international value chains in response to growing demands for innovation. These agreements, however, become significantly more complex when they involve global partners, which demands careful alignment between international contractual standards and domestic legal frameworks, particularly concerning intellectual property (IP) protection and adherence to local regulatory requirements. Brazil, in particular, represents a strategic market, especially in sectors like pharmaceuticals, animal health, and biotechnology, considering that the country has one of the largest and most dynamic consumer markets in Latin America, a robust agricultural and industrial base, and an expanding innovation ecosystem supported by renowned research institutions. However, proper management of Intellectual Property (IP) is critical for these agreements to fulfill their objectives and ensure legal security for all parties involved. In Brazil, the Industrial Property Law (Law 9.,279/96), the Software Law (Law 9,609/98) and the Innovation Law (Law 10.,973/2004) constitute the legal basis for the protection of patents, trademarks, copyrights on software and technology transfer mechanisms. However, the expansion of the R&D ecosystem in Brazil faces significant hurdles, such as the slow pace of patent examination by the National Institute of Industrial Property (INPI) and the lack of specific regulations for protecting know-how and research data in multilateral projects, and understanding these specificities is crucial for foreign companies and institutions aiming for productive partnerships within the country. Therefore, it is essential that the legal advisors involved in such R&D agreements proactively include contractual mechanisms designed to protect the parties’ intellectual property assets and prevent potential disputes. These mechanisms should explicitly differentiate between each party’s pre-existing technology (background IP) and the technology developed collaboratively during the project (foreground IP), incorporate comprehensive cross-licensing provisions, clearly define ownership rights related to research outcomes and further obligation, such as but not limited to regulatory procedures. Deciding between sole ownership or co-ownership must consider factors such as the parties' actual contributions, the conditions for commercial exploitation, and the specific legal frameworks applicable both locally and internationally. While co-ownership might initially seem equitable, the parties should carefully evaluate the potential risks involved, especially concerning future commercial use of the results, as well as obligations related to IP registration, protection and rights regarding licensing to third parties and use of the IP in general. Such measures not only facilitate the equitable distribution of risks among the parties but also enhance predictability and legal certainty throughout the partnership. The lack of well-defined contractual term can lead to protracted legal disputes, particularly in agreements involving public entities and private companies. Furthermore, the protection of know-how—often inadequately addressed through generic non-disclosure agreements (NDAs)—underscores the pressing need for more robust and tailored contractual mechanisms to safeguard confidential information and proprietary expertise. Moreover, international collaborations in Brazil benefit greatly from leveraging local research institutions and universities, many of which are globally recognized for their specialized expertise, advanced scientific infrastructure, and strong track record in applied research. These institutions often serve as critical bridges between global innovation ecosystems and the Brazilian regulatory and scientific environments, having as a particularity that agreements must be compliant with public policies and applicable rules. Establishing clear, well-structured and mutually beneficial partnerships with them, and knowing the specific legal provisions, not only enhances the technical robustness and credibility of research outcomes, but also facilitates informed navigation of local regulatory frameworks and cultural nuances that directly influence how R&D activities are executed in Brazil. This localized collaboration model is essential for mitigating operational risks, accelerating innovation cycles, and unlocking access to public funding and innovation incentive programs under the Brazilian legal framework. Finally, companies and institutions negotiating international R&D agreements involving intellectual property in Brazil should adopt a strategic and structured approach that includes a comprehensive checklist addressing the key contractual elements discussed, along with proactive and well-informed negotiation practices, aimed at mitigating future risks and enhancing both commercial and technological outcomes. In addition, continuous monitoring and regular updating of the contractual terms and conditions are essential due to the dynamic nature of both technological advancements and regulatory changes. The parties should formally establish mechanisms for regular reviews to ensure that contractual terms remain responsive to new legal, technological, and market developments —thereby safeguarding their interests, ensuring legal certainty, and fostering long-term, sustainable collaboration. In conclusion, the careful structuring of contractual clauses in international R&D agreements carried out in Brazil significantly maximize commercial and technological benefits while minimizing the probability of potential legal disputes. Therefore, companies and institutions must adopt a strategic and forward-looking approach from the very outset of negotiations, ensuring not only the legal soundness of the agreement but also the long-term success and sustainability of their collaborative innovation initiatives on the international stage. Authors: Talita Orsini de Castro, Isabela Zumstein Guido and Luiza Fernandes de Andrade.

It is known that intellectual property (IP) can be used as a policy tool during moments of geopolitical tension and commercial retaliation, particularly in the context of international disputes. Brazil’s new Law 15,122/2025 sets forth IP-related countermeasures that could affect licensing, royalties and tech transfer deals for global companies. Concerning Brazil, Law No. 12,270, enacted in 2010, was a legislative response to the need for domestic mechanisms to implement trade retaliation under the World Trade Organization (WTO) Dispute Settlement system. Its goal was to enable the Brazilian government to act, when authorized, against foreign violations of trade commitments, including by suspending obligations related to intellectual property rights. The law was introduced in the context of disputes such as the cotton case against the United States, in which Brazil sought to restore fair competition in the face of inconsistent agricultural subsidies. The idea of retaliating through the suspension of trade or IP concessions regained prominence after the European Union’s environmental import restrictions and later with the U.S. “Trump tariffs.” Therefore, Brazil enacted Law No. 15,122/2025, that authorizes the federal government to adopt countermeasures against countries or economic blocs that impose unilateral measures detrimental to Brazilian trade, investment, or competitiveness. This new legislation broadens the scope of retaliation by creating other procedures to enable the suspension of IP rights, the withholding of royalties and other commercial obligations — on an exceptional basis but without the procedure established by Law No. 12,270/2010. The law’s innovation lies not in enabling retaliation but in the process to implement such measures, with the tools made available to the Executive - now authorized to act not only after a WTO proceeding but also unilaterally and provisionally in response to foreign practices deemed harmful: restrictions on the importation of goods and services, suspension of commercial and investment concessions, and, in more sensitive cases, the suspension of obligations related to intellectual property. This may include, for example, the withholding of royalty payments or the suspension of protections for patents, trademarks, software, and other intangible assets held by foreign companies. This shift allows a more agile and strategic response to external regulatory pressure—especially where such measures affect Brazil’s trade exposure and economic sovereignty. While the law creates new possibilities for unilateral action in defense of national competitiveness, it also raises practical and diplomatic challenges. Unilateral countermeasures—especially involving intellectual property—could lead to claims of breach under the TRIPS Agreement and trigger retaliation or reputational damage. Thus, the use of such measures, especially those involving intellectual property rights, must be carefully weighed against potential disputes and reputational risks in international forums. The challenge lies in balancing national regulatory autonomy with the stability and predictability needed to support international trade and innovation ecosystems. Article 5 of the updated law sets out procedural safeguards for implementing trade countermeasures. It requires the government to regulate the process through public consultations, define clear timelines for the analysis of each case, and provide formal recommendations for possible retaliatory actions. These steps aim to ensure transparency, stakeholder engagement, and a structured decision-making process—particularly important when measures may affect sensitive areas such as intellectual property or access to foreign markets. Additionally, the law adds an important caveat: IP-related measures are to be treated as a last resort, only when other options prove inadequate. This recognizes the sensitive nature of IP in global supply chains and the potential fallout from targeting these rights in high-value sectors such as pharmaceuticals and technology. Nevertheless, given this scenario, it is imperative for companies — especially those operating across borders or with exposure to foreign IP portfolios— to review their intangible assets and strengthen their contractual and regulatory strategies. Adopting a proactive approach to legal compliance and risk management is essential to mitigate the potential effects of this legislation. Strategic measures may include reviewing licensing agreements, analyzing IP-related contractual clauses, and implementing dispute resolution mechanisms, while actively monitoring these developments and understanding the implications of potential countermeasures—actions that can offer greater legal certainty. Ultimately, Law No. 15,122/2025 highlights the need for prudent IP asset management and a robust legal protection strategy. [IP rights in Brazil; Law 15,122/2025 impact; Brazil trade countermeasures; Foreign intangible asset risk; Intellectual property compliance in Brazil] Talita Orsini de Castro Garcia Partner, Intellectual Property | [email protected] Isabela Zumstein Guido – Lawyer, Intellectual Property | [email protected]

Lawyers Enéias Queiroz Amorim and Fernanda de Almeida Prado Sampaio have just become partners at Finocchio & Ustra Sociedade de Advogados, a law firm with over 22 years of experience and recognized as one of the most influential in Brazil. With over 12 years of experience in the tax advisory practice, Enéias earned a law degree from Universidade Presbiteriana Mackenzie and a postgraduate degree in Tax Law from Instituto Brasileiro de Direito Tributário (IBDT). Throughout his career, he has advised large companies from different industries, such as pharmaceuticals, veterinary medicine, metallurgy, agronomy, automotive, food, transport, technology and services. Enéias, who was working as coordinator of our firm's tax advisory area, has extensive experience in tax special regimes, opportunities, planning, and compliance with indirect taxes. In the words of our tax specialist, becoming a partner at Finocchio & Ustra represents an important recognition and a new challenge. “The tax law practice is constantly evolving, and my goal is to continue helping our clients to have increasingly strategic and personalized support,” he emphasizes. Fernanda, also a specialist in Tax Law, graduated from Pontifícia Universidade Católica de Campinas (PUC) and has a postgraduate degree from Instituto Brasileiro de Estudos Tributário (IBET). Her broad experience in direct taxes, in particular, the Transfer Pricing project, tax planning, tax benefits arising from technological innovation and tax compliance, Fernanda, who also held the position of coordinator of our tax law area, takes over as partner of our firm, considering her achievement a significant milestone in her career. “I accept this responsibility with determination and reinforce my commitment to actively contribute to the growth of our firm and to excellence in delivering solutions to our clients,” she says.

The corporate and M&A team at Finocchio & Ustra Sociedade de Advogados advised Framework Digital, a technology company focused on digital transformation and innovation for large enterprises, in the acquisition of Rethink, a leading consultancy specializing in strategy, design, and digital product development. The transaction marks the integration of Rethink into the Framework ecosystem, giving rise to the new brand “Rethink by Framework.” This strategic combination creates a powerful player in the digital solutions market, with enhanced capabilities to deliver complex, high-impact projects and a comprehensive innovation portfolio. With the goal of reaching BRL 200 million in revenue over the next three years, the deal positions Framework to accelerate its growth trajectory and expand its presence both in Brazil and abroad, reinforcing its position as a key player in the corporate technology landscape. The deal was led by partner Felipe Cervone, alongside lawyers Rachel Marques, Camila de Godoy Ferreira, Júlia Savioli and Letícia Flaminio, with the participation of Enrico Abrahão Oliveira and Giovana Silva, all from Finocchio & Ustra.

“Moral damages” (“danos morais”, in Portuguese), refer to compensation awarded to individuals or entities that have suffered non-material harm, such as damage to reputation, violations of personal rights or emotional distress. Unlike purely financial losses, “moral damages” aim to redress intangible harm, ensuring that victims receive adequate reparation. This legal concept is deeply rooted in Brazilian civil law and is recognized by the Federal Constitution, the Civil Code, and several specific laws, such as the Consumer Protection Code and Environmental Law. The application of these types of damages is particularly relevant in consumer law, where Brazilian courts have been receptive to claims from individuals alleging personal harm due to issues such as defective products, delays in service delivery, improper charges, or failures in customer support. While consumer protection is a well-established principle in Brazil, excessive litigation and the broad interpretation of “moral damages” have led to concerns about abusive claims and the potential financial impact on businesses operating in the country. Companies often face lawsuits seeking high compensatory amounts, even in cases where the alleged damage is subjective or lacks significant impact. Also, the calculation and award of “moral damages” in Brazil is not straightforward. There are no fixed criteria or parameters to determine the amount of the compensation, which depends on the circumstances of each case, the degree of fault and harm, the economic situation of the parties, and the social and legal relevance of the right violated. The Brazilian courts have a wide discretion to assess and fix the value of these kind of damages, which can result in inconsistent and unpredictable outcomes. Therefore, discrepancies in court decisions have caused inconsistencies in awards, creating legal uncertainty for businesses. Some cases result in modest compensation, while others impose significant financial burdens on companies, especially in high-profile disputes. Moreover, the Brazilian legal system has witnessed a phenomenon known as the "moral damages industry", which consists of the abusive and frivolous use of lawsuits seeking compensation for trivial or nonexistent personal injuries. This practice not only overloads the judiciary, but also undermines the legitimacy and effectiveness of personal rights as a tool for social justice and human dignity. In order to prevent and combat the “moral damages industry”, the Brazilian courts have adopted some measures, such as dismissing manifestly unfounded claims, imposing sanctions on bad-faith litigants, and applying the principles of proportionality and reasonableness to moderate the amount of compensation. Given this complex legal landscape, foreign businesses operating in Brazil must be aware of the peculiarities and challenges of moral rights and damages in the Brazilian legal system. It is important for companies adopt proactive strategies to mitigate risks related to “moral damages”, by establishing clear contractual terms, implementing effective compliance mechanisms and ensuring high standards in consumer relations to prevent disputes. Additionally, close collaboration between clients and their legal counsel is essential to navigating judicial trends and setting realistic expectations in cases that involve personal injury, reducing both the frequency and value of moral damage awards. A strategic legal approach can be decisive in defending fair business practices and preventing companies from becoming targets of abusive or predatory lawsuits. Furthermore, the lawyer’s role is to guide businesses on how to handle allegations of “moral damages”, aiming to reduce the risks of high compensation and negative public exposure. By maintaining active engagement with the judiciary and aligning strategies with legal precedents, businesses can work toward ensuring that “moral damage” claims serve their intended purpose of fair reparation, rather than becoming a source of undue financial liability. Raïssa Simenes Martins Fanton, partner Luíza Pattero Foffano, lawyer

Brazilian regulation requires all companies, both national and foreign, registered in the National Registry of Legal Entities (CNPJ), to declare the existence or non-existence of an Ultimate Beneficial Owner (UBO) within thirty (30) days from the date of registration with the CNPJ, in accordance with the guidelines contained in the Normative Instruction No. 2119/2022, issued by the Federal Revenue Service. For the declaration purposes, the UBO is defined as the natural person who exerts control over a company or group, wielding the authority to make pivotal decisions and derive substantial benefit from its outcomes. An individual qualifies as a UBO if they possess more than 25% of the company’s share capital, whether directly or indirectly, or if they hold or exercise predominance in the company's decisions and have the power to elect the majority of its officers. Officers and directors of foreign companies who are not shareholders are not considered UBO, even if they have the power to elect the majority of the company’s officers. Foreign companies must declare their UBO or confirm its absence. In contrast, companies domiciled in Brazil only need to indicate the existence of a UBO, with no declaration required if no natural person qualifies as one. Among the documents that need to be submitted to the Federal Revenue Service for analysis is a corporate organization chart, as well as the equity interest of each shareholder. The purpose of the UBO declaration is to provide greater transparency, enabling the Federal Revenue Service to identify who controls a company and the source of the company’s funds, thereby helping to prevent illegal practices. However, some companies whose information is publicly available, and which are already subject to stricter regulation and control mechanisms, such as public companies or listed companies registered with the Securities and Exchange Commission (CVM), are not obliged to make this declaration. Failure to comply with this obligation or to provide supporting documentation may result in sanctions, including the suspension of the CNPJ, disrupting the company’s daily operations and preventing, among others, transactions with banking establishments, including the movement of current accounts, making financial investments and obtaining loans. The requirement to declare the UBO represents an advance in corporate governance and the fight against illicit practices in Brazil. The distinction between national and foreign companies reflects the Federal Revenue Service's concern with corporate structures used for tax evasion and asset concealment. Compliance with this obligation ensures fiscal regularity and transparency, strengthening integrity in the business environment. Therefore, companies must pay attention to deadlines and requirements to avoid penalties that could compromise their operations in Brazil. Andrea Ometto Bittar Tincani, partner Camila de Godoy Ferreira, lawyer Júlia Bueno da Conceição, lawyer Giovana Silva, intern

The data center market in Brazil is currently experiencing significant growth. With the increasing use of artificial intelligence and cloud applications,having larger and more powerful data centers has become not just strategic, but a critical necessity. This applies to both in-house operations and outsourced services. Brazil offers clear advantages for establishing data centers. Data centers require properties with substantial areas, which demand access to telecommunications infrastructure and high levels of security. They also require considerable amounts of energy to ensure operational stability. Brazil has a favorable mix, including a strong capacity for energy generation—primarily from renewable sources such as wind and solar—and the availability of large plots in developed urban centers (which meet the aforementioned infrastructure and security needs). Thus, there is a sort of “gold rush” when it comes to acquiring properties suitable for data center operations in Brazil. Real estate operations have a well-known characteristic: they are non-renewable assets, meaning once a property is allocated for a specific use, it is no longer available for other purposes. As a result, properties capable of housing data centers have become an attractive investment option. Some of the most used contractual arrangements to accommodate data center operations include: Property leases (with or without an option to purchase); Built to suit; Sale and leaseback; Surface rights; Real estate partnerships between property owners and data center operators (with profit sharing); Property sales. The choice of one option over another depends on various factors, such as the scale of the project, the intended use (in-house or outsourced operations), availability of financing (especially in sale and leaseback and built-to-suit arrangements), and other considerations. Authors: Luis Felipe Dalmedico Silveira, partner Maria Vitória Resende Alves de Queiroz Telles, lawyer Gabriel Cano Sartori, lawyer  

Recently, Brazilian legal system underwent a significant reform due to the enactment of Law No. 14,905/2024, published on July 1, 2024. This Law amended, among other provisions, Articles 389 and 406 of Law No. 10,406/2002, the Brazilian Civil Code, and also to adopt the Selic rate, excluding the IPCA/IBGE index rate, as the default legal rate for late payment interest in cases where no agreement exists between the parties. The enactment of Law No. 14,905, of 2024 represents a pivotal moment in Brazilian law, as it resolves a longstanding legislative and doctrinal dispute regarding the determination of late payment interest in the absence of explicit agreement. Previously, the legal framework lacked clarity, leaving room for two possible interpretations: one supports the application of a maximum rate of 1% per month under Article 161, paragraph 1 of the National Tax Code (CTN), while the other advocates for using the Selic rate as a standard for monetary adjustment. In 2019, this debate reached the Superior Court of Justice of Brazil (STJ) via Special Appeal No. 1,795,982. The case centered on whether the rate of 1% per month or the Selic rate should prevail. In its decision, published on October 23, 2024, the STJ was inclined to conclude that the Selic rate should prevail. The majority of the court reasoned that the 1% rate under Article 161, paragraph 1 of the CTN pertains exclusively to tax-related debts, while Article 406 of the Civil Code specifically links default interest to the rate applicable for federal tax arrears—a role fulfilled by the Selic rate. Given this uncertain scenario of legal uncertainty and aiming to harmonize interpretations, Law No. 14,905/2024 was enacted. The Law amended Articles 389 and 406 of the Civil Code, formally adopting the Selic rate—minus the IPCA index rate—as the default interest rate in cases without a contractual stipulation. This new rule has been effective since September 2024. While the Law clarifies the applicable rate, it delegated the calculation methodology to the Central Bank of Brazil (Bacen). On August 29, 2024, Bacen issued National Monetary Council (CMN) Resolution No. 5,151, which specifies, in Article 2, the formula for calculating the legal rate. According to the resolution, the monthly Selic and IPCA-15 percentages from the preceding month should be used, applying simple interest for capitalization. To facilitate compliance, Bacen has made an electronic tool, the Citizen's Calculator, available for public use. This tool simplifies the computation of default interest rates in accordance with the new legal standards. However, debates surrounding the default interest rates persists. On April 17, 2024, a draft bill to amend the Civil Code was presented in the Senate Plenary, proposing to set a default interest rate between 1% and 2% per month. While its chances of approval appear remote, its passage could reshape the current framework and reignite legislative discussions. For now, in the absence of an express agreement between the parties, the Selic rate minus the IPCA applies as the default rate, calculated in accordance with Bacen's prescribed formula and monthly disclosed percentages. Legal practitioners should, however, remain vigilant for future regulatory updates and developments regarding the proposed draft bill, as they may significantly alter the determination of default interest rates. Authors: Talita Orsini de Castro Garcia, partner Ana Letícia Fagundes, lawyer Chiara Prupere Giovaneti, lawyer

The corporate and M&A team of Finocchio & Ustra Sociedade de Advogados assitsted Aoop Soluções Digitais Ltda., a technology company specialized in hyperautomation, service design and cloud digital experiences, focused on ServiceNow, in an M&A transaction with NTT Data Business Solutions Participações S.A., a multinational corporation from the technology sector. As a result of the transaction, Aoop joins NTT Data group, and, with the partnership, the companies aim to expand their business not only in Brazil, developing innovative digital solutions. The transaction was conducted by partner Felipe Cervone alongside lawyers Camila de Godoy Ferreira, Letícia Flaminio and Júlia Cristina Arruda Savioli, with the participation of Enrico Abrahão Oliveira, all from Finocchio & Ustra's corporate and M&A team.  

The corporate department of Finocchio & Ustra Advogados advised Comedix Comércio de Cosméticos Ltda. e CMX Comércio e Distribuição Ltda., which develops its activities in the cosmetics market, in the purchase and sale of assets of Comedix and CMX Ltda. to Bio Brands Franchising Gestão de Marcas Ltda. The Transaction was led by Rachel Cerqueira Salvador Marques, corporate and mergers and acquisitions team’s coordinator, with the participation of Patrícia Bruzzi Carrion Paraguay, Sérgio Ribeiro Fernandes and Maria Eduarda Granchelli Oude Groenige, all from Finocchio e Ustra Advogados.  

The corporate team of Finocchio & Ustra Advogados advised the quotaholders of CQA Comercial Química Americana Ltda.,a company that operates in the sector of laboratory products and equipment, in the transaction of sale of 100% of its equity interest to Calibre Scientific Brasil Ltda., a company of products and equipment for laboratory research, diagnostics and biopharmaceuticals. The acquisition of CQA is aligned with the expansion strategy adopted by Calibre Scientific. As a result of the transaction, Calibre Scientific, which is today a reference in the market, expands its solution portfolio acting and area of activity, aiming to lead, thus, the consolidation of this market segment. The transaction was conducted by the Andrea Tincani, partner of the corporate and mergers & acquisitions team, with the participation of Arthur Carvalhaes, Carolina Bueno, Tainara Sanzovo and Beatriz Fonseca, all from Finocchio & Ustra Advogados.  

Abstract: Brazil's Ministry of Finance has received 113 applications from betting companies seeking to operate in the country starting in 2025. Companies must pay 30 million reais for a five-year license and meet requirements under Law No. 14,790/2023, including having a Brazilian headquarters and implementing measures to prevent money laundering. Text: The Secretariat of Prizes and Betting (SPA) of the Ministry of Finance has received 113 applications for authorization from 108 betting companies wishing to operate in Brazil starting in January 2025. Companies that obtain authorization will be required to pay 30 million reais to operate three brands for five years. In addition, they must comply with the requirements established by Law No. 14,790/2023, including: Having headquarters and administration within Brazilian territory; Having a Brazilian citizen as a partner holding at least 20% of the company's share capital; Designating a director responsible for the relationship with the Ministry of Finance; Designating a director responsible for customer service and the ombudsman; Implementing internal policies, procedures, and controls to prevent money laundering, terrorism financing, and the proliferation of weapons of mass destruction; Implementing internal policies, procedures, and controls to ensure the integrity of betting and prevent match-fixing and other types of fraud; Promoting responsible gaming and preventing gambling disorders. Brazil led the world in access to sports betting sites in 2022[1], and recent data indicates that Brazil was the 3rd highest consumer of betting globally in 2023[2]. Author: Guilherme Cremonesi Bruno Henrique dos Santos Henrique Zigart Pereira Footnotes [1] https://www.poder360.com.br/poder-sportsmkt/esportes/brasil-lidera-acessos-a-sites-de-apostas-esportivas-em-2022/, acessado em: 29/08/2024. [2] https://www.poder360.com.br/poder-sportsmkt/esportes/brasil-lidera-acessos-a-sites-de-apostas-esportivas-em-2022/, acessado em: 29/08/2024.

Corporate restructurings have become increasingly common in the Brazilian business landscape, driven by the need to adapt to a dynamic and competitive economic environment. In this context, the assignment of preemptive rights, safeguarded by the Brazilian Corporations Law, emerges as a valuable strategic tool for shareholders and companies. Preemptive Rights and Assignment The preemptive right is an essential right of shareholders guaranteed by the Brazilian Corporations Law. This right ensures that shareholders have the opportunity to subscribe to new shares issued by the company in the event of a capital increase, in proportion to the number of shares they hold. The purpose of this prerogative is to protect shareholders’ proportional participation and prevent the dilution of their shares. However, paragraph 6 of Article 171 of the Brazilian Corporations Law provides shareholders with strategic flexibility by allowing them to assign their preemptive rights to third parties. This assignment can occur either with or without compensation, enabling shareholders to transfer their preemptive rights to other shareholders or non-shareholders. As highlighted by jurists, preemptive rights are incorporated into the shareholder’s assets at the moment the general meeting deliberates on the capital increase. From that moment on, shareholders are fully free to negotiate their rights within the time frame established by the company’s bylaws or the general meeting, which cannot be less than 30 days. Assignment of Preemptive Rights in Corporate Transactions The assignment of preemptive rights can play a central role in corporate restructuring, especially in mergers, acquisitions, or capital increases with the admission of new investors. This assignment can facilitate the admission of strategic new investors into the company’s capital, promoting a realignment of interests and contributing to the reorganization of the corporate structure. This can be particularly useful in situations where companies seek to attract shareholders who bring not only financial resources but also expertise and synergies for business development. Shareholder Protection and Respect for the Principle of Equality It is important to emphasize that the assignment of preemptive rights can only occur after the capital increase is approved by the general meeting. This ensures that the principle of equality is preserved, guaranteeing that all shareholders will have the opportunity to participate in the decision and exercise their preemptive rights on equal terms. Therefore, the assignment of preemptive rights after the approval of the capital increase by the general meeting is the mechanism that balances the interests of all parties involved, ensuring transparency and fairness in the process. Final Considerations The assignment of preemptive rights emerges as a versatile tool in corporate restructuring, allowing shareholders greater flexibility while also offering the company an opportunity to attract new investors. When used effectively, this strategy can create new opportunities for all those involved and contribute to more efficient, adaptable corporate management aligned with the strategic interests of shareholders and companies. Authors: Camila de Godoy Ferreira Carolina Bueno de Oliveira Zogaeb Tainara Morata Sanzovo Jéssica Nader

The Corporate and M&A department of Finocchio & Ustra Advogados advised A. Azevedo Óleos, a Brazilian company which operates in the vegetable oils and derivatives manufacturing sector. in the M&A transaction with Oleon, a multinational corporation operating in the natural base oleochemicals sector. As a result of the Transaction, Oleon enters the Brazilian market and, alongside A. Azevedo Óleos, will expand the company´s business in Brazil and internationally in the natural base oleochemicals sector. The Transaction was led by Andrea Ometto Bittar Tincani and Felipe Cervone, partners of the Corporate and M&A team, with the lawyers Rachel Cerqueira Salvador Marques, Leticia Flaminio Oliveira, and Marcela Steckelberg Nicoletti, all from Finocchio e Ustra Advogados.  

On October 3, 2024, Brazil introduced Medida Provisória No. 1.262, aligning its tax regulations with the OECD’s Global Anti-Base Erosion (GloBE) Rules.This is part of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS), which establishes a minimum effective tax rate (ETR) of 15% for large multinational enterprises (MNEs). Key Features of the Legislation: Adoption of a 15% Minimum ETR: The legislation introduces an additional Contribuição Social sobre o Lucro Líquido (CSLL) to ensure that MNEs operating in Brazil meet the 15% minimum effective tax rate on global profits, as required by the OECD’s GloBE rules. Scope: The rules apply to Multinational Groups with entities in Brazil and with annual consolidated revenues of €750 million or more, making these groups subject to the GloBE minimum tax regulations, similar to those implemented in other G20 and OECD countries. Calculation of the Effective Tax Rate (ETR): The ETR is calculated as the ratio of Adjusted Covered Taxes (taxes paid on income and profits) to GloBE Income (global book profits), expressed as a percentage. If the ETR in a particular jurisdiction is below 15%, the difference will be collected through an additional CSLL in Brazil. The formula for calculating the Additional CSLL in Brazil is: Additional CSLL = (15% - ETR) x GloBE Income (in Brazil). Key Takeaways: Government Initiative: Unusually, the Brazilian government has issued both the executive order (Provisional Measure) and specific regulations simultaneously, indicating a strong commitment to getting this approved swiftly. Legislative Process: The Provisional Measure must be approved by Congress. If passed in 2024, these rules will take effect on January 1, 2025. OECD Guidelines: OECD commentary and guidelines have been included as interpretation framework for the new rules. Impact on MNEs: Multinational corporations (MNCs) with business in Brazil will need to reassess their Effective Tax Rate (ETR), as calculated under the new provisions. Impact on Tax Incentives and Planning Strategies: Several tax incentives and planning strategies widely utilized in Brazil may be significantly affected, including: SUDENE/SUDAM incentives, Goodwill amortization, Interest on Net Equity (INE), R&D incentives, New government grant tax credit mechanisms. Link to the Provisional Measure here: https://www.in.gov.br/web/dou/-/medida-provisoria-n-1.262-de-3-de-outubro-de-2024-58815820 Author: Bruno Marques Santo

The corporate team at Finocchio & Ustra Sociedade de Advogados advised Elsys, a well-established technology company with 35 years of experience,on the acquisition of a stake in dtLabs, a startup incubated at Unesp Bauru, specializing in the development of artificial intelligence solutions. As a result of the transaction, Elsys and dtLabs, which will keep their operational independence, commit to drive innovation in sectors such as agribusiness, retail, security, logistics, smart cities, industries, and mining, among others, by developing and commercializing new solutions and positioning Brazil as a significant global player in the sector. The partnership combines Elsys's strong presence in the domestic market with dtLabs's expertise in software development for the implementation of AI solutions. The transaction was led by Andrea Ometto Bittar Tincani, corporate and mergers and acquisitions team’s partner, with the participation of Camila de Godoy Ferreira, Gabriela Caroline Ramos Silva, Júlia Cristina Arruda Savioli and Enrico Abrahão Oliveira, all from Finocchio e Ustra.  

The adoption of alternative dispute resolution mechanisms has proven to be an effective strategy to ensure the successful execution of public contracts. Countries like the United States, the United Kingdom, and Australia widely use dispute boards, achieving a significant reduction in the number of litigations that reach the courts, in addition to promoting faster conflict resolution. International experience shows that adopting these committees not only prevents disputes but also ensures the continuity of works without the interruptions typical of judicial processes, thus guaranteeing the delivery of projects within the scheduled time and budget. In Brazil, Dispute Boards (DBs) emerge as an innovative and efficient solution, aligning the country with international best practices and demonstrating Brazil's commitment not only to efficiency but also to the transparency and modernization of its public works. They have already been applied in some large-scale projects. Notable examples include the construction of São Paulo's Yellow Line 4 subway, stadium renovations for the 2014 World Cup, and some highway projects. With the advent of the new Brazilian law that sought to update public procurement processes (Law No. 14133/2021), which includes the possibility of using Dispute Boards as a form of conflict resolution, several public infrastructure projects have already been implementing Dispute Boards with notable success. Highways, railways, and urban projects have benefited from the use of this tool, resolving contract execution disputes effectively and ensuring the continuity and quality of the works. In this regard, the ANTT (National Land Transport Agency — In Brazil), responsible for regulating the activities of federal railway and highway infrastructure exploration and the provision of land transport services in Brazil, has been one of the pioneering agencies in promoting and regulating DBs in Brazilian Public Administration. Accordingly, the ANTT approved Normative Resolution No. 6040/2024, which establishes clear guidelines for the implementation of DBs, intending not only to resolve potential conflicts between the agency and its regulated entities in highway and railway concession contracts but also to prevent possible disagreements. The Dispute Board is a dispute resolution tool that appoints three (3) experts of recognized technical and professional competence related to the contract's subject and the dispute, who have no conflicts of interest in the case. These experts must be capable of resolving disputes of a technical nature that involve rights with economic value that can be freely transacted by the parties, such as: a) the adequacy of works and services to regulatory compliance and/or contract agreements; b) the execution of the works and services themselves; c) the assessment of events that may impact the fulfillment of contractual obligations and the calculation of their financial impacts, among others. Specifically, in ANTT's resolution, the composition of the DB committee includes one member appointed by ANTT, one by the concessionaire, and a third member, who will serve as the president, mutually agreed upon by the other appointees. It is worth noting that the Dispute Board can also address disputes related to facts connected to these issues, which may even favor the prevention of future litigation. However, it cannot rule on the validity of ANTT's supervisory acts or regulations or strictly legal issues. Moreover, unlike arbitral decisions, DB decisions are not final, meaning they can be changed before the Judiciary or an Arbitral Tribunal, in the case of contracts with an arbitration clause. Thus, currently valid concession contracts can be amended through an addendum to include the option of Dispute Boards as an alternative for resolving future disputes. For existing disputes, there is no need for a contract addendum to implement a DB, as ANTT's resolution allows for the creation of a Dispute Board through an independent instrument to be signed between the agency and the concessionaire. Authors: Bárbara Fernandes and Luiz Felipe Fogo, Contracts Lawyers

The expatriation of employees is a common practice for companies looking to expand their operations abroad or meet international demands, becoming increasingly prevalent due to globalization. However, this process requires special attention to the legal obligations imposed by Law No. 7,064/82, which regulates the transfer of employees abroad. Understanding the specifics of this legislation is essential to ensure that workers' rights are respected and to avoid legal issues. One of the main considerations when planning expatriation is determining whether the transfer will be temporary or permanent. This decision directly impacts the rights and obligations of both the company and the employee, the maintenance of the employment relationship in Brazil, and the application of labor and social security regulations. This is because Law No. 7,064/82 establishes that the international transfer of Brazilian workers must comply with the most favorable regulation to the employee, whether from Brazilian law or the destination country’s law. This means that during expatriation with a temporary intent, the company must ensure the rights provided for in Brazilian law, such as FGTS (Unemployment Compensation Fund), INSS (Brazilian Social Security Institute), 13th salary, vacation with an additional one-third, and the transfer allowance, which can be 25% or another amount agreed upon in the contract. The payroll may undergo some adjustments depending on the company's policy and the destination country's laws. Salaries and benefits may be adjusted according to the cost of living in the country to which the employee is being transferred. Managing payroll for expatriates is a multifaceted task that requires attention to detail and a deep understanding of international laws and regulations, ensuring a successful and satisfying expatriation experience for the employee. Taxation can vary depending on the country of origin and the destination country, especially considering that Brazil has social security agreements with several countries. There may also be a need for adjustments in withholding tax according to fiscal and international laws. On the other hand, if the transfer is permanent, the company may proceed with the employee’s contract termination in Brazil, followed by hiring abroad. In this case, all severance payments will be due, and there will no longer be an employment relationship with the local subsidiary. Another crucial point that often raises questions in expatriation is the management of benefits during expatriation. Generally, these benefits are agreed upon in the offer letter and may include airfare, life insurance, moving costs, and other aspects negotiated with the employee. Additionally, after two years abroad, in the case of temporary transfers, the employee is entitled to a vacation in Brazil with all expenses covered by the company, as provided by law. As observed, the expatriation of employees requires detailed planning and strict compliance with the regulations established by Law No. 7,064/82. The company must ensure that all employee rights are respected, from the payment of benefits to the guarantee of return to Brazil, if necessary, depending on the temporary or permanent nature of the expatriation. Compliance with these obligations not only avoids legal issues but also ensures a smoother and safer expatriation process for all parties involved. Authors Veridiana Police, Labor and Social Security Advisory Partner; Victor Campana, Labor and Social Security Advisory Lawyer; Fernanda Florêncio, Labor and Social Security Advisory Consultant.