BRAZIL Law and Practice Contributed by: André Menescal Guedes, Raissa Freire de Almeida and Bruno Paiva, André Menescal Advogados
6. Recent Legal Developments 6.1 Significant Court Decisions or Legal Developments A key legal development in Brazil’s energy and infra- structure M&A environment over the past three years has been the judicial and regulatory consolidation of rules governing control transfers and concession assignments, alongside the emergence of litigation concerning curtailment in renewable generation. The Superior Court of Justice (STJ) reaffirmed that mergers, spin-offs and share transfers involving con- cession-holding companies do not require a new pub- lic tender, provided that regulatory consent is obtained and service continuity is guaranteed. This precedent has significantly increased transactional certainty for M&A in the electricity, sanitation and logistics sectors, where corporate reorganisations are common as part of portfolio optimisation or foreign investment entry. Equally important, the past three years have seen the rise of curtailment-related litigation in Brazil’s courts and regulatory agencies, particularly involving wind and solar generators in the Northeast. These cases concern claims for economic compensation due to grid dispatch restrictions that prevent plants from selling their full contracted output. Developers have argued that such curtailment constitutes a regula- tory or operational risk beyond their control, seeking damages or relief from performance obligations under power purchase agreements. While final judicial outcomes remain pending, first- instance and appellate decisions have begun to acknowledge the exceptional nature of curtailment and the need for regulatory reform to clarify risk allo- cation. The issue has become central to M&A due diligence, as buyers increasingly assess exposure to dispatch constraints when valuing renewable portfo- lios. Taken together, the consolidation of corporate-trans- fer jurisprudence and the ongoing curtailment liti- gation mark a decisive phase in Brazil’s energy law evolution, strengthening regulatory predictability while highlighting the urgent need for grid and market mod- ernisation.
ensuring that employee data is shared only as neces- sary for transaction purposes. In summary, buyers should focus on potential con- tingent liabilities, compliance with collective instru- ments, and integration planning to ensure a smooth post-closing transition. 5.7 Currency Control/Central Bank Approval Brazil does not impose prior approval requirements by the Central Bank for M&A transactions, but foreign exchange and investment registration rules must be strictly observed. All cross-border equity investments and related payments must be reported through the RDE-IED system, administered by the Central Bank. This registration is mandatory but declaratory, mean- ing that it serves information and monitoring purposes rather than that of transaction approval. Once properly registered, the investor gains legal access to the for- eign exchange market for the remittance of dividends, repatriation of capital and reinvestment of profits with- out additional authorisation. Payments relating to M&A transactions between residents and non-residents must be made through authorised financial institutions operating in the Brazil- ian foreign exchange market. These institutions verify the accuracy of documentation, including the share purchase agreement, proof of registration, and tax compliance certificates. Brazilian currency control rules are relatively liberal and are being further simplified under the Foreign Exchange Law (Law No. 14,286/2021), which mod- ernised capital inflows and outflows. However, trans- actions involving strategic sectors or government concessions may still require prior consent from rel- evant regulatory agencies (such as ANEEL or ANTAQ) before closing, even though no specific Central Bank approval is needed.
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