BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano, Luisa Tortolano Barreto and Julia Braga, Tauil & Chequer Advogados in association with Mayer Brown
Restrictions There are certain restrictions to the acquisition or lease of rural lands by foreign companies or Bra- zilian companies directly or indirectly controlled by foreign companies, which commonly impact power generation, transmission and distribution projects, but there are alternative legal structures for foreign investors, which have been accept- ed by lenders and stakeholders in the develop- ment of power projects in Brazil. There are also restrictions on the acquisition of land within the country’s border areas, but this restriction is not usually relevant in the development of power projects in Brazil. Finally, concessions, permissions and authorisa- tions related to power activities must be granted to companies incorporated pursuant to Brazilian laws. 1.4 Sale of Power Industry Assets The Concessions Law provides that the transfer of the concession or the control of the conces- sionaire is subject to prior approval of the com- petent authority, and the interested party must meet the requirements of technical and financial capacity, as well as legal and tax compliance, and must commit to comply with all the terms and conditions of the concession agreement. This provision in the Concessions Law was confirmed after passing judicial scrutiny by the Federal Supreme Court. ANEEL is the entity in charge of approving the transfer of concessions, permissions or authori- sations, or the change of control of companies that hold concessions, permissions or authorisa- tions related to power activities. As a general rule, the transfer of concessions, permissions or authorisations (asset deal) is subject to ANEEL’s prior approval, while the
change of control of companies (equity deal) in the power industry may or may not be subject to ANEEL’s prior approval. ANEEL Normative Resolution No 948/2021 (Module III) provides the rules applicable to change of control of companies in the power industry and, in summary, requires the prior approval of ANEEL for the following companies: • power generation, transmission and distribu- tion companies that hold concessions and permissions; and • hydro and nuclear power generation com- panies, whether holders of concessions or authorisations. In accordance with the guidelines of the Con- cessions Law, ANEEL Normative Resolution No 948/2021 (Module III) establishes that the potential purchaser must submit evidence to ANEEL with respect to its financial and techni- cal capacity; legal, tax and regulatory compli- ance; and commitment to comply with the terms and conditions of the concession, permission or authorisation. The change of control of oil, coal, gas, biogas, biomass, wind and solar power generation com- panies is usually not subject to prior approval by ANEEL. Nevertheless, the purchaser has an obligation to inform ANEEL about the change of control within 30 days after implementation of the transaction, upon the competent corporate registration. 1.5 Central Planning Authorities The central authority that oversees and admin- isters the technical aspects of the electricity supply and the development of transmission facilities to ensure the reliability of the electricity system and the adequacy of supply to satisfy
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