BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano and Luisa Tortolano Barreto, Tauil & Chequer Advogados in association with Mayer Brown
• Energias do Brasil SA – EDP Brasil; • Grupo Energisa SA; • CPFL Energia SA; • Neoenergia SA; • Argo Transmissão de Energia SA; • Celeo Redes; • Evoltz; • Verene; and • Quantum Participações. Distribution The principal investor-owned companies in the distri- bution segment are: • Equatorial Energia SA; • Grupo Energisa SA; • Enel Brasil SA; • CPFL Energia SA; • Companhia Paranaense de Energia – COPEL; • Neoenergia SA; • Energias do Brasil SA – EDP Brasil; and • Light SA. 1.3 Foreign Investment Review Process Federal Control of Nuclear Power The only restriction to private investment in the power industry – whether foreign or domestic – is in nuclear power generation, as the Brazilian Federal Constitu- tion provides for the federal government’s monopoly over this and does not provide for delegation of such activity through the granting of concessions, permis- sions or authorisations. Treatment of Foreign Companies Basic equality The Sixth Constitutional Amendment of 1995 revoked Article 171 of the Brazilian Federal Constitution, which provided for preferential treatment for companies con- trolled by Brazilians over companies directly or indi- rectly controlled by foreigners. Since then, equal and non-discriminatory treatment of companies, whether controlled by Brazilians or foreigners, has been a con- stitutional principle. Restrictions There are certain restrictions to the acquisition or lease of rural lands by foreign companies or Brazilian companies directly or indirectly controlled by foreign
companies, which commonly impact power genera- tion, transmission and distribution projects, but there are alternative legal structures for foreign investors, which have been accepted by lenders and stakehold- ers in the development 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 authorisations related to power activities must be granted to compa- nies 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 concessionaire is subject to prior approval of the competent 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 agree- ment. This provision in the Concessions Law was con- firmed after passing judicial scrutiny by the Federal Supreme Court. ANEEL is the entity in charge of approving the trans- fer of concessions, permissions or authorisations, or the change of control of companies that hold conces- sions, permissions or authorisations related to power activities. As a general rule, the transfer of concessions, per- missions 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 distribution companies that hold concessions and permissions; and
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