BRAZIL Law and Practice Contributed by: Vitor Henriques and Gabriela Sella, Franco Leutewiler Henriques Advogados
tial liabilities and confirm transaction bases, including the target numbers. The structure of the transaction is based on many relevant factors, and plays a very important role at this point, guiding the parties in the negotia - tion and execution of the definitive agreements. When involving publicly held companies, tender offer and disclosure procedures based on the Brazilian Corporations Law and the regulation of the Brazilian Securities and Exchange Commis - sion ( Comissão de Valores Mobiliários – CVM) shall be complied with by the parties involved. Approval from government authorities shall also be obtained when applicable, including from regulatory agencies and the Brazilian Adminis - trative Council for Economic Defence (CADE). 2.2 Primary Regulators From an antitrust perspective, CADE is the government authority responsible for analysing market concentrations that affect competition in Brazil, depending on whether certain thresh - olds set forth by law are met. Depending on the business sector involved, the transaction may also need to be approved by other government authorities, such as regulatory agencies. 2.3 Restrictions on Foreign Investments Although the Brazilian regulatory framework is generally friendly to foreign investments, Bra - zilian laws do impose certain restrictions and limitations on foreigners, including the following. • Land ownership: the Constitution establishes limits on land acquisition by foreigners, espe - cially in rural areas, border areas, national security zones and environmental preserva - tion areas. • Media companies: there are restrictions on foreign participation in media companies,
such as radio, television and newspapers. Brazilian law sets limits on the foreign capi - tal control of media companies, aiming to protect diversity of opinion and the country’s cultural identity. • Aviation: the Constitution stipulates that airlines operating domestic routes in Brazil must have the majority of voting capital and effective control in Brazilian hands. • Nuclear and natural resources: in some sec - tors deemed strategic for national security, such as nuclear, oil and some other natural resources, there are restrictions on foreign capital participation in companies and pro - jects. • Financial sector: although Brazilian legisla - tion allows foreign investments in the finan - cial sector, there are certain restrictions and specific regulations regarding the control of banks and other financial institutions. Foreigners should also consider restrictions and differences involving tax treatment, bureaucracy and other matters relevant to the structuring of foreign investments. 2.4 Antitrust Regulations CADE must pre-approve the implementation of certain transactions (such as the sale and purchase of relevant equity stakes and assets, joint ventures, associate agreements and cer - tain types of consortia) that are likely to have an impact on the Brazilian market. This is provided that the economic groups involved meet the minimum revenue criteria, which are that at least one of the groups reported, in the last financial statement, has annual gross revenue or total turnover in Brazil, in the year prior to the trans - action, equivalent to or greater than BRL750 mil - lion, and the other group BRL75 million.
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