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  • STF Upholds Law Barring Habitual Tax Defaulters from Judicial Reorganization

    STF Upholds Law Barring Habitual Tax Defaulters from Judicial Reorganization

    The STF (Brazil’s Supreme Federal Court) unanimously upheld the validity of the rule barring companies classified as habitual tax defaulters from seeking judicial reorganization. The restriction is established in the Taxpayer Defense Code (Supplementary Law 225/2026) and represents an important milestone at the intersection of tax law and corporate restructuring in Brazil. The decision was rendered on August 21 in the Court’s virtual plenary session.

    The concept of the habitual tax defaulter and the administrative process

    Supplementary Law 225/2026, whose rules were approved by the Chamber of Deputies in December, introduced the concept of the habitual tax defaulter into the Brazilian legal system. This category includes companies that engage in repeated default, using non-payment of taxes as a business strategy to gain a competitive advantage in the market.

    According to the Receita Federal (Brazil’s Federal Revenue Service), the primary objective of the measure is to strengthen tax compliance, foster fair competition among economic agents, and provide greater transparency to tax audit actions. The agency expressly highlights that the initiative does not target companies facing temporary financial hardship. The focus is exclusively on cases where default is deliberately planned.

    By July, the Receita Federal had already classified 22 legal entities under this category. However, it is worth noting that classifying a company as a habitual tax defaulter does not occur summarily or automatically. The legislation requires prior administrative proceedings, ensuring the taxpayer’s right to present a defense before final classification.

    The STF ruling and the dismissal of the OAB petition

    The validity of the rule was challenged at the STF through a lawsuit filed by the Ordem dos Advogados do Brasil (OAB, the Brazilian Bar Association). The professional body argued that barring access to judicial reorganization would impede access to justice. Furthermore, the OAB claimed that the measure would constitute a coercive and indirect method of tax collection by the State.

    However, the Court’s virtual plenary session rejected the request to suspend this provision. The view of the reporting justice, Justice Flávio Dino, prevailed, with his opinion fully joined by Justices Alexandre de Moraes, Cristiano Zanin, Edson Fachin, André Mendonça, Gilmar Mendes, Dias Toffoli, Luiz Fux, and Nunes Marques.

    In his vote, Justice Flávio Dino highlighted that the law establishes a legitimate mechanism for the State to protect itself against companies that repeatedly fail to pay taxes. The reporting justice stated that the principle of corporate preservation, which underpins judicial reorganization, should only benefit productive units operating under good faith and tax compliance.

    “The principle of corporate preservation must apply to units operating under good faith and tax compliance, a scenario incompatible with the conduct of a habitual defaulter who incorporates the non-payment of taxes, I reiterate, into its business model,” stated the reporting justice.

    Impacts and legal restrictions on companies

    In addition to being barred from seeking judicial reorganization, classification as a habitual tax defaulter brings several other severe sanctions for corporate entities. Under the rules validated by the STF, a company formally placed in this category is subject to:

    • Loss of tax benefits: The legal entity is barred from using tax incentives granted by public authorities.
    • Ban on government contracting: The company loses the right to participate in public biddings and enter into contracts with the Public Administration.
    • Maintenance of criminal liability: In cases of tax crimes, subsequent payment of the tax owed does not extinguish criminal liability, unlike the treatment applied to standard taxpayers.

    Practical considerations

    The STF decision consolidates the view that judicial reorganization is a mechanism intended to overcome genuine economic and financial distress, and cannot serve as a shield for strategic tax default. For foreign investors, executives, and founders operating in Brazil, this development reinforces the need to maintain rigorous corporate governance and tax compliance policies.

    The clear distinction made by the Receita Federal and endorsed by the STF between temporary financial distress and deliberate default requires companies to keep their accounting and tax obligations in strict compliance. Avoiding administrative classification is essential to prevent jeopardizing future corporate restructurings or commercial engagements with the public sector.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • Limits on Big Tech Bans of Business Accounts

    Limits on Big Tech Bans of Business Accounts

    The digital environment has become the primary commercial space for many companies. In this scenario, the banning of business accounts by major technology platforms, known as Big Tech, raises important questions about the limits of these companies’ power in controlling their virtual spaces.

    Legal limits on platform authority

    Although digital platforms have their own terms of use, deleting or suspending corporate profiles does not occur in a legal vacuum. Brazilian legislation sets parameters that limit these actions, protecting business users against arbitrary decisions.

    Two prominent legal instruments in this debate are the Consumer Defense Code (CDC) and the Marco Civil da Internet (Brazil’s Civil Rights Framework for the Internet). The CDC can apply to balance the relationship between the platform and the business user, ensuring transparency and preventing abusive practices. Meanwhile, the Marco Civil da Internet serves as the primary guide for rights and duties in Brazil’s digital environment, reinforcing the need for clear justifications to remove content or suspend accounts.

    Horizontal application of fundamental rights

    Another central concept in discussions on account banning is the horizontal application of fundamental rights, a legal principle establishing that basic constitutional rights must be respected not only by the State, but also in private relationships between companies and individuals.

    Applied to the context of Big Tech, this principle means that safeguards such as due process and the right to a full defense must be considered before deleting a business account. Even though platforms are private entities, they exercise a role with significant public impact and must therefore observe these rights when enforcing internal policies.

    Considerations for the corporate environment

    The deletion of a commercial profile can severely affect a company’s operations. Understanding that the power of digital platforms is limited by the CDC, the Marco Civil, and fundamental rights is an essential step for organizational governance and digital risk management.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • China reviews new cross-border anti-corruption draft law

    China reviews new cross-border anti-corruption draft law

    China’s top legislative body has begun reviewing a draft law aimed at combating cross-border corruption. The measure represents Beijing’s latest effort to expand the reach of its anti-corruption legal framework beyond its borders.

    Legislative progress and scope of the draft

    The draft Cross-Border Anti-Corruption Law was submitted for its first reading during the 24th session of the Standing Committee of the 14th National People’s Congress (NPC). Although the full text is not yet available to the public, the proposal comprises six chapters and 47 articles, establishing fundamental principles, scope of application, and the national stance regarding overseas corruption.

    According to state news agency Xinhua, enacting this law is an essential step toward completing China’s foreign-related legal framework. The new legislation aims to protect national interests and promote overseas business growth in compliance with governance rules.

    Focus on asset recovery and repatriation

    The draft bill consolidates a decade of anti-corruption practices aimed at closing jurisdictional loopholes and tackling financial crimes in offshore jurisdictions. The state news agency highlighted that the law seeks to enhance the legal tools available for repatriating fugitives and recovering assets.

    Among the primary systemic obstacles the legislation intends to address are historical difficulties in detecting crimes, collecting evidence, recovering illicit assets, and prosecuting offenders located outside Chinese territory.

    Practical impact on international business

    For companies and investors with operations linked to China, the progress of this legislation reinforces the importance of maintaining robust compliance programs. The expansion of Chinese jurisdiction over overseas corruption practices indicates tighter scrutiny of international business activities, requiring continuous attention to corporate governance standards.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • Braskem Files for R$ 56.5 Billion Out-of-Court Debt Restructuring

    Out-of-Court Restructuring Petition

    Braskem filed a petition for out-of-court debt restructuring (recuperação extrajudicial, a Brazilian statutory mechanism that allows debt renegotiation through a pre-agreed plan between a company and its creditors, subsequently submitted for judicial confirmation). The proceeding involves debts totaling R$ 56.5 billion.

    Creditor Support

    For the renegotiation to move forward and the plan to be consolidated, the company requires the support of a specific proportion of claim holders. Upon filing, Braskem already held formal approval from creditors representing 39.6% of the claims included in the restructuring.

    As the proceeding develops, the company aims to continue negotiations to reach support exceeding 50%. Reaching this threshold is the target sought by the company to enable the restructuring of the submitted debts.

    Corporate Perspective

    This development illustrates the use of out-of-court restructuring as a strategic tool to rebalance large debt volumes, prioritizing direct negotiation and consensus-building with a significant portion of creditors.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • CBS Tax Credits on Inventory During Brazil’s Tax Transition

    CBS Tax Credits on Inventory During Brazil’s Tax Transition

    The transition to the new Brazilian tax system brings important debates for the industrial and commercial sectors. A central issue for companies concerns the treatment of goods acquired before the change. Recent news indicates that existing inventory may generate credits for the Contribution on Goods and Services (CBS, a new federal value-added tax) during this adaptation period.

    The context of the tax transition

    Brazil is overhauling its consumption tax framework. The new system creates the CBS, a federal levy that will unify and replace current taxes. Because this change is not immediate, a transitional period will follow where old and new rules coexist.

    For companies, particularly in retail and manufacturing, this phase requires close attention to inventory flows. The tax treatment of items already produced or purchased that will only be sold under the new rules is a key consideration for executives and foreign investors with Brazilian operations.

    CBS credits on inventory

    Allowing inventory to generate CBS credits aims to prevent economic distortions. When a company purchases inputs or products under the previous tax regime, it incurs the taxes in effect at that time. If sales occur under the new system without appropriate credit recognition, unintended double taxation could increase operational costs.

    Signals that CBS credits will be permitted on existing inventory provide greater predictability. In practice, this means companies can use amounts already paid along the supply chain to offset taxes due under the new system, honoring the non-cumulative principle driving the reform.

    Preparing for the new scenario

    Although the possibility of claiming credits is a positive sign for asset valuation, the scenario demands preparation. Companies must maintain strict controls over:

    • The volume and value of inventory at the moment the system transitions;
    • Tax documentation proving purchases made under the old rules;
    • Accounting criteria for calculating and recording the new credits.

    Monitoring upcoming regulatory definitions for this transition is essential to ensure compliance and financial efficiency during the change of regime.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • Extrajudicial Probate: End of Mandatory Advance ITCMD Payment

    Extrajudicial Probate: End of Mandatory Advance ITCMD Payment

    It was recently reported that extrajudicial probate no longer requires the advance payment of the ITCMD (State Estate and Gift Tax). This change directly impacts how estate settlement and asset distribution are handled outside of the judicial system.

    Understanding the Key Concepts

    To grasp the scope of this measure, it is important to clarify two fundamental concepts:

    • Extrajudicial probate (inventário extrajudicial): an administrative procedure conducted directly at a public notary office (cartório), without the need for court proceedings, used to inventory and distribute the estate left by a deceased individual.
    • ITCMD: the Brazilian state tax levied on the transfer of assets and rights through inheritance or donations.

    End of the Prior Payment Requirement

    The main reported change is the waiver of prior tax payment as a prerequisite for completing the procedure at a notary office. Previously, the requirement for advance ITCMD collection often represented a financial barrier at the beginning of the probate process, as the parties involved had to disburse funds before having formal access to the inherited assets.

    Under the new guideline, advance tax collection is no longer a mandatory condition for drafting the extrajudicial probate deed. This measure allows the administrative procedure to move forward more smoothly at the notary office.

    Practical Considerations

    Exempting the prior payment of ITCMD simplifies the workflow of out-of-court probate, providing greater speed for regularizing assets. This is a relevant development for estate planning and asset management for families and investors in Brazil.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • Sale of Medicines on Marketplaces to Undergo Public Consultation

    Sale of Medicines on Marketplaces to Undergo Public Consultation

    The regulation of e-commerce in the healthcare sector will undergo new definitions. The regulatory agency has begun a process that will establish the rules for the sale of medicines on marketplaces, e-commerce platforms, and other digital channels.

    The role of the public consultation

    To define the new operating framework for digital platforms, the proposed rules will be submitted to a public consultation. This mechanism allows the market, technology companies, and civil society to follow the topic and understand the guidelines before their final approval.

    Impact on digital platforms

    The initiative seeks to establish parameters for the operation of digital channels that broker or conduct medicine sales. Defining these standards is a step aimed at aligning digital retail operations with healthcare sector oversight.

    Companies operating under the marketplace model should monitor the development of this public consultation to understand the future regulatory landscape applicable to their commercial operations.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • The Oncoclínicas Case and Statutory Tender Offers (OPA) in the Capital Markets

    The Brazilian capital market frequently encounters situations that test governance rules and the dynamics among public company investors. Recently, the case involving Oncoclínicas has raised important discussions regarding corporate protection mechanisms and shareholder conduct.

    Statutory tender offers (OPA) and shareholder activism

    A statutory tender offer (OPA, or Oferta Pública de Aquisição) is a mechanism included in the bylaws of various companies to set specific rules in cases of relevant equity acquisitions. The Oncoclínicas episode highlights the role of this instrument amid growing shareholder activism in Brazil.

    Shareholder activism occurs when investors use their position on the shareholder roster to actively influence management decisions and strategic directions. When this movement intersects with OPA trigger thresholds set forth in corporate bylaws, the market closely watches how the company’s internal rules are interpreted and applied.

    The minority dilemma: protection versus convenience

    The central discussion raised by the case revolves around the role of minority shareholders. The debate contrasts two fundamental aspects of corporate relations:

    • Minority protection: The need to ensure that non-controlling shareholders are not harmed by control transactions or by decisions that concentrate power disproportionately.
    • Opportunistic convenience: The risk that mechanisms created to protect investors might be used strategically or opportunistically to force negotiations or extract specific advantages during transition periods.

    Finding the balance between the legitimate defense of minority rights and the prevention of opportunistic behavior remains a major challenge in modern corporate governance.

    Market perspectives

    Debates like this serve as a gauge for the capital markets, highlighting the importance of clear and objective drafting in corporate bylaws. For investors, executives, and founders, the episode reinforces that a thorough understanding of governance rules is essential for legal certainty and predictability in corporate relations.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • AI Governance in Private Companies: Risks and Challenges

    AI Governance in Private Companies: Risks and Challenges

    Artificial intelligence (AI) has rapidly shifted from the experimentation phase to implementation across daily business operations. For fast-growing private companies, the technology offers substantial opportunities, such as increasing productivity, improving customer experience, and accelerating decision-making. However, accelerated adoption without adequate oversight creates significant vulnerabilities.

    Recent data indicates that nearly three out of four companies plan to implement agentic AI (systems capable of taking actions with limited human involvement) over the next two years. In contrast, only one in five possesses a mature governance model for autonomous agents. This gap exposes organizations to operational, legal, cybersecurity, and reputational challenges.

    The Mismatch Between Adoption and Governance

    AI is increasingly embedded in core business processes, with use cases including content generation, coding assistance, knowledge retrieval, data analysis, and customer support. It is observed that the greatest barriers to value creation are often organizational rather than technical. Companies reporting the most progress are those that align technology investments with employee training, establishing clear governance and defined expectations on how tools should be used across the entire organization.

    Key Artificial Intelligence Risks for Companies

    Effective AI governance begins with identifying where the technology can create risks. Key areas of concern include:

    • Data, Privacy, and Intellectual Property: AI tools process vast volumes of data. Without established controls, companies can lose visibility over how sensitive information circulates within their environments. This generates risks of unauthorized use, uncertainty over the ownership of AI-generated content, and difficulties in demonstrating compliance. The risk is compounded by shadow AI, which occurs when employees use unsanctioned tools that operate outside security controls.
    • Autonomous Actions and Agentic AI: The risk associated with autonomous agents goes beyond providing a “wrong answer” to executing a “wrong action.” For example, a chatbot at a car dealership in the United States was manipulated by a user into agreeing to sell a new vehicle for $1. This incident illustrates how tools can be pushed outside their intended scope when safeguards are weak.
    • Reliability and Performance: The performance of an AI model can drift over time due to updates, new data sources, and changes in the operating environment. Systems that are not continually monitored and re-evaluated can cause operational disruptions and poor decisions.
    • Customer Impact and Business Risk: When AI is integrated into customer-facing processes, the consequences of failure escalate. Errors or biases can translate into tangible harm. For instance, health insurers in the United States have faced lawsuits challenging the use of algorithmic tools in coverage denials, with allegations that automated systems contributed to improper determinations.
    • Vendor Dependency: Most companies build their operations using tools developed by third parties. This creates a reliance on external infrastructure and model providers, exposing the business to vulnerabilities within the AI supply chain.

    Practical Considerations

    To mitigate these risks, it is essential for companies to adopt best practices that build the trust and discipline required for the safe deployment of artificial intelligence. Structuring internal processes, defining the scope of tool operations, and maintaining continuous supervision are indispensable steps to protect the business against litigation and reputational harm.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • Decree Regulates Brazil’s Power Market for 2027

    Decree Regulates Brazil’s Power Market for 2027

    The regulatory framework for the Brazilian infrastructure sector will undergo a significant transition in the coming years. A new decree was recently issued to regulate the opening of the country’s electricity market, establishing that the changes will take effect starting in 2027.

    The 2027 Milestone

    Setting 2027 as the milestone for market opening provides a crucial planning horizon for companies, power generators, and investors. The regulation via decree formalizes the guidelines that will steer this transition, establishing a clear path toward a more flexible contracting environment.

    Strategic Planning

    For corporate entities, executives, and foreign investors operating in the Brazilian infrastructure sector, early regulation enables the structuring of new business models. The timeframe leading up to 2027 provides the necessary runway for market participants to understand the new rules and adjust their operations and power supply contracts.

    Monitoring the implementation of this regulation will be essential for companies seeking to optimize operational costs and explore new opportunities in the power sector throughout this decade.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.