Transformation of State-owned companies at the federal level

Such measures include the transformation into Corporations of any state-owned company in which the Federal Government holds a stake in the capital or in the decisions-making process (without considering the specific legal structure and even if it does not have a corporate legal structure); and the repeal of the existing state-owned companies regimes: Law No. 13,653 of State Companies, Decree-Law No. 15,349 of Mixed Economy Corporations and Law No. 20,705 of State Corporations (the most commonly used in the last years).

DNU 70/2023 sets a maximum transition term of 180 days from the DNU 70/2023’s issuance date to transform and register the newly created corporations before the applicable Corporate Authority.

It also provides that that the newly created corporations:

• Will be subject to Law No. 19,550 of General Corporations as applied to the corporations in which the Federal Government does not hold a stake.

• Will not hold public law prerogatives, advantages in their good and services purchases or powers to prioritize or grant benefits in their legal relations.

• Will be subject to the control of the applicable Corporate Authority.

• Will only be subject to Law No. 24,156 of Financial Administration and Public Sector Control Systems and implementing regulations when the Federal Government holds a majority stake in the shareholding.

These provisions will not apply, as a general rule, to the state-owned companies in which provinces or municipalities hold a stake (as long as the Federal Government does not hold a stake in them).

Lastly, DNU 70/2023 allows that the newly created corporations be subject to a Participated Property Programs to transfer their shares to their employees or to a privatization process.

For such purpose, DNU 70/2023 amends the Participated Property Program regime provided in Law No. 23,696 on State Reform. Moreover, it repeals certain restrictions that prevented the privatization or assignment of the shares that the Federal Government holds over certain companies.