Yesterday (06.06.2019), a majority of the Supreme Federal Court rejected a challenge that had been presented against Federal Law nº 13.303/2016, which sets forth the legal framework of state-owned enterprises and their subsidiaries. The following conclusions were affirmed:

  1. Sale of state-owned enterprises directly controlled by the Federal Government depends upon a previous legislative authorization and must be executed through a formal tender process, as set forth in Brazilian statutes;
  2. Sale of subsidiaries of state-owned enterprises does not depend upon a specific legislative authorization and does not have to be executed through a formal tender process. Nevertheless, such sale must be carried out by means of a "competitive procedure" abiding by the "principles applicable to the Public Administration."

Specifically on the conditions that would have to be met so that subsidiaries of stateowned enterprises could be sold, the Ministers rendered the following votes:

The decision rendered by the Supreme Federal Court is aligned with the conclusions of the Brazilian Federal Audit Court and guarantees the correction of divestment procedures initiated by Brazilian state-owned enterprises. Further, it allows their divestment projects to be promptly resumed especially those already announced by Petrobras and Eletrobras , generating additional revenues to the Federal Government and allowing the Bolsonaro Administration to pursue one of its strategic objectives

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.