Subsidiaries to be sold without legislative authorization and competitive bidding
STF allows subsidiaries of state-owned companies and government-controlled companies to be sold without specific legislative authorization and competitive bidding.
On June 6, by a majority vote, the en banc Federal Supreme Court (STF) found for the constitutionality of the provisions of Law No. 13303, of 2016, which sets forth the legal status of state-owned companies, government-controlled companies, and their subsidiaries with regard to the sale of subsidiaries.
The following conclusions prevailed:
1. Disposition of the Federal Government’s control over state-owned companies and government-controlled companies requires previous legislative authorization and formal bidding procedure.
2. Disposition of control of state-owned companies and government-controlled companies over their subsidiaries does not require specific legislative authorization and can be conducted irrespective of a formal bidding procedure. However, a competitive procedure compliant with the government’s principles is required.
STF’s decision provides legal certainty to investment rationalization processes of Brazilian state-owned companies, and State reduction in compliance with the Federal Accounting Court, positively impacting on, for example, the «divestiture» plans announced by Petrobras e Eletrobras. Consequently, additional revenue is generated to the Federal Government, enabling it to reach one of its strategic objectives quicker.