OVERVIEW. Doing Business in Brazil Practical Business and Legal Considerations. Fabiano Gallo September, 2016

Transcription

1 OVERVIEW Doing Business in Brazil Practical Business and Legal Considerations Fabiano Gallo September, 2016

2 Impeachment of President Dilma Roussef

3 I m p e a c h m e n t of P r e s i d e n t D i l m a R o u s s e f Brazilian economy started to face problems during the first term of President Dilma Roussef; Such problems have been caused by a less favorable international scenario combined with: Heterodox Macroeconomic Policy; Lack of a Long-Term Planning ( power project vs. country project ); Lack of the necessary reforms (political, social security, tax and labor reforms); Lack of investments in infrastructure; Lack of credibility and political support owing to corruption scandals. Brazil entered into a political crisis, the Brazilian Real was depreciated and the economy entered into a recession. Even being a success under the public and sport standpoints, the Rio Olympic Games were also affected by the cutting of government s spending. Campos Mello Advogados September,

4 I m p e a c h m e n t of P r e s i d e n t D i l m a R o u s s e f The Brazilian GDP had a decrease of 3.8% in 2015; The inflation in 2015 was 10.67%; The year of 2015 ended with an unemployment rate of 8.5%; The Brazilian industrial production had a decrease of 8.3% in 2015, reaching its worst level in the last 12 years. Campos Mello Advogados September,

5 I m p e a c h m e n t of P r e s i d e n t D i l m a R o u s s e f Source: Brazilian Central Bank Campos Mello Advogados September,

6 I m p e a c h m e n t of P r e s i d e n t D i l m a R o u s s e f Source: Brazilian Institute of Geography and Statistics Campos Mello Advogados September,

7 I m p e a c h m e n t of P r e s i d e n t D i l m a R o u s s e f Source: Brazilian Institute of Geography and Statistics Campos Mello Advogados September,

8 I m p e a c h m e n t of P r e s i d e n t D i l m a R o u s s e f Source: Brazilian Institute of Geography and Statistics Campos Mello Advogados September,

9 I m p e a c h m e n t of P r e s i d e n t D i l m a R o u s s e f Besides the economic mistakes, Roussef s government employed creative accounting tools to hide Brazilian public deficit, which based the impeachment under a legal standpoint; During the impeachment process, the Vice-President Michel Temer assumed the interim presidency and the Brazilian economy started to improve when compared to Roussef s government; President Dilma Roussef has definitely been impeached on August 31, 2016, and Michel Temer assumed the Brazilian presidency on a definitive basis. Campos Mello Advogados September,

10 Current Scenario

11 C u r r e n t S c e n a r i o President Michel Temer is a neoliberal politician and is expected to substantially change the path to be followed by the country during the next years. Campos Mello Advogados September,

12 C u r r e n t S c e n a r i o The measures that are planned to be taken by Temer s government include: A social security reform; Constitutional changes to provide a cap for spending of the Federal Government; Creation of temporary new taxes; New law for State-Owned Companies with more transparency and improved corporate governance less political influence in the management of such companies; Privatizations; Substantial investments in the infrastructure sector through concessions and PPPs; and Incentive to foreign investments. Campos Mello Advogados September,

13 Foreign Direct Investments (FDI) in Brazil

14 F o r e i g n D i r e c t I n v e s t m e n t s ( F D I ) in B r a z i l Even during the economic crisis, Brazil received a sizeable FDI amount; Brazil is still the 6 th country in the world that receives more FDI. Campos Mello Advogados September,

15 F o r e i g n D i r e c t I n v e s t m e n t s ( F D I ) in B r a z i l Source: United Nations, 2016 Campos Mello Advogados September,

16 Brazilian Expanding Areas

17 B r a z i l i a n E x p a n d i n g A r e a s Brazil holds a good space in the sectors of production of goods and services as the consumer market still has lots of potential to grow; Brazil also holds a huge agricultural potential, being one of the largest exporters worldwide; In addition, Temer s government announced a plan of privatizations, concessions and PPP s in the total amount of R$269 billion until 2019; It is expected that a material portion of such investments be made by foreign companies and governments. Campos Mello Advogados September,

18 B r a z i l i a n E x p a n d i n g A r e a s The investments will be focused on the following areas: Oil & Gas; Renewable Energy; Telecommunications; Transport; Roads; Urban Mobility; Airports; and Ports. Campos Mello Advogados September,

19 B r a z i l i a n E x p a n d i n g A r e a s The government developed a plan called Investment Partnership Program ( PPI ) in order to: Expand the investment opportunities; Increase the employment rate; Improve the public infrastructure. The Program establishes rules and a calendar for the concessions, privatizations and PPP s; More stability and foreseeability for private investors; The program will be supported by: BRL 30 billion of financing from BNDES and FI-FGTS; Consistent return rates and feasibility studies; and Pre-approved Environmental Licensing. Campos Mello Advogados September,

20 M&A Trends Due Diligence

21 M & A T r e n d s Due to the recent crisis and the depreciation of the Brazilian Real, the price of Brazilian assets is relatively low; Distressed M&A has seen a substantial increase, with cash-strapped companies particularly those affected by the Car Wash scandal turning to restructuring proceedings and selling off distressed assets as a means of staying alive. Campos Mello Advogados September,

22 M & A T r e n d s As the Brazilian economy seems to start a gradual recovery, Brazilian assets are a good longterm investment. Financial analysts have defined the Brazilian assets as the decade s deal in view of their current prices; Increased number of transactions starting with JV and cooperation agreements before deciding on definite M&A deals. Campos Mello Advogados September,

23 M & A T r e n d s Source: PricewaterhouseCoopers Brazil Campos Mello Advogados September,

24 M & A D u e D i l i g e n c e In Brazil, small and mid-sized businesses represent the majority of companies. Usually, these companies: (i) do not follow reporting and controls at international standards (e.g.: auditing rules); and (ii) are not listed in the stock exchange market. Due diligence process is key for the successful acquisition of companies. A separate investigation by an auditing firm should be conducted simultaneously with the legal due diligence. Campos Mello Advogados September,

25 M & A D u e D i l i g e n c e Main areas to be covered in a due diligence investigation: (i) Labor; (ii) Tax; (iii) Environmental; (iv) Compliance. In all such areas there are certain situations where the limited liability concept may be disregarded and contingencies may flow to the shareholders, directors and officers. Campos Mello Advogados September,

26 Overview about Campos Mello Advogados

27 C a m p o s M e l l o A d v o g a d o s D L A P i p e r DLA PIPER has a well established practice in Latin America, advising clients in every industry sector for clients worldwide; CAMPOS MELLO ADVOGADOS is a key player in DLA Piper s footprint in Latin America, advising international clients operating and investing in the Brazilian market, as well as important local clients; We operate with DLA Piper through a Cooperation Agreement executed in Campos Mello Advogados September,

28 C a m p o s M e l l o A d v o g a d o s A b o u t U s Full service business law firm; Offices in São Paulo and Rio de Janeiro; 140 lawyers. The team has been extremely successful in providing the assistance we need in all areas. The only problem now is when we have to work with others firms, because we realize how accustomed we have became to Campos Mello s high standards. (Client, Chambers Latin America) Campos Mello Advogados September,

29 THANK YOU Campos Mello Advogados September,

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