The Committee on Economic Development, Industry and Commerce approved on Monday (1st) the authorization granted to the Executive Power, to totally or partially cancel foreign investments coming from sovereign funds to Brazil, which represent a threaten to national sovereignty.

According to that bill – PL 3581/08 – proposed by Fernando Diniz (PMDB-MG), Brazilian government should also propose an adjustment in the objective of the investment, to eliminate the detected threaten and to keep the resources in Brazil.

That decision will always depend on the authorization of Federal Senate, and can be adopted within 180 days from the date on which Central Bank communicates the entrance of the investment in Brazil to the Sate Office.

The Executive Power will also have the option to ask for the authorization from Senate to negotiate with the country from which the sovereign fund comes. After an agreement is closed, Executive Power can submit it to the ratifying of that House, which will always decide according to the absolute majority of votes.

Those rules are provided for at the substitution bill of the rapporteur, Deputy Dr. Ubiali (PSB-SP). The original bill established that the only solution would be the total or partial repatriation of the investments considered as harmful to national sovereignty.

Conditions
According to the approved substitution bill, the Executive Power will only impose the established restrictions when, simultaneously:

- the resources of sovereign funds are used to acquire more than 25% of the voting shares of a domestic company;
- there is a valid fear that the investment has the objective to harm national sovereignty; and
- the funds are being invested in the infrastructure or to national defense area – the original bill mentioned only roads, ports and sectors related to national defense.

Procedure
The bill, which is being processed in conclusive character, will still be reviewed by the Committees on Finances and Taxation; and on the Constitution and Justice and Citizenship.

Report - Edvaldo Fernandes
Editing- Natalia Doederlein
Translation - Positive Idiomas Ltda