2023-05-06 01:42:00
The Attorney General’s Office (AGU) filed, this Friday (5), with a preliminary injunction at the Federal Supreme Court (STF) so that the Union has voting power proportional to the shareholding it has in Eletrobras. After the privatization of the company, completed in 2022, the public authorities were entitled to less than 10% of the votes at the company’s meeting, despite holding 32.95% of the shares.
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For the AGU, the provisions of the law with these limitations represent a serious injury to public property and interest. These conditions are “unjustifiable from a legal-constitutional point of view”, according to the Union’s lawyers. Only the Union has limited participation in voting.
The AGU’s direct action of unconstitutionality (ADI) is also subscribed by President Luiz Inácio Lula da Silva (PT). The text asks the STF to remove the rule of the Eletrobras privatization law that prohibits the shareholder or group of shareholders from casting votes in excess of 10% of the number of shares into which the company’s voting capital is divided. This understanding would be valid only in the case of shareholders with this position before the privatization process.
The ADI filed at the STF requests the suspension, on a preliminary basis, of these provisions of the law, with retroactive effects. For AGU, the limiting rule should only apply to voting rights related to shares acquired after the privatization of the company.
According to the fundamentals of the AGU action, with the sale of the majority of the capital of Eletrobrás, there was an increase in resources in the company through a public offering of shares on the stock exchange. The Union held approximately 43% of the common shares (considering direct control and other forms of participation). However, as per the rule imposed by the Privatization Law, the government’s voting power was reduced to less than 10% of the voting capital.
The rule questioned by the AGU was originally adopted to “pulverize the company’s shares” by preventing it from being controlled by economic groups that divert it from social interest purposes. However, the AGU argues that, instead of fulfilling the purpose for which they were instituted, the devices had the practical effect of indirectly expropriating the Union’s political powers in the company.
Violation of property rights
For the AGU, the rule limiting the right to vote, when analyzed in conjunction with other aspects of the privatization process of Eletrobrás, generates disproportionate damage to the Union. The limitation would therefore be a violation of the federative entity’s property right, “the principles of reasonableness, proportionality, and various constitutional commandments that govern the performance of the Public Administration”.
Lawyers point out that the rule only restricts the property right of the Union, the only shareholder to own more than 10% of the shares. “Thus, the 10% limitation — which affects only and exclusively the public good owned by the Union — encourages the maintenance of the status quo, in which small shareholders actually control the company to the detriment of the political power of the Union in the assemblies”, argue.
Privatization
The AGU points out, however, that the purpose of the action is not the renationalization of Eletrobrás, which will continue to be a company under private management, but rather the protection of the public interest. The action says that the purpose is to obtain an adequate interpretation of the legislation so that the Union participates in the management of Eletrobrás in a proportionate way to the public investment.
Eletrobras
Eletrobras, responsible for operating 101 power generation plants from different sources, is the largest electricity company in Latin America. It has an installed capacity of 42,600 mW and 73,800 km of transmission lines throughout the country. It directly employs around 10,000 people. In 2022, it had a net profit of BRL 3.6 billion.
With information from the Attorney General’s Office
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