The Alienist – Machado de Assis

A classic of Brazilian literature, this fiction written by Machado de Assis is, one hundred and thirty years after its original publication, one of the most devastating reflections about how insane science can be.
The protagonist Simão Bacamarte is a doctor who get interested in psychiatry, starting a study about insanity in the city of Itaguaí, in the State of Rio de Janeiro, where he launches  a hospice – considered the most modern method in the treatment of psychiatric diseases at that time -, gathering the local population for his experiments.  It’s a surprising and modern story, with brings an intense debate about the limits between madness and reason, insanity and lucidity.

The tug-of-war for calculating the PIS and Cofins

The PIS and Cofins are social contributions levied on the company’s revenues and have become quite complex due to excessive rules.
There is a strong debate on what type of revenue shall be considered for calculating these taxes. One example is the not-so-recent decision of the Brazilian Supreme Federal CourtSTF) about the exclusion of the VAT taxICMS) from the calculation basis of the PIS and Cofins, which applicability remains subject to discussions until these days.
Another revenue item subject to debate is the interest on capitaljuros sobre capital próprio, or JCP), a type of remuneration paid by the companies to their shareholders as interest over the invested capital. In 2015, Decree No. 8,426 made it mandatory to include the interest on capital in the calculation basis of the PIS and Confis.
Last may, however, taxpayers were awarded with an important decision from the Administrative Council of Tax AppealsCarf).
Carf decided not to charge PIS and Cofins on interest on capital received by a financial institution in the year of 2000 based on the argument that interest on capital is not a revenue generated directly from the company’s business and, thus, cannot be considered for the purposes of tax payment.
On the same case, Carf also decided for the exclusion from the calculation basis of the PIS and Cofins revenues generated from rentals of real estates owned by the refereed financial institution, which clearly have no relations with its core activities.
It is a good precedent for taxpayers, as it demonstrates Carf’s commitment to review these matters on a case-by-case basis to evaluate which revenues relate to the taxpayer’s core activities and which do not.
Carf’s decision, however, applies only to administrative and judicial discussing events that occurred before the year of 2015, i.e. before the enactment of Decree No. 8,426.
We will keep an eye on these discussions.
By Julia Malafaia Vituli Silva, associate at Candido Martins Advogados

Back to the future: digital signature in M&A Transactions

In recent years, we have seen a significant growth in the number and in the volume of M&A transactions in Brazil. The volume of operations announced in 2018 grew 28% compared to 2017 but was smaller than the number of transactions announced in 2014, for example, as published by the Brazilian Association of Financial and Capital Market EntitiesANBIMA).
If compared to countries such as the United States and those of the European Union, M&A activities in Brazil are still shy and we are still crawling towards the de-bureaucratization of the transactions.
Although the negotiation practice applied in Brazil is very similar to North American and European models, including the use of clauses influenced by contracts from these countries, we are still living in the past as to the use of technological innovations that bring agility and greater efficiency to these processes. A great example of this is the execution of agreement through digital signatures.
In the United States, for example, a contract is considered validly executed by the parties if it is signed electronicallyeven without digital certification). In our country there is already a law validating the digital signaturethe one issued by the Brazilian Public Key Infrastructure, ICP-Brasil). In this sense, the digital signature is already being widely used in the Brazilian courts, and the positive results in terms of efficiency and economy of resources are enormous. So why not use it to close deals? Why not move forward to the future?
The answers we hear are many, but they almost always go by the expressions “lack of legal certainty”, “possibility of invalidating the deal” and even “why change something that has been done in the same way for so many decades?”
But if technological evolution has already given us the necessary tools to remove any of these questions, then again, we ask, why not make use of the digital signature in M&A transactions?
The answer: we’re already doing this in our firm! Most of the transactions we conduct are being closed without the printing of one single sheet of paper, with only digital signatures of the parties. And the reality is that this has been widely accepted by our clients, from the most varied sectors of the economy.
For those who live in the M&A transactions world, used to print blocks and blocks of paper documents to be initialed and signed by several parties, the new process is shocking! It literally shows us that the future has arrived!
It is important to say that the validity and effectiveness of the business are totally preserved. In fact, digital signature is even more secured than physical signatures, as there is no way to forge it, not to mention the enormous savings of time and resources, avoiding, for example, traveling, endless meetings, endless paper prints, and so on.
The digital signature is a reality, and for M&A transactions it provides the parties with a better experience, with significant gains for everyone involved! To the future and beyond!
By Daniel Rodrigues Alves, lawyer at Candido Martins Advogados