Provisional Measure No. 2128-10 Of May 25, 2001

Original Language Title: Medida Provisória nº 2.128-10, de 25 de Maio de 2001

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PROVISIONAL MEASURE In 2,128?10, DE May 25, 2001.

Changes income tax legislation with respect to tax incentives for exemption and reduction, sets guidelines for tax incentives for the application of income tax on income in the Investment Funds Regionals, and it gives other arrangements.

THE PRESIDENT OF THE REPUBLIC, in the use of the attribution that confers you the art. 62 of the Constitution, adopts the following Interim Measure, with force of law:

Art. 1º Without prejudice to the other standards in force applicable to matter, starting in the year?calendar of 2000 and until December 31, 2013, legal persons who have approved design for installation, enlargement, modernization or diversification framed in sectors of the economy considered, in act of the Executive Power, priority for regional development, in the areas of acting, of the extinction Extinction of the Northeast Development? SUDENE and Superintendence of Amazon Development? SUDAM, will be entitled to the reduction of seventy-five per cent tax on income and additional non-restitution, calculated on the basis of profit from the holding.

§ 1º The fruition of the tax benefit referred to in the caput dar?if?á from the year?subsequent calendar to the one in which the installation, modernization, extension, or diversification project enters into operation, second lau by the Ministry of National Integration, until the last working day of the month of March of the calendar year subsequent to the commencement of fruition.

§ 2º In the event of the expedition of constitutive laude after the date referred to in § 1º, the fruition of the benefit give?if?á from the year?schedule of the laude expedition.

§ 3º The term of fruition of the tax benefit is equal to the period between the year of commencement of fruition and December 31, 2013, and may not exceed ten years.

§ 4º For the purposes of this article, the diversification and total modernization of existing venture will be considered to be implantation of new producer unit, second criteria laid down in regulati

§ 5º In the chances of extension and partial modernization of the venture, the benefit provided for in this article is conditioned on the increase in actual capacity installed in the expanded or modernized production line in, at the very least:

I? twenty per cent, in the cases of infrastructure ventures?structure (Law No. 9,808 of July 20, 1999) or structurers, in the terms and conditions laid down by the Executive Power ; and

II? fifty per cent, in the cases of the other priority endeavours.

§ 6º The provisions of the caput shall not apply to the pleas approved or filed in the competent organ and in the form of the previous legislation, until August 24, 2000, for which the discipline introduced by the caput of the art. 3º of Law No. 9,532 of December 10, 1997.

§ 7º Legal persons holding projects for implantation, modernization, extension or diversification filed in the competent body and in the form of legislation prior to August 24, 2000, which will come to be approved on the basis of in the discipline introduced by the caput of the art. 3º of Law No. 9,532, 1997, and whose activity falls within the economic sector considered priority, in act of the Executive Power, will be able to plead the reduction provided for in this article by the deadline that will remain in order to complete the ten-year period.

§ 8º The laureate referred to in § § 1º and 2º shall be exfiled in accordance with standards laid down by the Ministry of National Integration.

Art. 2º It gets extinct, for the period of ascertaining started from 1º January 2001, the tax benefit of reducing the income tax and additional non-restitution, of which it treats art. 14 of Law No. 4,239 of June 27, 1963 and the art. 22 of the Decree?Law No. 756 of August 11, 1969, except for those ventures of the sectors of the economy that will come under consideration, by the Executive Power, priority for regional development, and for those with headquarters in the area of jurisdiction of the Franca Zone of Manaus.

Art. 3º Without prejudice to the other, standards in force on the matter, it is maintained, until December 31, 2013, the percentage of thirty per cent provided in the inciso I of the art. 2º of Law No. 9,532, 1997, for those ventures of the sectors of the economy that will come under consideration, in act of the Executive Power, priority for regional development.

Art. 4º The arts. 5º, 9º and 21 of Law No. 8,167 of January 16, 1991, pass vigorously with the following changes:

" Art. 5º The Investments Funds will apply their resources, as of August 24, 2000, in the form of subscription of convertible debentures in shares, from issuance of the beneficiary companies, observing?if the conversion will only occur:

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§ 1º As of 1º September 2000, will there be only project approval that has proven economic viability?financial, attested by updated studies, and which is properly framed in the approved guidelines and priorities by the respective Deliberative Council, by making the issuance of the debentures conditional on the appropriate constitution of the guarantees provided for in § 4º of this article

§ 2º The Operator Banks are responsible for the conversion that it treats the caput, to which should it take effect?if, in full, within one year from the date of issuance of the Implanted Venture Certificate (CIS), in the terms of § 12 of this article, not admitted to secondary allotment of the debentures.

§ 3º Vencil the time limit set for conversion, pursuant to § 2º, shall remain the obligation to rescue the debentures, at the respective maturity, to be carried out by the issuing company.

§ 4º The debentures to be underwritten with the resources of the Funds should have real or floating warranty, cumulatively or not, admitted, in relation to the former ; its constitution in competition with other credits, at the discretion of the Bank Operator, plus bail provided by controller shareholders.

§ 5º In the event of debentures with a floating guarantee, the issuing company shall assume, in the issuing deed, the obligation not to divest or burden real estate or other well subject to registration of property which is part of the project, without the prior and express authorization of the Ministry of National Integration, which should be averaged in the competent registration.

§ 6º The issuance deed of debentures is far?á by public or particular instrument.

§ 7º It does not apply to the debentures of which it treats this Act, the provisions of § 1º of the art. 57, art. 66 and art. 70 of Law No. 6,404 of December 15, 1976 (Law on Societies by Actions).

§ 8º The ceilings and minimum limits for the grace, amortization and maturity deadlines and other conditions of the debentures issued on the basis of the provisions of this article shall be established by the Ministry of National Integration, taking in consideration of the sectorial and local peculiarities of the endeavors to be encouraged.

§ 9º The remuneration of debentures issued on the basis of the provisions of this Act shall be established, as per the legislation in force, by the National Monetary Council, by you or its mandators, using?whether as reference the charges financial for financing granted with resources from the Northern Financing Constitutional Funds, North East and Center?West.

§ 10. Contracts regarding the projects to be benefited from proceeds from the incentives of the Northeast and Amazon Investment Funds will contain clause predicting that the financial charges set out as remuneration for the debentures to which they are refers to this Act will be reviewed annually and whenever the Long-term Interest Rate? TJLP present cumulative variation, for more or less, over thirty per cent.

§ 11. The review that treats § 10 will be effected in the month of January of each year, and may occur at any time, whenever the cumulative variation of the TJLP, for more or less, from the month of January of the year 2001 or the date of the last revision, reach percent higher than thirty percent.

§ 12. The implantation certificate to which you refer to the art caput . 19 of the Decree?Law No. 1,376 of December 12, 1974, pass on to be named Implanted Venture Certificate (CEI), preserving?whether all rights and duties derived from actions and events administered under the now changed denomination. " (NR)

" Art. 9º Regional Development Agencies and Operators Banks shall ensure to legal persons or groups of affiliated companies that, either isolated or jointly, hold at least fifty and one per cent of the voting capital of the titular holding company of sector venture of the economy considered, by the Executive Power, priority for regional development, the application, in this venture, of resources equivalent to seventy percent of the value of the options that it treats art. 1º, inciso I.

§ 1º In the hypothesis that it treats this article, the limits of fiscal incentives contained in the approved financial scheme for the project, which, in addition to adjusted to the annual budget of the Funds, will not include any installment of resources for application in art compliance. 5º of this Act.

§ 2º In cases of joint participation, the minimum threshold of twenty per cent of the voting capital will be obeyed for each legal person or group of affiliated companies, to be integralized with own resources.

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§ 4º Regarding the infra projects?structure, as per constant definition of the caput of the art. 1º of Law No. 9,808 of July 20, 1999, as well as those considered to be structural for regional development, thus defined by the Executive Power, taking as a basis the state and regional development plans, the limit on which it treats § 2º of this article will be five per cent.

§ 5º The provisions of § 1º of the art. 1º of Law No. 9,808, of 1999, will be carried out only in the form of this article or, exceptionally, in composition with art resources. 5º of this Act, upon subscription of convertible debentures in shares, at the discretion of the Ministry of National Integration.

§ 6º Exceptionally, only for the cases of companies holding the projects constituted in the form of open companies, the rules in force in the inciso II of § 2º of the art will be maintained. 1º of Law No. 9,808, 1999.

§ 7º Consider?if affiliated companies, for the purposes of this article, those whose majority of the voting capital is controlled, directly or indirectly, by the same physical or legal person, understood also, the latter, as member of the group.

§ 8º Investors who fall within the hypothesis of this article should substantiate the ability to port the resources required for project deployment, discounted the holdings in other projects in the area of extinction acting SUDENE and SUDAM, whose shareholder transfer pleas will be submitted to the Ministry of National Integration, save in cases of minority joint participation, when observed any of the conditions set out in § 9º.

§ 9º The application of the resources of legal persons or groups of affiliated companies that fall within the hypothesis of this article will be carried out:

I? when the stock control occurs in an isolated manner, under the modality of common or preferred shares, observed the standards of the societies by actions ; and

II? in the cases of minority joint participation, under the modality of shares or convertible debentures in shares.

§ 10. The Ministry of National Integration may exceptionally authorize the admission of new shareholder with the minimum participation required under § § 2º, 4º and 6º, deducted from commitments made on other projects already approved by the extinction SUDENE and SUDAM, with the goal of application of the incentive in the form established in this article, provided that the new minority shareholding comes to guarantee the resources of previously anticipated incentives, in place of legal person deductions or group of affiliated companies that:

I? is in the process of bankruptcy, bankruptcy or liquidation ; or

II? did not submit, in the tax returns on the income of the last two exercises, incentive generation capacity compatible with the commitments made on the occasion of the project's approval, based on technical advice from the Secretary?Executive of the respective defunct Regional Development Superintendency.

§ 11. In the hypotheses of merger, incorporation or spation of legal person holder of shareholding, the right to use the incentive, in the form established in this article, will automatically be transferred to the successor legal person, maintain the percentage of which they treat § § 2º, 4º and 6º of this article.

§ 12. Are resources deducted from income tax for application on own project, as set out in this article, should be applied by December 31 of the second subsequent year to the year?calendar to match the option, under penalty of reversal to the respective Fund with the corresponding quota issue in favor of the optant.

§ 13. The time limit for § 12 may be extended, at the discretion of the Ministry of National Integration, when the application of the resources is pending judicial or administrative decision.

§ 14. The application of the resources in the modality provided for in this article will not be able to exceed sixty per cent of the total investment value provided for in the project or, exceptionally, seventy per cent for the case of infra projects?structure, at the discretion Ministry of National Integration, obeyed to the limits of fiscal incentive constants of the Calendar of Inversions and Mobilization of Approved Resources. " (NR)

" Art. 21. .........................................................................................................................................................................

§ 1º The beneficial companies of tax incentives, which have net worth equal to or less than R$ 10,000,000.00 (ten million reais), are waived:

I? of registration in the Commission, of Securities? CVM ;

II? of the independent audit achievement of their demonstrations?financial ; and

III? of the sending of copy of the financial statements to the CVM.

§ 2º The securities of issuance of tax incentives benefiting from tax incentives using some of the colleges provided for in § 1º and integrate the portfolios of FINOR, FINAM and FUNRES will only be negotiated:

I? in special auctions on stock exchange, upon the process of conversion of Investment Certificates, veded, in this case, the faculty established in § 2º, of the art. 8º of this Act, of stipulation of the payment in current currency of share of the price of the offered securities ; or

II? privately, following its acquisition at the special auctions

§ 3º In the case described in the inciso I of § 2º, the special auction editals should appear:

I? the condition of a company beneficial of tax incentives with a net worth equal to or less than R$ 10,000,000.00 (ten million reais) unregistered and unchecked by the CVM ; and

II? the warning that the securities under the conditions described in inciso I are not traded on a stock exchange or counter market and that their purchasers will only be able to negotiate?them in private transactions.

§ 4º The colleges provided for in § 1º and incisos of this article do not apply to the beneficial undertakings of tax incentives that have disseminated securities on the market, until they proceed to the cancellation of their registration in the CVM, upon public offer of the acquisition of the entirety of those securities, pursuant to the standards set by it. " (NR)

Art. 5º The project holders approved by the extinction SUDENE and SUDAM, which have obtained the Implanted Venture Certificate (CEI), at its discretion and with approval from the Ministry of National Integration, for the part or all of the vincendas, convertible and non-convertible debentures, subscribed in favor of FINOR and FINAM, will be able to:

I? to the rescue of the debentures no?convertible upon conversion operation of these papers in convertible debentures ; met the same conditions and limits established rivers § § 1º and 2º of the art. 5º of Law No. 8,167, 1991, in what couber ;

II? authorize the Ministry of National Integration and the respective Operator Bank to promote secondary distribution of these securities or have it included?them in the special auctions held on stock exchanges, referred to in art. 8º of Law No. 8,167, 1991, met the specific standards regarding matter ;

III? quiger these securities by renegotiating the debit, based on their current value, under conditions similar to those in the rural credit securitization process regulated by the National Monetary Council ; or

IV? renegotiate these securities by means of grace and maturity more appropriate to the updated payment capacity of the project, with financial burdens equivalent to those of the Financing Constitutional Funds, required in the cases of medium-size ventures.

§ 1º For the purpose of this Provisional Measure, consider?if debts overdue only those debentures won and not settled on the date fixed for their payment.

§ 2º With respect to debts in convertible debentures and not?convertible into overdue shares, of issue of the companies referred to in the caput, these will be able to quip or renegotiate the debtor balance, for their current value, the criteria set out in the incisos III and IV of this article.

§ 3º The companies holding the projects referred to in this article will have the deadline of ninety days, counted from August 24, 2000, to express their preferences in relation to the alternatives provided for in this article, fining which shall comply with the obligations assumed, in accordance with the previous legislation.

Art. 6º Companies with projects in deployment phase and have registration of delay occurrence in incentive resource releases, regarding the approved original schedule, without being able to impute to them responsibility for that occurrence, they will be able to request the re-evaluation and, eventually, the restructuring of their project, by the Ministry of National Integration.

§ 1º Companies that fall within the hypothesis provided for in this article, of conformity with the opinion of the Ministry of National Integration, which will set, inclusive, the deadline for completion of the project, may have the balance of their debts in convertible debentures and no?convertible, overdue and vincendas, dispensed with the incidence of the anticipated financial burden, including those of mora, since August 24, 2000 until the project obtain the respective CIS, when, then, these companies will be framed in the situations provided for in art. 6º.

§ 2º The debentures vincendas object of § 1º will have their amortization and maturity deadlines automatically extended from August 24, 2000, upon the granting of a new grace period, pursuant to § 1º of the art. 2º of Law No. 9,126 of November 10, 1995.

Art. 7º In the other cases of projects in a deployment phase, where there is a timely receipt of the incentives provided for in the original schedule, the respective holding companies, when receiving the CIS, will be able to, for their debts in debentures, won and vincendas, opt for the alternatives envisaged in art. 6º, under conditions that are to be fixed in opinion of the Ministry of National Integration.

Art. 8º The companies to which the arts refer. 7º and 8º should apply for what they provide the quoted devices to the Ministry of National Integration, within the maximum period of one hundred and eighty days, counted, in the case of art. 7º, as of August 24, 2000, and, in the case of art. 8º, as of the date of receipt of the CIS, under penalty of loss of the right to those faculties.

Art. 9º Case the Ministry of National Integration constate irregularities in the projects of the companies referred to in the arts. 7º and 8º, they shall be subjected to the special audit procedure with a view to the collection of the resources until then released and to the exclusion of the system, in compliance, with the regulatory provisions in force.

Art. 10. The remunerations provided for in art. 20 of Law No. 8,167 of 1991 in favor of the organs managers of the Investment Funds will apply until December 31, 2000.

§ 1º As of 1º January 2001, and until May 5, 2001, the date of the extinction of SUDENE and SUDAM, the remuneration of Superintendencies by the administration of the Funds will be three per cent calculated on the basis of the value of each release by the respective Fund, and intended for the cost of the research and development activities, qualification and improvement of human resources, considered to be priority in relation to the sectors and endeavors recipient of the incentives, as well as the institutional promotion of the Funds.

§ 2º The value of the remuneration provided for in § 1º will constitute direct charge to be covered with resources from the Funds, so there will be no issuance of Investment Certificates with respect to the value of the remuneration mentioned.

§ 3º The remuneration that is up to the Banks Operators by the administration of these Funds, as of January 2001, will be established by joint initiative of the Ministries of National Integration and the Finance.

Art. 11. The administration of the handling of financial resources earmarked for the execution of ventures supported by the Regional Investments Funds shall comply with specific rules, to be established by the Executive Power, on the joint initiative of the Ministries of the Farm and National Integration.

Art. 12. Apply?whether the FUNRES and the Executive Group for Economic Recovery of the State of the Holy Spirit? GERES, in what couber, the provisions of this Provisional Measure.

Art. 13. The trustees of the Constitutional Funding Funds will make jus, as of January 31, 2001, at the rate of administration of three per cent per year on the net worth of the respective Funds, appropriate monthly.

Single Paragraph. The administration fee that it treats the caput is limited, in each financial year, to twenty percent of the value of the transfers of which it treats the article "c", inciso I, of the art. 159 of the Federal Constitution, held by the National Treasury to each of the bank administrators.

Art. 14. The deadline of which it treats § 2º of the art. 3º of Law No. 10,177 of January 12, 2001, for the demonstration of borrowers, is extended until May 31, 2001.

Art. 15. Are the acts practiced on the basis of the Provisional Measure No. 2,128 to be convalidated?9, of April 26, 2001.

Art. 16. This Provisional Measure comes into force on the date of its publication.

Art. 17. Revoke?if the art. 4º of Law No. 9,532 of December 10, 1997.

Brasilia, May 25, 2001 ; 180º of Independence and 113º of the Republic.

FERNANDO HENRIQUE CARDOSO

Pedro Malan

Simon Cirineu Dias