Last September 19, the Senate approved the bill (PL No. 2.646/2020) that creates infrastructure debentures, to be issued by public-utility companies.
Debentures are negotiable instruments representing loans issued by companies and may be acquired by individuals or legal entities on the market, remunerated by interest and adjustment for inflation until full payment.
The bill provides that funds raised by means of these debentures shall be earmarked for infrastructure projects or activities that are intensive in research, development, and innovation. This measure is in addition to other initiatives the Brazilian government is implementing, such as incentivized debentures (governed by Law No. 12.431 of June 24, 2011), for the purpose of diversifying long-term private funding sources in Brazil.
Please note that infrastructure debentures are different from incentivized debentures, as they grant different tax benefits. While incentivized debentures grant benefits to the buyer, such as Income Tax exemption for individuals and tax rate reduction for legal entities, infrastructure debentures grant benefits to the issuer, with a reduction by thirty percent (30%) in the interest paid to the bondholders in the tax basis of Income Tax – IR and Social Contribution on Net Income – CSLL.
The approved bill also establish the maximum term for issuing these infrastructure debentures until December 31, 2030, according to the regulations for investment funds in the industry. It also permits that infrastructure debentures be issued by direct or indirect controlling companies of the specific companies, including concessionaires, permittees, authorized companies, or lessees covered by the bill.
The enactment of regulations to define project classification criteria and incentives to environmental and social initiatives is planned.
Please note that persons related to the issuer of the debentures as defined in said bill (controlling shareholders, shareholders holding more than ten percent (10%) of the voting shares, managers, and relatives up to the 2nd degree cannot purchase the debentures, which restriction also applies to funds with shareholders holding more than ten percent (10%) of the controlled shares) do not have permission to invest in the infrastructure debentures issued thereby.
Those that fail to comply with these prohibitions are subject to a fine of twenty percent (20%) of the debenture amount. In the event of violation of prohibitions involving intent, fraud, collusion, or sham, including with buyers abroad or by means of legal artifices, the issuing company shall be jointly liable for the fine.
Finally, since the text was amended during processing in the Senate, the bill will be now sent back to the Chamber of Deputies.
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This article is based on publicly available information and given for informational purposes only. It is not intended as legal advice foreign subsidiary as a comprehensive analysis of the matters referred to herein.