STF sends the Union’s request for conciliation on proportional voting at Eletrobras

The Minister of the Federal Supreme Court (STF) Kassio Nunes Marques determined this Tuesday (19) that the Union and Eletrobras try to reach an agreement on proportional voting in the company. In May, the Attorney General’s Office (AGU), which represents the government, asked the Court to overturn sections of the law that allowed the company’s privatization. One of the points questioned is the rule that limits the voting power of any shareholder on the company’s board to 10%. The Union owns 42.6% of the shares.

The rapporteur, Nunes Marques, sent the case to the Conciliation and Arbitration Chamber of the Federal Administration (CCAF) in an “attempt at an amicable solution between the parties”. Conciliation must be discussed within 90 days. In the decision, the minister highlighted that the action does not call for the “renationalization” of Eletrobras.

“What is sought is the declaration of partial unconstitutionality, without reducing the text, of the contested provisions, in order to guarantee the possibility of the Union fully exercising its political rights in the company in a manner proportional to the public capital invested”, he wrote.

He stated that the “solution must seek to balance the interests revealed by the constant tension between controlling and controlled groups”. “We cannot lose sight of both the public interest guiding the provision of essential services to Brazilian society, as well as economic profitability and the good performance of the company’s management”, added the judge.

Nunes Marques followed the understanding of the Attorney General’s Office (PGR), which also called for the “opening of conciliatory negotiations between interested parties, in order to reach a consensual solution”.

“Any decision by the Supreme Court could have a significant impact not only on the administration of Eletrobras, but also on the national electrical system and, ultimately, on the economic order itself. In light of the jurisprudence of this House, the application of public law must observe a component of legal ethics”, he argued.

The sale of the former state-owned energy company has been criticized by President Luiz Inácio Lula da Silva (PT) since the election campaign. “Now look at the mess… The government has 43% of Petrobras’ shares [Eletrobras], but on the council you only have the right to 1 vote. Our forty [por cento] only worth 1 [voto]. Whoever has 3% has the same right as the government. We went to court so that the government has the number of votes for the number of shares it has”, said the president in May this year. Eletrobras was privatized during the Bolsonaro government, in 2022.