The Public Prosecutor’s Office (AGU) entered the Supreme Federal Court (STF) on Friday (5) with an action to ban the points from privatizing Eletrobras.
The measure was also signed by President Luiz Inacio Lula da Silva.
Indicates that the government questions
The government is questioning the parts of the Eletrobras privatization law that deal with shareholders’ voting power. The government is aware that the law has infrequently reduced the weight of the votes it is entitled to.
The government owns 42.61% of the common shares of Eletrobras. But, due to the Eletrobras privatization law, the government’s vote share was limited to 10%. That’s because the privatization turned Eletrobras into a “corporation,” a private capital firm without a controlling shareholder.
Therefore, no shareholder has more than 10% voting power, even with more common shares. The mechanism was built into the privatization law to prevent, for example, a private group from taking control of the company.
The same model was adopted in the privatization of Embraer.
“The public power owns approximately 43% of the ordinary shares, but can only exercise votes up to a limit of 10% of the number of shares in the voting capital of the company. We are confident that the court will restore to the union the right to fully exercise its political rights in This gigantic sector of national electricity,” the union’s attorney general, Jorge Messias, wrote on Twitter.
The intention is not to undo privatization
In the lawsuit, the American Badger Association states that the goal is not to seek the re-nationalization of Eletrobras, as this is a topic that “certainly, should be debated by the National Congress, including in light of that court’s jurisprudence.”
Lula called privatization “Leonine”
Lula had already said, in February, that the government would contest aspects of the privatization.
“It was more like banditry so that the government would not have a majority in Eletrobras again. We, including, perhaps, the federation’s attorney general, will go to court so that we can review this Leonine contract against the government,” the president said at the time.
- Lula criticizes the privatization of Eletrobras and says that the AGU will request a review of the contract
- Eletrobras privatization: see the questions and answers
See how distribution will work for those who have invested FGTS resources in Eletrobras
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