Privatization can be challenged and reversed

Eletrobras understands the risks of reversing the privatization of the company, especially in the face of formal challenges by President Lula

Eletrobras understands the risks of reversing the privatization of the company, especially in the face of legal challenges and formal challenges by President Luiz Inácio Lula da Silva. According to the company, as of Thursday (20), there were 23 lawsuits pending against the company’s approved privatization model.

In Form 20F, which was sent today to the Securities and Exchange Commission (SEC), the US equivalent of the Brazilian Securities Commission (CVM), Eletrobras stated that the form and other aspects of the company’s privatization may be called into question by regulators or consumer groups, among agents others.

As a result, the risk is that the courts may suspend the privatization, which would have dire legal effects on the company’s reputation.

The company recalled that President Lula issued public statements against the allocation and asked the Attorney General’s Office to conduct studies to assess the legal bases for objecting to the devices in the company’s articles of association that limit the exercise of the right to 10% of the capital to the shareholders’ vote, regardless of the number of shares.

“If the president succeeds in challenging these provisions, the Brazilian government may attempt to regain control over us, which could lead us to backtrack on privatization back to being a state-owned company for legal purposes with implications,” Eletrobras said. .

Along these lines, if the privatization is contested, he says, the company will be able to struggle to raise capital and maintain investments and its current market share. In addition, such a challenge could have adverse effects on our rating, share price and ADS. [American Depositary Shares]”, he added.

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