Economic and Financial Order

Title VII Economic and Financial Order

Chapter I General Principles of Economic Activity

Article 170: Economic Order, Market System, Social and Democratic Basis

0. The economic order, founded on the appreciation of human work and on free enterprise, is intended to ensure everyone a life with dignity, according to the dictates of social justice, with due regard for the following principles:
  1. national sovereignty;
  2. private property;
  3. the social function of property;
  4. free competition;
  5. defense of the consumer;
  6. defense of the environment;
  7. reduction of regional and social differences;
  8. achievement of full employment;
  9. preferential treatment for small enterprises organized under Brazilian laws and having their head-office and management in Brazil.
1. Free exercise of any economic activity is ensured to everyone, regardless of any government authorization, except in the cases set forth by law.

Article 171: Concepts

{Revoked by Constitutional Amendment No. 6/1995 of 15 Aug 1995 }

Article 172: Investments

The law regulates foreign capital investments, according to national interests, encourages reinvestments, and regulates the remittance of profits.

Article 173: Public Companies

0. With the exception of the cases set forth in this Constitution, the direct exploitation of an economic activity by the State is only allowed whenever it is necessary to national security or to a relevant collective interest, as defined in the law.

1. Public companies, mixed capital companies, and other entities engaged in economic activities are subject to the specific legal regimes governing private companies, including with respect to labor and tax liabilities.

2. Public companies and mixed capital companies may not enjoy fiscal privileges which are not extended to companies of the private sector.

3. The law regulates the relationships of public companies with the State and with society.

4. The law represses abuse of economic power aiming at domination of markets, elimination of competition, and arbitrary increase of profits.

5. The law, without prejudice to the individual liability of the officers of a legal entity, establishes the liability of the latter, subjecting it to penalties compatible with its nature, for acts that contravene the economic and financial order and the economy of the people.

Article 174: State and Economy

0. As the normative and regulating agent of economic activity, the State, in the manner set forth by law, performs the functions of supervision, incentive, and planning, the latter being binding for the public sector and indicative for the private sector.

1. The law establishes the guidelines and bases for planning balanced national development, which embody national and regional development plans and make them compatible.

2. The law supports and encourages co operatives and other forms of association.

3. The State favors the organization of cooperatives for mineral prospecting and mining activities, taking into account the protection of the environment and the social economic promotion of the prospectors and miners.

4. The cooperatives referred to in the preceding paragraph have priority in obtaining authorization or grants for prospecting and mining of mineral resources and deposits in the areas where they are operating and in those established in accordance with Article 21 XXV, in the manner set forth in the law.

Article 175: Public Utility Services

0. In the manner set forth in the law the Government in responsible for providing public utility services either directly or by grant or permit, which will always be through public bidding.

1. The law provides for:
  1. the regime for public utility companies, the special nature of their contract, and of extension thereof, and the conditions of forfeiture, control, and termination of the grant or permit;
  2. the rights of users;
  3. tariff policy;
  4. the obligation of maintaining adequate services.
Article 176: Monopolies

0. Mineral deposits, whether being exploited or not, and other mineral resources and hydraulic energy potential represent property separate from the soil, for purposes of exploitation or use, and belong to the Republic, the grant holder being guaranteed ownership of the mined product.

1. The prospecting and mining of mineral resources and the utilization of the potentials mentioned in the caption of this article may only take place with authorization or concession by the Union, in the national interest, by Brazilians or by a company organized under Brazilian laws and having its head-office and management in Brazil, in the manner set forth by law, which law shall establish specific conditions when such activities are to be conducted in the boundary zone or on Indian lands.

2. The owner of the soil is assured of participation in the results of the mining work, in the manner and amount provided for by law.

3. Authorization for prospecting shall always be granted for a limited period of time and the authorizations and grants set forth in this article may not be assigned or transferred, either in full or in part, without the prior consent of the granting authority.

4. Exploitation of a renewable energy potential of small capacity does not require an authorization or grant.

Article 177: Monopoly of Some Activities

0. The following are the monopoly of the Republic:

I. prospecting and exploitation of deposits of oil and natural gas or other fluid hydrocarbons;

II. refining of national or foreign oil;

III. imports and exports of the products and basic by-products resulting from the activities set forth in the preceding items;

IV. ocean transportation of crude oil of national origin or of basic oil by products produced in Brazil, as well as pipeline transportation of crude oil, its by products and natural gas of any origin;

V. prospecting, mining, enrichment, reprocessing, industrialization, and trading of nuclear mineral ores and minerals and their by products.
  • The monopoly established in this article includes the risks and results deriving from the activities mentioned therein, and the Republic is forbidden to assign or grant any kind of participation, either in kind or in legal tender, in the exploitation of oil or natural gas deposits, excepting the provisions of Article 20
  • The law shall provide for the transportation and use of radioactive materials within the Brazilian territory.
Article 178: Transportation

0. The law shall provide for the regulation of air, water and ground transportation, and it shall, in respect to the regulation of international transportation, comply with the agreements entered into by the Union, with due regard to the principle of reciprocity.

1. In regulating water transportation, the law shall set forth the conditions in which the transportation of goods in coastal and internal navigation will be permitted to foreign vessels.

Article 179: Small Companies Help

The Republic, the States, the Federal District, and the Municipalities afford micro companies and small companies, as defined by law, differentiated legal treatment, seeking to further them through simplification of their administrative, social security, and credit obligations or through elimination or reduction thereof by means of a law.

Article 180: Tourism

The Republic, the States, the Federal District, and the Municipalities promote and further tourism as a factor of social and economic development.

Article 181: Response to Foreign Authority

Response to a requisition for a document or for information of a commercial nature, made by a foreign administrative or judicial authority to an individual or legal entity residing or domiciled in Brazil require authorization from the proper Authority.

Chapter II Urban Policy

Article 182: Municipal Urbanization

0. The urban development policy carried out by the Municipal Government, according to general guidelines set forth in the law, is aimed at organizing the full development of the city's social functions and ensuring the well being of its inhabitants.

1. The master plan, approved by the City Council, which is compulsory for cities of over twenty thousand inhabitants, is the basic tool of the urban development and expansion on policy.

2. Urban property performs its social function when it meets the fundamental requirements for the city's organization as set forth in the master plan.

3. Expropriation of urban property is made against prior and fair compensation in cash.

4. The Municipal Government may, by means of a specific law, in relation to areas included in the master plan, demand, according to federal law, that the owner of inbuilt, underused, or unused urban soil provide for adequate use thereof, subject, successively, to:
  1. compulsory subdivision or construction;
  2. rates of urban property and land tax that are progressive in time;
  3. expropriation with payment in public debt bonds issued with the prior approval of the Federal Senate, redeemable within up to ten years, in equal and successive annual installments, ensuring the real value of the compensation and legal interest.
Article 183: Usurpation

An individual who holds as his own an urban area of up to two hundred and fifty square meters, for five years without interruption or opposition, using it as his or as his family's home, acquires title to such property, provided that he does not own any other urban or rural property.

1. The deed of title and authorization of use is granted to the man or woman, or both, regardless of their marital status.

2. Such right shall not be recognized for the same holder more than once.

3. Public real property shall not be acquired by usurpation.

Chapter III Agricultural and Land Policy and Agrarian Reform

Article 184: Agrarian Reform

0. It is incumbent upon the Republic to expropriate for social interest, for purposes of agrarian reform, rural property which is not performing its social function, against prior and fair compensation in agrarian debt bonds with a clause providing for maintenance of real value and redeemable within a period of up to twenty years as from the second year of issue, and the use of which shall be defined in the law.

1. Useful and necessary improvements are compensated in cash.

2. A supplemental act establishes special summary adversary proceedings for expropriation action.

3. The budget each year determines the total volume of

4. agrarian debt bonds, as well as the amount of funds for the agrarian reform program in the fiscal year.

5. Transactions of transfer of property expropriated for agrarian reform purposes are exempt from federal, state, and municipal taxes.

Article 185: Limits of Agrarian Reform

0. The following shall not be subject to expropriation for agrarian reform purposes:
  • small and medium sized rural property, as defined in the law, provided its owner does not own other property;
  • productive property.
1. The law ensures special treatment for productive property and establishes rules for the fulfillment of the requirements for its social function.

Article 186: Social Function, Limits

The social function is performed when rural property simultaneously meets, according to the criteria and standards prescribed in the law, the following requirements:

  1. rational and adequate use;
  2. adequate use of available natural resources and preservation of the environment;
  3. compliance with the provisions which regulate labor relations;
  4. exploitation which favors the well-being of the owners and workers.

Article 187: Policy

The agricultural policy is planned and carried out pursuant to the law, with the actual participation of the production sector comprising producers and rural workers, as well as the marketing, storage, and transportation sectors, with special consideration for:

I. credit and fiscal mechanisms;

II. prices compatible with production cost and marketing guarantees;

III. research and technology incentives;

IV. technical assistance and rural extensions;

V. agricultural insurance;

VI. co operatives;

VII. rural electricity and irrigation systems;

VIII. housing for rural workers.

1. Agricultural planning includes agro industrial, stock raising, fishing, and forestry activities.

2. Agricultural policy action is rendered compatible with agrarian reform action.

Article 188: Public Vacant Lands

0. The destination given to public and vacant lands is to be compatible with the agricultural policy and the national agrarian reform plan.

1. The disposal or granting in any way of public lands with an area of more than two thousand and five hundred hectares to an individual or legal entity, even through an intermediary, shall require the prior approval of Congress.

2. Disposals or grants of public lands for agrarian reform purposes are excluded from the provisions of the preceding paragraph.

Article 189: Propriety Title

0. The beneficiaries of distribution or rural land under the agrarian reform receive deeds of title or authorization of use which may not be transacted for a period of ten years.

1. The deed of title and authorization of use is granted to the man or the woman, or to both, irrespective of their marital Status, pursuant to the terms and conditions set forth in the law.

Article 190: Restrictions

The law regulates and restricts the acquisition or lease of rural property by a foreign individual or legal entity, and determines the cases subject to authorization from Congress.

Article 191: Usurpation

0. The individual who, not being the owner or rural or urban property, holds as his own, for five years, without interruption or opposition, an area of land on the rural zone not exceeding fifty hectares and with his labor and that of his family makes the land productive and dwells thereon, shall acquire ownership of the land.

1. Public property shall not be acquired by usurpation.

Chapter IV National Financial System

Article 192: Financial System

0. The national financial system, structured to promote the balanced development of Brazil and serve the collective interests, is regulated by a supplemental law which also provides for:

I. authorization for the operation of financial institutions, ensuring official and private banks access to all instruments of the banking financial market, such institutions being prohibited from engaging in activities not foreseen in the authorization mentioned in this item;

II. authorization and operation of insurance, social security, and capitalization companies, as well as of the official supervisory agency and of the official reinsurance agency;

III. conditions for the participation of foreign capital in the institutions referred to in the preceding items, considering especially:
  • national interests;
  • international agreements;
IV. organization, operation, and duties of the central bank and other public and private financial institutions;

V. Requirements for the appointment of members of the board of directors of the Central Bank and other financial institutions, as well as their impediments after leaving office;

VI. creation of a fund or insurance, for the purpose of protecting the public economy, guaranteeing credits, investments, and deposits up to a certain amount, the participation of federal funds being forbidden;

VII. criteria restricting the transfer of savings from regions with income below the national average to more developed regions;

VIII. operation of credit cooperatives and requirements for them to operate and have the structure inherent to financial institutions.
  1. The authorization referred to in Items I and II are non-negotiable and non-transferable, transfer of control of the authorized legal entity being allowed, and is granted free of charge, according to the national financial system law, to a legal entity whose directors are technically qualified and of unblemished reputation and which proves that its economic capacity is compatible with the undertaking.
  2. The funds for regional programs and projects under the responsibility of the Republic are deposited at their regional credit institutions and invested by them.
  3. Real interest rates, including commission and any other consideration directly or indirectly related to the extension of credit, shall not exceed twelve percent per annum; interest charged above this limit shall be considered as a usury crime and shall be punished in all of its forms as the law shall determine.