TITLE VII – THE ECONOMIC AND FINANCIAL ORDER
CHAPTER I – THE GENERAL PRINCIPLES OF THE ECONOMIC ACTIVITY
*Article 170. The economic order, founded on the appreciation of the value of human work and on free enterprise, is intended to ensure everyone a life with dignity, in accordance with 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. consumer protection;
6. environment protection;
7. reduction of regional and social differences;
8. pursuit of full employment;
9. preferential treatment for small enterprises organized under Brazilian laws and having their head-office and management in Brazil.
Sole paragraph – Free exercise of any economic activity is ensured to everyone, regardless of authorization from government agencies, except in the cases set forth bv law.
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*CA 6/95.
*Article l7l. (revoked).
Article 172. The law shall regulate, based on national interests, the foreign capital investments, shall encourage reinvestments and shall regulate the remittance of profits.
Article 173. With the exception of the cases set forth in this Constitution, the direct exploitation of an economic activity by the State shall only be allowed whenever needed to the imperative necessities of the national security or to a relevant collective interest, as defined by law.
Paragraph l – The public company, the mixed-capital company and other entities engaged in economic activities are subject to the specific legal system governing private companies, including labour and tax liabilities.
Paragraph 2 – The public companies and the mixed-capital companies may not enjoy fiscal privileges which are not extended to companies of the private sector.
Paragraph 3 – The law shall regulate the relationships of public companies with the State and society.
Paragraph 4 – The law shall repress the abuse of economic power that aims at the domination of markets, the elimination of competition and the arbitrary increase of profits.
Paragraph 5 – The law shall, without prejudice to the individual liability of the managing officers of a legal entity, establish the liability of the latter, subjecting it to punishments compatible with its nature, for acts performed against the economic and financial order and against the citizens’ monies.
Article 174. As the normative and regulating agent of the economic activity, the State shall, in the manner set forth by law, perform the functions of control, incentive and planning, the latter being binding for the public sector and indicative for the private sector.
Paragraph I – The law shall establish the guidelines and bases for planning of the balanced national development, which shall embody and make compatible the national and regional development plans.
Paragraph 2 – The law shall support and encourage cooperative activity and other forms of association
Paragraph 3 – The State shall favour the organization of the placer-mining activity in cooperatives, taking into account the protection of the environment and the social-economic furthering of the placer-miners.
Paragraph 4 – The cooperatives referred to in the preceding paragraph shall have priority in obtaining authorization or grant for prospecting and mining of placer resources and deposits in the areas where they are operating and in those established in accordance with article 21, XXV, as set forth bv law.
Article 175. It is incumbent upon the Government, as set forth by law, to provide public utility services, either directly or by concession or permission, which will always be through public bidding.
Sole paragraph – The law shall provide for:
1. the operating rules for the public service concession- or permission- holding companies, the special nature of their contract and of the extension thereof, as well as the conditions of forfeiture, control and termination of the concession or permission;
2. the rights of the users;
3. tariff policy;
4. the obligation of maintaining adequate service.
*Article 176. Mineral deposits, under exploitation or not, and other mineral resources and the hydraulic energy potentials form, for the purpose of exploitation or use, a property separate from that of the soil and belong to the Union, the concessionaire being guaranteed the ownership of the mined product.
Paragraph I – 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 bv law, which law shall establish specifi c conditions when such activities are to be conducted in the boundary zone or on Indian lands.
Paragraph 2 – The owner of the soil is ensured of participation in the results of the mining operation, in the manner and amount as the law shall establish.
Paragraph 3 – Authorization for prospecting shall always be for a set period of time and the authorization and concession set forth in this article may not be assigned or transferred, either in full or in part, without the prior consent of the conceding authority.
Paragraph 4 – Exploitation of a renewable energy potential of small capacity shall not require an authorization or concession.
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* CA 6/95.
**Article 177. The following are the monopoly of the Union:
1. prospecting and exploitation of deposits of petroleum and natural gas and of other fluid hydrocarbons;
2. refining of domestic or foreign petroleum;
3. import and export of the products and basic by-products resulting from the activities set forth in the preceding items:
4. ocean transportation of crude petroleum of domestic origin or of basic petroleum by-products produced in the country, as well as pipeline transportation of crude petroleum, its by-products and natural gas of any origin;
5. prospecting, mining, enrichment, reprocessing, industrialization and trading of nuclear mineral ores and minerals and their by-products.
Paragraph I – The Union may contract with state-owned or with private enterprises for the execution of the achvities provided for in items I through IV of this article, with due regard for the conditions set forth by law.
Paragraph 2 – The law referred to in paragraph I shall provide for:
1. a guarantee of supply af petroleum products in the whole national territory;
2. the conditions of contracting;
3. the structure and duties of the regulatory agency of the monopoly of the Union.
Paragraph 3 – The law shall provide with respect to the transportation and use of radioactive materials within the national territory.
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** CA 9/95.
*Article 178. 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.
Sole paragraph – 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.
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* CA 7/95.
Article 179. The Union, the states, the Federal District and the municipalities shall afford micro-enterprises and small enterprises, as defined by law, differentiated legal treatment, seeking to further them through simplification of their administration, tax, social security and credit obligations or through elimination or reduction thereof by means of law.
Article 180. The Union, the states, the Federal District and the municipalities shall promote and further tourism as a factor of social and economic development.
Article 181. Compliance with request for a document or for information of commercial nature, made by a foreign administrative or judicial authority to an individual or legal entity residing or domiciled in the country shall depend upon authorization from the competent authority.
CHAPTER II – URBAN POLICY
Article 182. The urban development policy carried out by the municipal government, according to general guidelines set forth in the law, is aimed at ordaining the full development of the social functions of the city and ensuring the well-being of its inhabitants.
Paragraph 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 policy.
Paragraph 2 – Urban property performs its social function when it meets the fundamental requirements for the ordainment of the city as set forth in the master plan.
Paragraph 3 – Expropriation of urban property shall be made against prior and fair compensation in cash.
Paragraph 4 – The municipal government may, by means of a specific law, for an area included in the master plan, demand, according to federal law, that the owner of unbuilt, underused or unused urban soil provide for adequate use thereof, subject, sucessively, to:
1. compulsory parceling 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 the legal interest.
Article 183. An individual who possesses 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, shall acquire domain of it, provided that he does not own any other urban or rural property.
Paragraph 1 – The deed of domain and concession of use shall be granted to the man or woman, or both, regardless of their marital status.
Paragraph 2 – This right shall not be recognized for the same holder more than once.
Paragraph 3 – Public real estate shall not be acquired by prescription.
CHAPTER III – AGRICULTURAL AND LAND POLICY AND AGRARIAN REFORM
Article 184. It is within the power of the Union to expropriate on account of social interest, for purposes of agrarian reform, the 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 the real value, redeemable within a period of up to twenty years computed as from the second year of issue, and the use of which shall be defined in the law.
Paragraph I – Useful and necessary improvements shall be compensated in cash.
Paragraph 2 – The decree declaring the property as being of social interest for agrarian reform purposes empowers the Union to start expropriation action.
Paragraph 3 – It is incumbent upon a supplementary law to establish special summary adversary proceeding for expropriation action.
Paragraph 4 – The budget shall determine each year the total volume of agrarian debt bonds, as well as the total amount of funds to meet the agrarian reform programme in the fiscal year.
Paragraph 5 – The transactions of transfer of property expropriated for agrarian reform purposes are exempt from federal, state and municipal taxes.
Article 185. Expropriation of the following for agrarian reform purposes is not permitted:
1. small and medium-size rural property, as defined by law, provided its owner does not own other property;
2. productive property.
Sole paragraph – The law shall guarantee special treatment for the productive property and shall establish rules for the fulfilment of the requirements regarding its social function.
Article 186. The social function is. met when the rural property complies simultaneously with, according to the criteria and standards prescribed by 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 that regulate labour relations;
4. exploitation that favours the well-being of the owners and labourers.
Article 187. The agricultural policy shall bc planned and carried out as established by law, with the effective participation of the production sector, comprising producers and rural workers, as well as the marketing, storage and transportation sectors, with especial consideration far
1. the credit and fiscal mechanisms;
2. prices compatible with production costs and the guarantee of marketing;
3. research and technology incentives;
4. technical assistance and rural extension;
5. agricultural insurance;
6. cooperative activity;
7. rural electricity and irrigation systems;
8. housing for the rural workers.
Paragraph 1 – Agricultural planning includes agroindustrial, stock raising, fishing and forestry activities.
Paragraph 2 – Agricultural policy and agrarian reform actions shall be made compatible.
Article 188. The destination given to public and unoccupied lands shall be made compatible with the agricultural policy and the national agrarian reform plan.
Paragraph l – The alienation or concession 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 if through an intermediary, shall depend on the prior approval of the National Congress.
Paragraph 2 – Alienations or concessions of public lands for agrarian reform purposes are excluded from the provisions of the preceding paragraPh.
Article 189. The beneficiaries of distribution of rural land through agrarian reform shall receive title-deeds or concession of use which may not be transacted for a period of ten years.
Sole paragraph – The title-deed and the concession of use shall be granted to the man or the woman, or to both, irrespective of their marital status, according to the terms and conditions set forth by law.
Article 190. The law shall regulate and limit the acquisition or lease of rural property by a foreign individual or legal entity, and shall establish the cases that shall depend on authorization by the National Congress.
Article 191. The individual who, not being the owner of rural or urban property, holds as his own, for five uninterrupted years, without opposition, an area of land in the rural zone, not exceeding fifty hectares, making it productive with his labour or that of his family, and having his dwelling thereon, shall acquire ownership of the land.
Sole paragraph – The public real estate shall not be acquired by prescription.
CHAPTER IV – THE NATIONAL FINANCIAL SYSTEM
*Article 192. The national financial system, structured to promote the balanced development of the country and to serve the collective interests, shall be regulated by a supplementary law which shall also provide for:
1. authorization for the operation of financial institutions, it being ensured the access of the official and private banks to all the instruments of the banking financial market, such institutions being prohibited from taking part in activities not provided for in the authorization mentioned in this item;
2. authorization and operation of insurance, reinsurance, social security and capitalization companies, as well as of the supervising agency;
3. conditions for the participation of foreign capital in the institutions to which the preceding items refer to, considering especially:
1. the national interests;
2. the international agreements;
4. organization, operation and duties of the central bank and other public and private financial institutions;
5. 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;
6. creation of a fund or insurance, for the purpose of protecting the citizens’ monies, guaranteeing credits, investments and deposits up to a certain amount, it being forbidden the participation of funds of the Union;
7. the restrictive criteria of the transfer of savings from regions with income below the national average to others of greater development;
8. the operation of credit cooperatives and the requirements for them to obtain operational and structural conditions characteristic of financial institutions.
Paragraph 1 – The authorization referred to in items I and 1I shall be non- negotiable and non-transferable, it being allowed the transfer of control of the incumbent legal entity, and shall be granted, free of charge, according to the national financial system law, to a legal entity whose directors are technically capable and of spotless reputation and which proves that its economic capacity is compatible with the undertaking.
Paragraph 2 – The financial resources relating to regional programmes and projects under the responsibility of the Union shall be deposited at their regional credit institutions and invested by them.
Paragraph 3 – Real interest rates, including commissions and any other compensation directly or indirectly related to the concession of credit, shall not exceed twelve percent per annum; charges above this limit shall be considered crime of usury, which shall be punished in all of its forms, as the law shall determine.
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*CA 13/96