Temporary Constitutional Provisions Act

Article 36. The funds existing on the day the Constitution is promulgated, except for those resulting from tax exemptions which become private property and those which are of interest to national defense, shall be extinguished if they are not ratified by the National Congress within two years.

Article 37. Adaptation to the provisions of article 167, III, shall be made within the period of five years, the excess being reduced at a rate of at least one-fifth per year.

Article 38. Until the promulgation of the supplementary law referred to in article 169, the Union, the states, the Federal District and the municipalities shall not spend more than sixty-five percent of the amount of the respective current revenues on personnel.

The Union, the states, the Federal District and the municipalities, whenever the respective expenditure with personnel exceeds the limit established in this article, shall return to such limit, reducing the excess percentage at a rate of one-fifth per year.

Article 39. For purposes of compliance with the constitutional provisions which involve variations of expenses and revenues of the Union, after the promulgation of the Constitution, the Executive Power shall draw up and the Legislative Power shall examine a bill of review of the budgetary law referring to the fiscal year of 1989. The National Congress shall vote within twelve months the supplementary law provided by article 161, II.

Article 40. The Free-Trade Zone of Manaus, with its characteristics of free-trade, export and import and fiscal benefits, shall be maintained for a period of twenty-five years as from the promulgation of the Constitution. The criteria which regulated or may come to regulate the approval of projects in the Free-Trade Zone of Manaus may only be modified by a federal law.

Article 41. The Executive Powers of the Union, the states, the Federal District and the municipalities shall reassess all sectorial tax incentives now in force and shall propose the appropriate measures to the respective Legislative Powers.

Paragraph 1. The incentives which are not confirmed by law within two years of the promulgation of the Constitution shall be considered revoked.

Paragraph 2. Revocation shall not preclude any rights which have become vested before that date, in relation to incentives granted under conditions and for a set period of time.

Paragraph 3. Incentives granted by means of agreements concluded between states, in accordance with article 23, paragraph 6 of the 1967 Constitution, with the wording of Amendment number 1, of October 17, 1969, shall also be reassessed and reconfirmed within the time limits set forth in this article.

Article 42. Of the funds intended for irrigation, during a period of 25 (twenty-five) years, the Union shall apply: (CA No. 43, 2004)

1. twenty percent in the Centre-West Region; region.

2. fifty percent in the Northeastern Region, preferably in the semi-arid

Article 43. On the date of the promulgation of the law regulating the prospecting and mining of mineral resources and beds of ore, or within one year counted from the date of the promulgation of the Constitution, the authorizations, grants and other deeds affording mining rights shall become ineffective, in case the prospecting or mining works have not provenly started in the legal time limits or are inactive.

Article 44. The Brazilian companies which presently hold valid prospecting authorizations and permits for the mining of mineral resources and the exploitation of hydraulic energy shall have four years, counted from the date of the promulgation of the Constitution, to comply with the requirements of article 176, paragraph 1.

Paragraph 1. Except for the provisions of national interest set forth in the constitutional text, Brazilian companies shall be exempt from compliance with the provisions of article 176, paragraph 1, provided that, within four years counted from the date of the promulgation of the Constitution they have destined the product of their mining and processing activities to industrialization within the national territory, in their own facilities or in a controlling or controlled industrial company.

Paragraph 2. Brazilian companies which hold a hydraulic energy concession for use in their industrial processes shall also be exempted from compliance with the provisions of article 176, paragraph 1.

Paragraph 3. The Brazilian companies referred to in paragraph 1 may only be granted prospecting authorizations or concessions to mine or exploit hydraulic energy potentials provided that the energy and the mining product are used in their respective industrial processes.

Article 45. Refineries which operate in the country under article 43 and under the conditions of article 45 of Law number 2,004 of October 3, 1953 12 , are excluded from the monopoly established by article 177, II, of the Constitution.

Risk contracts entered into with Petróleo Brasileiro S.A. (Petrobrás) for petroleum prospecting, which are effective on the date of the promulgation of the Constitution are exempted from the prohibition of article 177, paragraph 1.

Article 46. Credits with institutions under intervention or extra-judicial liquidation, even when such proceedings are converted into bankruptcy, are subject to adjustment for inflation from the date of maturity to the date of actual payment, with no interruption or suspension.

The provisions of this article shall also apply to:

1. transactions made after the proceedings referred to in the head paragraph of this article have been decreed;

2. loan, financing and refinancing transactions, transactions of financial assistance for liquidity purposes, assignment or subrogation of credits or mortgage bonds, guarantee of deposits made by the public, or of purchase of liabilities, including those carried out with funds intended for such purposes;

3. credits existing prior to the promulgation of this Constitution;

4. credits held by public administration entities before the promulgation of this Constitution and not settled by January 1, 1988.

Article 47. In the settlement of debts, including their subsequent renegotiation and composition, even when taken to court, arising out of any loans granted by banks and by financial institutions, there shall be no adjustment for inflation, provided that the loan has been granted:

1. to micro and small businessmen or to their businesses in the period from February 28, 1986, to February 28, 1987;

2. to mini, small and medium rural producers in the period from February 28, 1986, to December 31, 1987, provided that it refers to rural credit.

Paragraph 1. For the purposes of this article, micro-enterprises shall be considered as the legal entities and individual firms with annual income of up to ten thousand National Treasury Bonds, and small enterprises as the legal entities and individual firms with annual income of up to twenty-five thousand National Treasury Bonds.

Paragraph 2. Classification as a mini, small or medium rural producer shall be made in accordance with the rural credit rules in force at the time of the contract.

Paragraph 3. Exemption from adjustment for inflation referred to in this article shall only be granted in the following cases:

1. if the initial debt, plus legal interests and judicial fees, are settled within ninety days of promulgation of this Constitution;

2. if the application of the funds is not contrary to the purpose of the financing, the burden of proof lying with the creditor institution;

3. if the creditor institution does not show that the borrower has the means to pay his debt, such means excluding the business of the borrower, the house where he lives, as well as his work and production instruments;

4. if the initial financing does not exceed the limit of five thousand National Treasury Bonds;

5. if the beneficiary is not the owner of more than five rural modules. Paragraph 4. The benefits referred to in this article shall not be extended to the debts which have already been paid and to debtors who are members of the Constituent Assembly.

Paragraph 5. In the event of transactions maturing after the deadline for settlement of the debt, should the borrower be interested, the banks and the financial institutions shall effect, by a specific instrument, an amendment to the original conditions of the contract so as to adjust them to this benefit.

Paragraph 6. The granting of this benefit by private commercial banks shall not, under any circumstances, entail a burden to the Government, even if made by refinancing and on-lending of funds by the central bank.

Paragraph 7. In the case of on-lending to official financial agents or credit cooperatives, the burden shall fall upon the original source of funds. Article 48. The National Congress, within one hundred and twenty days of the promulgation of this Constitution, shall draw up a consumer defense code.