April 2019

_ the April │ 2019 edition of our Newsletter has the following highlights:

– Brazilian Securities and Exchange Commission (CVM) discloses Circular Letter with general guidelines for publicly-held corporations, foreign corporations and “companhias incentivadas

– Innovations on the Brazilian Securities and Exchange Commission’s risk-based plan

– Releasing of Brazilian Code of Corporate Governance for Startups & Scale-Ups

– B3 disclosed a report regarding companies’ adaptation to Novo Mercado Regulation

_ Brazilian Securities and Exchange Commission (CVM) discloses Circular Letter with general guidelines for publicly-held corporations, foreign corporations and “companhias incentivadas

On February 28th, 2019, the Brazilian Securities and Exchange Commission (“CVM”) disclosed Circular Letter CVM/SEP 03/2019, which provides general guidelines for publicly-held corporations regarding the disclosure of information and the execution of certain transactions.

CVM annually discloses these general guidelines, providing a consolidation of rules and general understandings regarding relevant topics and the day-by-day issues of publicly held corporations.

This year, the Circular Letter provided the following important news:

  • Brazilian Code of Corporate Governance: the information provided by the company in the Brazilian Code of Corporate Governance´s form shall be consistent with the one provided in the company’s reference form, internal regiments and any existent codes indicated by the company, which shall be available at Empresas.Net System.
  • Distant Voting: The Distant Voting Bulletin (“BVD”) shall not be a part of the Ordinary General Meeting’s management proposal or participation guide, as it is a document that contains specific rules of disclosure.

In case no shareholder sends the BVD through service providers (custodians and custodian bank), the company shall send, through Empresas.NET System, a statement made by the custodian bank informing that BVD’s were not exercised through service providers. In case the shareholders send the BVD exclusively through service providers, the company shall send, through Empresas.NET System, a consolidated statement of distant voting, even though the information is the same as the one presented by the custodian bank.

The disclosure of the final voting summary statement and final voting detailed statement attached to the minutes of the shareholders’ meeting at Empresas.NET System does not exempt the company from its obligation to disclose them in the correct category at Empresas.NET System.

In case the election of the members of the Board of Directors is to be carried out through the multiple voting process, shareholders who refrain from distributing their votes in the election of board of directors’ members through BVD shall also have their votes counted as refrained in the multiple voting process. Therefore, they will not participate in the appointment of the members of the board of directors.

  • Indemnification Compromise: The company shall disclose at Empresas.NET System the indemnification compromises made in favor of directors and officers, as well as the amendments and other documents related thereto.
  • Related Parties’ Transactions: usual and ordinary transactions related to cash management and treasury made between publicly-held companies and financial services companies which are related parties are exempt from the disclosure provide for in Schedule 30-XXXIII of CVM Instruction 480/09, even if they exceed the financial thresholds set forth in the aforementioned schedule, as long as the fees charges by the financial institution are within the range set forth in its disclosed general fee table.

Nevertheless, the companies remain obliged to disclose the operations among related parties in the Reference Form and financial statements, as provided for in the applicable regulation.

  • Shares Buyback Program: the company shall establish clear and objective mechanisms regarding share buyback programs, in order to avoid that transactions made in organized markets (i) have as a counterpart their controlling shareholders, members of the board of directors, member of the board of officers, members of the audit committee, or members of any statutory body with technical and advisory functions; and (ii) produce unusual effects on price, volume or liquidity, which may be beneficial to controlling shareholders, members of the board of directors, member of the board of officers, members of the audit committee, or members of any statutory body with technical and advisory functions in their negotiations with other market participants.

Additional information regarding the Circular Letter can be accessed in Portuguese at:

http://www.cvm.gov.br/legislacao/oficios-circulares/sep/oc-sep-0319.html

_ Innovations on the Brazilian Securities and Exchange Commission’s risk-based plan

On February 12th, 2018, CVM disclosed its biennial risk-based plan (“SBR”) for the years 2019 and 2020. This management system has been used since 2009 and is a way of presenting to the market some supervising actions that shall be taken by CVM’s technical areas over a given two-year-period.

The purpose of SBR is to improve CVM’s results in the future by innovating its processes and techniques.

RISKS THAT WERE NOT DISCUSSED BEFORE SHALL BE A PRIORITY FOR THE NEXT TWO YEARS, SUCH AS IRREGULARITIES IN PUBLIC OFFER DISTRIBUTIONS VIA CROWDFUNDING AND RAISING OF SAVINGS VIA COLLECTIVE INVESTMENT CONTRACTS WHICH ARE NOT REGISTERED AT CVM.

CVM also informed that SBR will be more focused on promoting planning and execution, as well as on creating an exclusive goal for each one of the aforementioned actions.

Additional information can be accessed in Portuguese at:

http://www.cvm.gov.br/menu/acesso_informacao/planos/sbr/bienio_2019_2020.html

_Releasing of Brazilian Code of Corporate Governance for Startups & Scale-Ups

On March 26th, 2019, the Brazilian Institute of Corporate Governance (“IBCG”) released its code of Corporate Governance for Startups & Scale-Ups.

This edition contains specific corporate governance structures for each phase of a Startup business, divided into: (i) creation; (ii) Minimum Viable Product – MVP; (iii) Product Market Fit – PMF; and (iv) scale. If a Startup presents a scalable, innovating and high growth potential business model, the last two phases will be considered as a transition from a Startup to a Scale-Up.

In addition, the code brings corporate governance pillars that shall be used in all phases aforementioned, although each one has its own features, which are:

  • Strategy & Society: medium and long term perspective and shareholders relationship.
  • People & Resources: intellectual capital and tangible and intangible resources needed.
  • Technology & Intellectual Property: distinction between ideas and operationalized models, in order to guaranty the sustainability and protection of the innovation.
  • Processes & Accountability: phase development and sustainable and consistent growth.

Additional information on the Brazilian Code of Corporate Governance for Startups & Scale-Ups can be accessed in Portuguese at:

https://conhecimento.ibgc.org.br/Lists/Publicacoes/Attachments/24050/IBGC%20Segmentos%20-%20%20Governan%C3%A7a%20Corporativa%20para%20Startups%20&%20Scale-ups.pdf

_ B3 disclosed a report regarding companies’ adaptation to Novo Mercado Regulation

On February 15th, 2019, B3 disclosed a report about companies’ adaptation to the new Novo Mercado Regulation, which was amended in 2019 and shall be followed by the companies until their Ordinary General Shareholder Meeting to be held in 2021 (“Report”).

Among the new rules, we highlight the following:

  • New regulation on independent board of directors’ members characterization and their election procedure, as well as the board of directors’ opinion on the company’s indication policy for each candidate.
  • Mandatory evaluation of board of directors, its committees and board of officers.
  • Mandatory compliance methods, internal control and corporate risks, which cannot be cumulated with other operational functions.
  • Creation of an audit committee (statutory or not) in accordance with Novo Mercado’s new regulation.
  • Creation of an internal audit in accordance with Novo Mercado’s new regulation.
  • Disclosure of certain internal regiments and policies.

The survey conducted by B3 covered 90% of the companies listed in the Novo Mercado and most of them have not implemented the new regulation. The report shows that the new Novo Mercado Regulation is not followed by most of the companies yet.

Additionally, the report also contains B3’s orientations regarding the disclosure of information required pursuant to the new Novo Mercado Regulation, such as the indication of items in the reference form in which the information shall be disclosed.

More information regarding the Report can be accessed in Portuguese at:

http://www.b3.com.br/data/files/AD/50/76/23/BBDE86101A627E86AC094EA8/Relatorio_de_Emissores-1_Ed..pdf


by:

gyedre carneiro de oliveira
gyedre@cdoadv.com.br | +55 11 5171 8901

érika aguiar carvalho fleck
ecarvalho@cdoadv.com.br | +55 11 5171 8902

gabriela saad krieck
gkrieck@cdoadv.com.br | +55 11 5171 8903

rafael costa silva
rsilva@cdoadv.com.br | +55 11 5171 8907