Ano: 2023

June 2023

_the june│2023 edition of our Newsletter has the following highlight:

– Highlights of the proposal to amend the Brazilian Corporate Law

– Decree No. 11,563 regulates the Brazilian Legal Framework of Crypto Assets

 

_ Highlights of the proposal to amend the Brazilian Corporate Law

 

The Bill 2.925/23 to amend Law No. 6,404/1976, the Brazilian Corporate Law, and Law 6,385/1976, which created the Brazilian Securities and Exchange Commission (“CVM“), proposed by the Executive Branch, through the Ministry of Finance, was submitted for approval by the National Congress on June 2, 2023 (“PL 2,925“). The purpose of the proposed changes is to include greater protection for minority shareholders against losses caused by controlling shareholders or managers of listed companies.

 

Among the changes proposed in PL 2.925, the following stand out:

 

  • Expansion of CVM’s competences: in order to create new means of instruction of administrative processes, such as, among others, the performance of inspections in the establishments of investigated companies and the request, through the judicial power, of search warrants and seizure of documents and information.

 

  • Civil Liability: for losses suffered by investors as a result of action or omission of companies in violation of the legislation and regulation of the securities market, subject to proof of guilt or intent, applicable to:
    • Managers;
    • Controlling shareholders, when the legislation or regulation directly imposes on them the duty to comply with the infringed norm or when they contribute to the practice with managers (joint and several liability);
    • Offerors and the coordinators of public offerings for the distribution of securities and offerors and intermediaries of public offerings for the acquisition of securities.

 

  • Class Actions for Civil Liability: possibility for legitimate investors to bring class actions for civil liability.

 

  • Arbitration: the by-laws, regulations, deeds and instruments for the issuance of securities may provide that the liability action shall be decided by arbitration, provided that they are public, and CVM may regulate the limits of this public character, including cases in which confidentiality will be admitted.

 

  • Termination of Liability Law Suit: inclusion of the authorization and termination of a liability law suit, which are treated by articles 159 and 246 of the Brazilian Corporate Law, as being within the competence of Shareholders’ Meetins. Even if approved, the termination shall not take effect if shareholders representing ten percent of the voting capital decide to reject it.

 

  • Restriction to Vote: managers may not vote in resolutions regarding the exemption from liability of managers and members of the fiscal council and on the filing of a liability law suit.

 

  • Exemption from Liability: exclusion of automatic exemption from liability for managers and members of the fiscal council after the approval of financial statements and management accounts.

 

  • Legitimacy for the Filing of a Liability Law Suit: when shareholders, within the shareholder’s meeting, decide not to promote the law suit, change in the hypothesis of legitimacy by shareholders of listed companies.

 

  • Award in Liability Law Suits in case of Conviction: in case of conviction of managers or controlling shareholder, an award of 20% on the total amount of the indemnity shall be paid to the plaintiff.

 

PL 2.925 and its status can be accessed in Portuguese through the link below:

https://www.camara.leg.br/proposicoesWeb/fichadetramitacao?idProposicao=2367421

 

_ Decree No. 11,563 regulates the Brazilian Legal Framework of Crypto Assets

 

On June 14, 2023, Decree No. 11,563 was published, which regulates Law No. 14,478 of September 21, 2022, also known as the Brazilian Legal Framework of Crypto Assets (“Decree“). This Decree establishes the guidelines for the provision of virtual asset services and assigns to the Central Bank of Brazil the responsibility of regulating the crypto asset market.

 

Since the entry into force of the Decree on June 20, 2023, the Brazilian Central Bank is competent to:

 

  • regulate the provision of virtual asset services, in compliance with the guidelines of the Brazilian Legal Framework for Crypto Assets;
  • regulate, authorize, and supervise virtual asset service providers; and
  • deliberate on the other hypotheses established in the Brazilian Legal Framework of Crypto Assets, except with respect to the National Registry of Politically Exposed Persons.

 

The Decree does not apply to assets representing securities which shall remain under the jurisdiction of CVM, subject to Law No. 6,385/1976.

 

The Decree can be accessed in Portuguese through the link below:

http://www.planalto.gov.br/ccivil_03/_ato2023-2026/2023/decreto/D11563.htm

Concessão de florestas pode impulsionar créditos de carbono

Lei 14.590/23 amplia rol de atividades permitidas a concessionários

Posted in: Uncategorized

May 2023

_the may│2023 edition of our Newsletter has the following highlight:

– Change in jurisprudence on the exclusion of partners in limited liability companies

 

_ Change in jurisprudence on the exclusion of partners in limited liability companies

 

The understanding of the Judiciary on the flexibility of the exclusion of minority partners from limited liability companies due to simple disagreements with other partners has faced changes with decisions that have established the reinclusion of partners who have proven the inexistence of relevant errors causing the exclusion.

 

Pursuant to article 1,085 of the Civil Code, when partners representing more than half of the corporate capital decide that one or more partners are endangering the continuity of the company, due to acts of undeniable gravity, they may exclude them from the company.

 

In the previous interpretation of said provision, the simple breach of affectio societatis (subjective element involved in the incorporation of a company which entails the partners’ intention to enter into a partnership between them) was used as argument for exclusion of a partner.  Disagreements between partners were enough to justify said decision. However, recent judgments of the São Paulo State Court of Justice (proceedings No. 1000422-16.2021.8.26.0068, No. 1018472-86.2019.8.26.0577 and No. 1128795-76.2015.8.26.0100) and even of the Superior Court of Justice (REsp 1.129.222-PR) have been rendered in a contrary manner, in view of the inexistence of a serious fault that would justify the exclusion of the partner.

 

This change in jurisprudence supports the guarantee of freedom of expression by minority partners, who previously could be subject to the exclusion from the company for expressing an idea contrary to the other partners. Thus, recent decisions aim to reduce abuses by majority partners in limited liability companies. According to minister Nancy Andrighi, in order to judicially exclude a partner, it is not enough to allege a breach of the affectio societatis, but rather to demonstrate just cause, that is, the reasons that caused such a breach (REsp 1.129.222-PR).

 

Therefore, the new jurisprudential interpretation of article 1,085 of the Civil Code, traces a new path, which aims to ensure the best interests of the company by demanding proof of acts of undeniable gravity to allow the exclusion of a partner.

 

March 2023

_the march│2023 edition of our Newsletter has the following highlight:

– Ordinary Shareholders’ Meetings and Quotaholders’ annual meetings

– CVM’s Annual Letter News

– Institutional Shareholder Services (ISS) discloses proxy voting guidelines

 

_ Ordinary Shareholders’ Meetings and Quotaholders’ annual meetings

 

In the upcoming months, corporations and limited liability companies shall disclose their financial statements and call their Ordinary Shareholders’ Meetings or Quotaholders’ annual meetings, as appropriate, regarding the financial year ended on December 31st, 2022.

 

Matters to be Discussed and Preparatory Proceedings to Ordinary Shareholders’ Meetings and Quotaholders’ Annual Meetings

 

All corporations, listed and non-listed, need to hold, within the first 4 months following the end of the fiscal year, an Ordinary Shareholders’ Meeting: (i) to examine the management accounts, analyze, discuss and vote the financial statements; (ii) to deliberate on the destination of the net profit of the relevant financial year and on the distribution of dividends; and (iii) to appoint managers and the members of the Fiscal Council (Conselho Fiscal), as applicable.

 

Additionally, corporations must prepare the documents listed in art. 133 of Law No. 6.404/1976 (“Brazilian Corporate Law“) and publish a notice informing its shareholders that such documents are available at the company’s headquarters; in the case of listed companies, the documents must also be available on the company’s IR website, as well as in the Brazilian Securities and Exchange Commission (“CVM“), and B3 S.A. – Brasil, Bolsa, Balcão (“B3“) websites. This publication is waived if the companies publish their financial statements up to 1 month before the date set for the Ordinary Shareholders’ Meeting or when such meeting gathers all the shareholders.

 

Nevertheless, corporations must publish their financial statements before the Ordinary Shareholders’ Meeting is held, according to the instructions below:

 

  • Those whose annual gross revenue is up to R$78 million may do so electronically through the SPED System (Central de Balanços do Sistema Público de Escrituração Digital – SPED), pursuant to article 294, III, of the Brazilian Corporate Law and, according to Ordinance ME No. 12.071/2021 and Ordinance Nº 10.031/2022;

 

  • Listed companies with individual gross revenues of less than 500 million Brazilian Reais in the last fiscal year, classified as small sized companies pursuant to article 294-B of the Brazilian Corporate Law and CVM Resolution 166/2022 (“RCVM 166“), may do so electronically through the Empresas.NET system (CVM’s system for disclosure of documents); and

 

  • For other companies, the publication must be carried out in a widely circulated newspaper, and it may be done in a summarized form, subject to the provisions of article 289, II of the Brazilian Corporate Law and Opinion CVM No. 39, applicable to listed companies, with simultaneous disclosure of the full documents on the same newspaper’s website, which must provide digital certification of the authenticity of the documents maintained on its own page issued by a certifying authority accredited within the Brazilian Public Key Infrastructure (ICP-Brasil).

 

Regarding limited liability companies, within the first 4 months following the end of the fiscal year, they need to hold a meeting in order: (i) to examine the management accounts, analyze, discuss, and vote the financial statements; (ii) to appoint management, as necessary. The meeting is not necessary in case all the shareholders decide, in writing, on the aforementioned matters.

 

Financial Statements of Large Companies

 

Pursuant to Law No. 11.638/2007, limited liability companies, or group of companies under common control, which, in the 2022 fiscal year, recorded assets in an amount higher than R$240 million or annual gross revenue in an amount higher than R$300 million shall: (a) prepare their financial statements in agreement with the applicable rules set forth in the Brazilian Corporate Law; and (b) submit the financial statements to the appreciation of an independent auditor registered at Brazilian CVM.

 

After the publication of Circular Letter SEI No. 4742/2022/ME by the National Department of Business Registration and Integration -DREI, the understanding that the publication of financial statements for these companies is optional was confirmed, and Boards of Trade were instructed to follow this guideline, so that the filing of corporate acts of such companies will not be rejected on the grounds of lack of proof of said publications.

 

Digital Meetings

 

Pursuant to Law No. 14.030/2020, the ordinary shareholders’ meetings and quotaholder’s annual meetings may be held partially or exclusively in a digital form, and must comply with the applicable rules established by CVM Resolution No. 81/2022, as amended, in the case of listed companies, and/or those of the National Department of Business Registration and Integration (“DREI“), in the case of closely-held corporations and limited liability companies.

 

_ CVM’s Annual Letter News

 

CVM’s Superintendence of Corporate Relations (“SEP“) disclosed, on February 28, 2023, the Annual Circular Letter 2023 (“Letter“), which provides guidance on regulatory updates and on the procedures that listed, foreign and supported companies must comply with, in addition to pointing out important CVM’s board rulings (“Annual Letter“).

 

Among the new guidelines, the following stand out:

 

  • Publications: flexibility in carrying out publications ordered by the Brazilian Corporate Law or provided in CVM regulations by small sized listed companies (i.e., those with annual gross revenue of less than R$ 500,000,000.00 (five hundred million reais), based on the financial statements of the last fiscal year), according to RCVM 166, which allows for such publications to be made through the Empresas.NET systems;

 

  • Acquisition of a company or corporate interest by listed companies: guidance on the minimum information that shall be included in the document disclosing the operation (material fact or communication to the market, subject to the applicable regulation) to enable better understanding of the transaction, including the main conditions of the business (such as price and payment terms), as well as financial and/or operational information about the acquired business;

 

  • Business Environment Improvement Law: CVM Resolution No. 168/2022 regulated and gave practical applicability to Law No. 14.195/2021, which provides for (i) the mandatory separation between the functions of chairman of the board of directors and CEO or principal executive of listed companies whose consolidated gross revenue is less than R$ 500,000,000.00 (five hundred million Brazilian Reais); and (ii) the mandatory presence of at least 20% independent members on the board of directors of listed companies that cumulatively meet the following criteria: (a) registered in category A, (b) have securities admitted for trading on a stock exchange, and (c) have shares or depositary receipts outstanding; and

 

  • Guidelines to fill out the Reference Form (Formulário de Referência), according to its new structure provided for in CVM Resolution No. 59/2022.

 

The Letter can be accessed in Portuguese through the link below:

https://conteudo.cvm.gov.br/legislacao/oficios-circulares/sep/oc-anual-sep-2023.html

 

_ Institutional Shareholder Services (ISS) discloses proxy voting guidelines

 

As usual, Institutional Shareholder Services (ISS) proxy advisory firm released the Benchmark Policy Recommendations for shareholders’ meetings to be held from February 2023. It is a guide of voting guidelines for meetings based on best corporate governance practices.

 

Among the recommendations included in the guidelines, the following are worth highlighting:

 

  • Election of the Board of Directors: recommendation to vote against (i) bundled election or individual members if the board’s composition after the election does not have any female members; and (ii) members who are already part of the board of directors of more than 5 companies;

 

  • Board of Directors Structure: recommendation to vote against changes in the board of directors’ structure or number of members within the context of company control divergences;

 

  • Installation of the Fiscal Council: recommendation to vote in favor of the installation of the fiscal council, except if candidates have not been indicated/disclosed by management or minority shareholders in a timely manner. In this case, the recommendation is to abstain from this deliberation;

 

  • Management Compensation: in general, the recommendation is to vote in favor of the management compensation, provided that they are presented within the applicable regulatory deadline containing all the elements required by CVM regulation. The recommendation to vote against applies to compensation proposals that are not adequately detailed or clear.

 

The Benchmark Policy Recommendations can be accessed through the link below:

https://www.issgovernance.com/file/policy/active/americas/Brazil-Voting-Guidelines.pdf

Detalhamento de remuneração de administradores é desafio

Apesar de haver mecanismos de avaliação dos investidores, nem sempre se presta a devida atenção ao assunto

Posted in: Uncategorized

February 2023

_the february│2023 edition of our Newsletter has the following highlight:

– CVM discloses annual letter with general guidelines on procedures to be observed by listed companies

– CVM discloses letter regarding the impacts of a Supreme Court decision

– CVM Resolution introduces new rules for investment advisors

– Brazilian Investments Abroad – Deadline for submitting the Annual Statement of Brazilian Investments Abroad to the Brazilian Central Bank

– Foreign Capitals in Brazil – Deadline for submitting periodical statements to the Brazilian Central Bank

 

_ CVM discloses letter regarding the impacts of a Supreme Court decision

 

On February 28, 2023, the Brazilian Securities and Exchange Commission (“CVM”) disclosed the annual letter with updates regarding general guidelines on procedures to be observed by listed (“Annual Letter”).

 

As usual, the Annual Letter compiles listed companies’ main obligations and reflects regulatory changes, in addition to reporting important decisions taken by CVM’s board.

 

The main update of the Annual Letter refers to the inclusion of guidelines regarding the Reference Form (Formulário de Referência) in its new structure, as per the wording provided by CVM Resolution No. 59/21.

 

The Annual Letter can be accessed in Portuguese through the link below:

https://conteudo.cvm.gov.br/legislacao/oficios-circulares/sep/oc-anual-sep-2023.html

 

_ CVM discloses letter regarding the impacts of a Supreme Court decision

 

On February 13, 2023, CVM disclosed Letter No. 1 (“Letter“), with the purpose of (i) warning companies’ Investor Relations Officers and auditors on the financial statements and on the allocation of income for the period, and (ii) advise on the preparation and the disclosure of the financial statements for the fiscal year ending on December 31st, 2022, due to the decision of the Supreme Court on res judicata in tax matters taken on February 8th, 2023.

 

The Letter clarifies the impact and scope of said decision, in addition to indicating the measures to be taken by listed companies when preparing their financial statements.

 

In addition, superintendencies within CVM advised that it is necessary to have a robust disclosure of the impact of the decision on the financial statements and on the allocation of the result for the period, including through the disclosure of a material fact pursuant to CVM Resolution No. 44/2021, if applicable.

 

The Letter can be accessed in Portuguese through the link below:

https://conteudo.cvm.gov.br/legislacao/oficios-circulares/snc-sep/oc_snc_sep_0123.html

 

_ CVM Resolution introduces new rules for investment advisors

 

On February 14, 2023, CVM published Resolutions CVM 178 (“RCVM 178“) and CVM 179 (“RCVM 179“), which shall regulate investment advisors’ activities (formerly known as “autonomous investment agents”).

 

RCVM 178 revokes Resolution RCVM 16, of February 9, 2021 (“RCVM 16“), and among other changes, the following are worth highlighting:

 

  • End of exclusivity: investment advisors will be able to act as agents for one or more intermediaries;

 

  • Flexibility regarding corporate form: legal entities that advise on investments may choose the corporate form to be adopted, with no longer the previous need to assume the form of a simple company, pursuant to the applicable law;

 

  • Term of acknowledgement: clients presented by investment advisors shall execute a term of acknowledgement which shall contain a description of the essential traits of investment advisors’ activities and their duty to disclose the compensation structure and potential conflicts of interest to the investor;

 

  • Nomination of a competent officer: investment advisors who are legal entities shall appoint a natural person as its competent officer;

 

  • Intermediaries’ accountability: the intermediary’s supervision duties regarding investment advisor’s activities have been detailed.

 

RCVM 178 and part of RCVM 179 will come into force on June 1st, 2023; RCVM 179 will fully come into force on January 2nd, 2024.

 

RCVM 178 can be accessed in Portuguese through the link below:

https://conteudo.cvm.gov.br/export/sites/cvm/legislacao/resolucoes/anexos/100/resol178.pdf

 

RCVM 179 can be accessed in Portuguese through the link below:

https://conteudo.cvm.gov.br/export/sites/cvm/legislacao/resolucoes/anexos/100/resol179.pdf

 

_ Brazilian Investments Abroad – Deadline for submitting the Annual Statement of Brazilian Investments Abroad to the Brazilian Central Bank

 

Individuals or legal entities that are either residents, domiciled or headquartered in Brazil and that hold any values, goods, rights, and assets of any nature abroad (“Brazilian Investments Abroad”) are required to periodically send statements related to the mentioned Brazilian Investments Abroad to the Brazilian Central Bank, according to the following rules:

 

  • Annual Statement of Brazilian Investments Abroad: applicable to holders of Brazilian Investments Abroad in an amount equal or superior to US$1,000,000.00 (one million U.S. dollars) or its equivalent in other currencies, on the base date of December 31, 2022. In the year 2023, this annual statement must be filed between February 15, 2023 and April 5, 2023.

 

  • Quarterly Statement of Brazilian Investments Abroad: applicable to holders of Brazilian Investments Abroad in an amount equal or superior to US$ 100,000,000.00 (one hundred million U.S. dollars) or its equivalent in other currencies, on the base dates indicated below. In the year 2023, the said quarterly statements must be filed according to the schedule below:

 

Base Date:                   Submission Period:

March 31, 2023             From April 30 to June 5, 2023

June 30, 2023               From July 31 to September 5, 2023

September 30, 2023      From October 31 to December 5, 2023

 

_ Foreign Capitals in Brazil – Deadline for submitting periodical statements to the Brazilian Central Bank

 

The entities incorporated or organized in Brazil under the Brazilian legislation, and which are receivers of Foreign Direct Investment (investimento estrangeiro direto – IED) (“IED Receivers“), are obliged to periodically send statements related to such foreign investments to the Brazilian Central Bank, according to the following rules:

 

  • Annual Statement of IED Receivers: applicable to IED Receivers that, on the base date of December 31, 2022, held total assets in an amount equal or superior to R$100,000,000.00 (one hundred million reais). Exceptionally in the year of 2023, the annual statement must be submitted through the system of the Foreign Capitals Census (Censo de Capitais Estrangeiros), within the period of July 1, 2023, and 6:00 pm of August 15, 2023.

Exceptionally in the year of 2023, the annual statement must be submitted until March 31 st , 2023 only by the IED Receivers that on the base date of December 31, 2022, held total assets in an amount equal or superior to R$300,000,000.00 (three hundred million reais).

  • Quarterly Statement of IED Receivers: applicable to IED Receivers that, on the base-dates indicated below, held the total assets in an amount equal or superior to R$300,000,000.00 (three hundred million reais). In the year 2023, the mentioned quarterly statements must be filed according to the schedule below:

 

Base Date:                   Deadline:

March 31, 2023             From April 1 to June 30, 2023

June 30, 2023               From July 1 to September 30, 2023

September 30, 2023      From October 1 to December 31, 2023

 

As informed in the item above, exceptionally in this year of 2023, the IED Receivers which, on the base date of December 31, 2022, held total assets in an amount equal or superior to R$ 300.000.000.00 (three hundred million reais), must submit the quarterly statement by March 31, 2023 through the Brazilian Central Bank’s system SCE-IED (Sistema de Prestação de Informações de Capital Estrangeiro de Investimento Estrangeiro Direto) in the economic-financial statements functionality (such system shall also  be used for submitting the quarterly statements with base dates of March 31, 2023 and June 30, 2023, according to the schedule above).

 

Also on an exceptional basis, the deadline for submitting the quarterly statement with the base date of September 30, 2023 is between November 1, 2023 and December 31, 2023.

 

  • Five-Year Statement of IED Receivers: the base date of this statement is December 31 of the calendar year ending in 0 (zero) or 5 (five), and must be submitted by IED Receivers which, on the reference date, held total assets in an amount equal or superior to R$100,000.00 (one hundred thousand reais). In 2023 there will be no delivery of the five-year statement.