Mês: March

_ Brazilian Capital Abroad – Deadline for submitting periodic statements to the Central Bank in 2024

Individuals or legal entities resident, domiciled or headquartered in Brazil and holders of values, assets, rights, and assets of any nature abroad (“Brazilian Capital Abroad“) are required to periodically submit to the Central Bank statements on such Brazilian Capital Abroad, subject to the following framework rules:

• Annual Statement of Brazilian Capital Abroad: applicable to holders of Brazilian Capital Abroad in an amount equal to or greater than US$1,000,000.00 (one million United States dollars) or its equivalent in other currencies, on the base date of December 31 of the immediately preceding year. In the year 2024, this annual statement (with a base date of 12/31/2023, therefore) must be provided between 02/15/2024 and 04/05/2024.

• Quarterly Statement of Brazilian Capital Abroad: applicable to holders of Brazilian Capital Abroad in an amount equal to or greater than US$100,000,000.00 (one hundred million United States dollars) or its equivalent in other currencies, on the base dates of March 31, June 30 and September 30 of each year. In the year 2024, these quarterly statements must be submitted according to the schedule below:

_ Foreign Capital in Brazil – Deadline for submitting periodic statements to the Central Bank in 2024

Entities incorporated or organized in Brazil under Brazilian law, with or without profit, with or without legal personality, and which are recipients of foreign direct investment (“FDI Recipients“) are required to periodically submit to the Central Bank statements on such investments. The rules regarding such declarations have been updated in recent years, especially through BCB Resolutions No. 278/2022 and 281/2022, amended in the last quarter of 2023 by BCB Resolution No. 348/2023.

In general terms, and following the regulations in force, the rules regarding periodic declarations applicable to FDI Recipients, specifically for the year 2024, are:

• Quarterly Statement of FDI Recipients: applicable to FDI Recipients that, on the base dates indicated below, have total assets in an amount equal to or greater than R$300 million, according to the schedule below:

The Quarterly Declarations must be provided in the Foreign Direct Investment Foreign Capital Information System (SCE-IED), through the functionality of economic-financial declarations.

• Annual Statement of FDI Recipients: applicable to FDI Recipients who, on the base date of 12/31/2023, have net equity equal to or greater than the equivalent of US$100 million, according to the dollar exchange rate released by the Central Bank of Brazil on 12/31/2023, i.e., R$484,070,000.00.

The Annual Statement must be provided through the Foreign Capital Census system, within the deadline between 07/01/2024 and 6 pm on 08/15/2024.

• Five-Year Declaration of FDI Recipients: The base date of this declaration is December 31 of a calendar year ending in 0 (zero) or 5 (five), and must be provided by FDI Recipients who, on the base date of reference, have total assets in an amount equal to or greater than R$100,000.00 (one hundred thousand reais). In 2024 there will be no delivery of the five-year declaration.

_ CVM publishes an annual circular letter with general guidelines on procedures to be observed by publicly held companies in 2024

On March 7, 2024, the Brazilian Securities and Exchange Commission (“CVM“) released the CIRCULAR/ANNUAL-2024-CVM/SEP letter, which updates the general guidelines on procedures to be observed by publicly held companies (“Annual Letter“).

As usual, the Annual Letter brings together the main obligations of publicly held companies and reflects regulatory changes, in addition to highlighting important decisions of the CVM board.

This year, among the highlights of the Annual Letter, is the inclusion of a specific annex containing the “Panel of Companies with ESG Aspects”. The inclusion was certainly due to the entry into force of CVM Resolution No. 59/21 in 2023, which requires publicly held companies to include indicators related to Environmental, Social and Governance (“ESG“) practices in their reference forms. Thus, the Annual Letter compiled the ESG information of the forms delivered from 2023 to January 2024, revealing a significant number of incorrect and/or incomplete fillings, leading the CVM to implement notices in the online system to warn about inappropriate fillings and reinforcing the importance of the matter.

The Annual Letter also highlighted the guidelines on the reporting of financial information related to sustainability, based on the international standard issued by the International Sustainability Standards Board (“ISSB“) implemented by CVM Resolution No. 193/23. As highlighted in the Annual Letter, CVM Resolution No. 193/23 allows companies, securitization companies and investment funds to voluntarily disclose the fiscal years 2024 and 2025 and, for publicly held companies, such measure becomes mandatory, and no longer optional, as of the fiscal years starting on or after January 1, 2026.

Another clarification made by the Annual Letter is the definition of “corporate demands” provided for in article 33 of CVM Resolution No. 80/22, which obliges issuers to communicate such demands under the terms and deadlines established in Annex I of that Resolution. As clarified in the Annual Letter, “corporate claims” are any judicial or arbitration proceeding whose requests are, in whole or in part, based on corporate or securities market legislation, or on the rules issued by the CVM. In the specific case of initiation of an arbitration proceeding, the issuer must communicate its initiation or receipt of the initiation within seven (7) business days from the sending/receipt of the initiation.

The Annual Letter can be accessed through the link below:

https://conteudo.cvm.gov.br/legislacao/oficios-circulares/sep/oc-anual-sep-2024.html

_ Season of Annual General Meetings and Annual Meetings of Members

In the coming months, corporations and limited liability companies must disclose their financial information, as well as convene and hold the Annual General Meetings (“AGM“) or the annual meetings of their shareholders (“Meeting“) for the fiscal year ending December 31, 2023.

Deliberations and Preparatory Procedures for the AGM and the Meeting

As provided for in article 132 of the Brazilian Corporations Law, all corporations, both open and privately held, must hold, in the first 4 months following the end of each fiscal year, an AGM to: (i) take the accounts of the managers, examine, discuss and vote on the financial statements; (ii) to resolve on the allocation of net income for the year and the distribution of dividends and (iii) to elect the management and members of the fiscal council, if applicable.

In addition, corporations must prepare the documents indicated in article 133 of the Brazilian Corporations Law and publish a notice informing their shareholders that such documents are available for consultation at the company’s headquarters; in the case of publicly-held companies, the documents must also be made available on the company’s websites, CVM and B3 S.A. – Brasil, Exchange, Counter (“B3“). The publication of the notice is waived if the companies publish their financial statements up to 1 month before the date scheduled for the AGM or when the AGM meets all shareholders.

Notwithstanding, companies must publish their financial statements prior to the AGM, provided that:

• those whose annual gross revenues are equal to or less than R$78 million may do so electronically through the Central Balance Sheet of the Public Digital Bookkeeping System – SPED, according to article 294, item III, of the Brazilian Corporations Law and, under ME Ordinance No. 12,071/2021 and ME Ordinance No. 10.031/2022.

• publicly held companies whose individual gross revenues earned are less than R$500 million in the last fiscal year, considered to be smaller under the terms of article 294-B of the Brazilian Corporation Law and CVM Resolution No. 166/2022 (“RCVM 166“), may do so electronically through the Empresas.NET system; and

• for other companies, the publication must be made in a newspaper of wide circulation, which may be carried out in a summarized form, in compliance with the provisions of the Brazilian Corporate Law and CVM Guidance Opinion No. 39, applicable to publicly-held companies, with simultaneous disclosure of the full documents on the website of the same newspaper, which must provide digital certification of the authenticity of the documents kept on the proper page issued by a certifying authority accredited within the scope of the Brazilian Public Key Infrastructure (ICP-Brasil).

Concerning limited liability companies, as provided for in article 1,078 of the Civil Code, also in the first 4 months following the end of the fiscal year, a Meeting shall be held to (i) take the accounts of the managers and deliberate on the balance sheet and the economic result and (ii) appoint managers, when necessary. The meeting is dispensable if all the members deliberate in writing on the matters that would be the subject of it.

Financial Statements of Large Companies

Under Law No. 11,638/2007, limited liability companies, or a group of companies under common control, that registered in the fiscal year 2023 total assets greater than R$ 240 million or annual gross revenue greater than R$ 300 million, must (a) prepare their financial statements by the rules applicable to corporations; and (b) submit the financial statements to an independent auditor registered with the Brazilian Securities and Exchange Commission.

After the publication of SEI Circular Letter No. 4742/2022/ME by the DREI (National Department of Business Registration and Integration), the understanding that the publication of financial statements is optional was confirmed, and the Boards of Trade are advised to comply with this guideline, so that the filings of corporate acts of such companies are not required, nor are they rejected,  alleging that the aforementioned publications were not substantiated.

AGOs and Digital Meetings

According to Law No. 14,030/2020, AGMs and Meetings may be held partially or exclusively digitally and must comply with the applicable rules established by CVM Resolution No. 81/2022, as amended, in the case of publicly held companies, and/or those of the National Department of Business Registration and Integration (“DREI”), in the case of privately held corporations and limited liability companies.

_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