April/May/June 2024

_The April I May I June 2024 edition of our Newsletter has the following highlights:

– CVM Accepts Settlement Agreement with Director Worth R$ 3.2 million

– Important Decisions by the CVM Board Addressed in the Annual Circular Letter

– B3 Launches Public Consultation on Proposal to Evolve Novo Mercado Regulations

_ CVM Accepts Settlement Agreement with Director Worth R$ 3.2 million


In April this year, the Board of the Securities and Exchange Commission (“CVM”) accepted a proposal for a Settlement Agreement with the Investor Relations Officer of a publicly traded company (“DRI”) in three cases involving the disclosure of material facts.

In the administrative sanctioning process (PAS), the DRI was being investigated for the untimely disclosure of a material fact regarding a potential corporate acquisition previously reported by the press, in violation of art. 157, §4 of Law 6.404/79 (“LSA”) and arts. 3 and 6, sole paragraph, of the then-current CVM Instruction 358 – now replaced by CVM Resolution No. 44.

In the PAS, the relevant information was leaked after the submission of a non-binding offer for the potential acquisition of a factory by the company. When questioned by the CVM on the matter, the company responded generically that it always evaluated investment opportunities in line with its business strategy and that, at that time, there were no facts or binding documents that warranted disclosure to the market.

The SEP took the opportunity to reiterate the CVM’s understanding that “in the event of information leakage or if the company’s securities trade abnormally, the material fact must be immediately disclosed, even if the information relates to ongoing (not concluded) negotiations, initial talks, feasibility studies, or even the mere intention to carry out the transaction. Therefore, if the relevant information escapes the control of management or there is abnormal fluctuation in the price, quotation, or trading volume of the securities issued by the publicly traded company or referenced to them, the DRI must inquire with the people with access to acts or material facts to determine whether they are aware of any information that should be disclosed to the market.”

Additionally, the SEP highlighted that, according to the already established understanding within the CVM, the relevance of a fact is not affected even if, after its disclosure, there is no atypical change in the price or traded volume of the shares.

In the two administrative processes (PA), the DRI was being investigated for the alleged failure to disclose material facts about changes in financial projections prior to or concurrently with their announcement in earnings presentation conference calls held throughout 2022 and 2023, in violation of the same provisions mentioned above. Furthermore, there was an investigation into the failure to update the company’s reference form with the same projections within the stipulated timeframe, in violation of arts. 21, §3, and 25, §3, VIII, both of CVM Resolution No. 80.

As part of the Settlement Agreement, the DRI committed to pay CVM the amount of R$ 3.2 million.

For more information on the topic, visit: CVM aceita Termo de Compromisso com diretor da CSN no valor de R$ 3.2 milhões — Comissão de Valores Mobiliários (www.gov.br)


_ Important Decisions by the CVM Board Addressed in the Annual Circular Letter


The release of the 2024 Annual Circular Letter by the Superintendence of Corporate Relations (SEP) of the Securities and Exchange Commission (CVM) on March 7, 2024, is a significant milestone in the context of annual corporate practices. In addition to providing comprehensive guidelines on the disclosure of periodic and occasional information for publicly traded companies, the document highlights recent decisions and relevant regulations issued by the regulator.

One of the highlighted decisions pertains to the topic of cash-settled derivatives, emphasizing the complexity and potential impacts of these transactions on the securities market. CVM President João Pedro Nascimento, in the context of PAS CVM No. 19957.009010/2021-72, emphasized the importance of full disclosure of these operations, recognizing the effects that may result from them. He noted that although they are purely financial settlement instruments, derivatives are often equated with direct stock purchases, especially when the involved parties acquire or borrow shares as hedging. This analogy is crucial in cases of significant share acquisitions, even if they do not result in isolated majority control.

The central concern lies in the possibility of undisclosed derivatives transactions significantly influencing the liquidity and distribution of the target company’s securities, potentially distorting investors’ perception of their true condition and affecting corporate governance and market efficiency. Therefore, the decision underscores the importance of transparency and proper disclosure of these transactions to maintain the integrity and efficiency of the securities market, as well as to protect investors and promote adherence to corporate governance principles.

Additionally, the Circular highlighted the recent decision made in the context of the Administrative Sanctioning Process (PAS) CVM No. 19957.008172/2021-936, which brought important clarifications regarding the possibility of administrators voting on the proposal of a liability action against themselves, as stipulated by Article 159 of the Corporate Law. In a judgment that began on May 23, 2023, and concluded on September 5 of the same year, the CVM Board outlined three fundamental points.

Firstly, it was decided that the conflict-of-interest situations described in Article 115, §1, of the Corporate Law should be interpreted according to the material/substantial approach, in line with the predominant doctrine and recent positions of the CVM Board. Next, the Board highlighted that, specifically in the context of deliberations related to liability actions under Article 159 of the mentioned law, there are additional justifications in the law itself that support the application of the material approach, allowing shareholders/administrators to vote in these deliberations.

Finally, the Board established that if a shareholder/administrator decides to vote on deliberations related to the proposal of a liability action provided for in Article 159 of the Corporate Law, they must bear the burden of proving that their vote was made in the best interest of the company, considering the specific circumstances of the case in question. In summary, although the decision allows the exercise of the right to vote by shareholders/administrators in these deliberations, it also imposes the responsibility of demonstrating the absence of a conflict of interest with the company, requiring consistent argumentation aligned with the company’s interests.

The Annual Circular and the mentioned decisions can be accessed through the links below: https://conteudo.cvm.gov.br/legislacao/oficios-circulares/sep/oc-anual-sep-2024.html



_ B3 Launches Public Consultation on Proposal to Evolve Novo Mercado Regulations


B3 S.A. – Brasil, Bolsa, Balcão (“B3”) has launched a Public Consultation regarding the proposal to evolve the Novo Mercado Regulations (“Regulations”), aiming to gather contributions from market agents, companies, investors, regulators, associations, and other interested parties (“Consultation”).

The Consultation aims to enhance the value of the Novo Mercado Seal and protect companies and their investors by adopting additional corporate governance requirements that help mitigate risks. This initiative intends to make the Brazilian capital market more attractive, potentially drawing more investment from local and international investors.

Below are the main proposals presented in the Consultation:

  1. “Under Review” Novo Mercado Seal: B3 suggests implementing an “under review” seal as a precautionary measure to signal relevant events that may affect the company, such as potential material errors in financial information, delays in financial information delivery, auditors’ reports with modified opinions, requests for judicial recovery, inability to maintain statutory directors, environmental disasters, fatal accidents, and labor practices that violate human rights.


  1. Aligning Senior Management’s Actions with the Company’s Interests: Regarding the board of directors, B3 presented three proposals for improvement that follow the international evolution of corporate governance. They are: (i) limiting the number of boards of directors that a board member of a Novo Mercado company can be part of, (ii) establishing a term limit for independent board members in the same company, and (iii) increasing the minimum number of independent board members required by the Novo Mercado.


  1. Reliability of Financial Statements: With the aim of protecting investors, B3 consulted the market on the adoption of an international practice related to the effectiveness of internal controls for the preparation of financial statements by companies. Therefore, B3 proposes that statements regarding the effectiveness of the company’s internal controls be presented in the annual management report by the CEO and the CFO, and that there be an assurance work by an independent auditing firm regarding the assessment made by the company’s management.


  1. Sanctions and Handling of Irregular Conduct: At this point, B3 consults the market regarding the possibility of applying the penalty of disqualification from holding positions as an administrator, member of the audit or risk committees, or member of the fiscal council due to non-compliance with rules of supervision and control structures.


Regarding the fines imposed in sanctioning processes, B3 seeks to gather market agents’ perceptions on a proposal to adapt the Regulations so that the fine ranges provided are replaced by a maximum pecuniary penalty, adjusted to maintain proportionality with the potential damages that irregular conduct may cause to companies in the segment and their investors.


  1. Flexibility Regarding Arbitration Chambers: Given the advancement of arbitration as a preferred conflict resolution method among market agents, B3 proposes measures to allow greater flexibility in choosing the Arbitration Chamber by the company, no longer requiring the Market Chamber to be the mandatory forum for resolving corporate and business disputes.

Besides the main proposals, B3 also suggests several ancillary measures to adapt the Regulations to legislative changes, clarify certain practices, and pose specific questions to the market to gather opinions on topics such as executive compensation, integrity, and other relevant issues.

As seen, these changes aim to enhance the value of the Novo Mercado Seal, improve protection for companies and investors, and ensure that corporate governance practices align with international standards, providing more reliability in the Brazilian stock exchange for investors.

The text of the Public Consultation, including the annex with the revised draft of the complete Regulations, can be accessed from the following link:



CVM absolves accused of fraud in acquisition operation of controlling interest in a publicly traded company
Brazilian Capital Abroad – Deadline for submitting periodic statements to the Central Bank in 2024
CVM acquits defendants accused of fraud in transaction to acquire control of a publicly held company
Brazilian Securities and Exchange Commission (CVM) amends points of CVM Resolution No. 175
CVM proposes reform in the rules and procedures of shareholders' general meeting
CVM publishes Guidance Opinion on Soccer Corporations (SAF)