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                 PUBLICATIONS

March 2017

 

_Brazilian Securities and Exchange Commission (CVM) discloses Circular Letter (Ofício Circular) with general guidelines for publicly-held corporations

_Annual Declaration of Brazilian Capital Abroad – DCBE 2017

_Brazil’s Supreme Court of Justice (STJ): D&O does not cover acts of insider trading

_Brazilian Securities and Exchange Commission (CVM) discloses Circular Letter (Ofício Circular) with general guidelines for publicly-held corporations

In February 2017, CVM disclosed Circular Letter CVM/SEP 01/2017, 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 amendments:

_ detailed information regarding the distance voting procedure since some companies are obliged to adopt this mechanism on this year’s General Shareholders Meetings; and

_new preventive measures by the Superintendence of Corporate Relations (SEP) in compliance with its risk-based supervision system included on CVM`s two-year plan for 2017-2018.

CVM INFORMED THAT THIS CIRCULAR LETTER HAS THE PURPOSE OF ENCOURAGING THE DISCLOSURE IN A COHERENT WAY AND IN ACCORDANCE WITH THE BEST CORPORATE GOVERNANCE PRACTICES AS WELL AS TO REDUCE THE REQUIREMENTS MADE BY THE CVM AND ITS PENALTIES AND COERCITIVE FINES. 

The Circular Letter is available at: http://www.cvm.gov.br/export/sites/cvm/legislacao/circ/sep/anexos/oc-sep-0117.pdf

_Annual Declaration of Brazilian Capital Abroad – DCBE 2017

Between February 15, 2017 and April 5, 2017, all individuals and legal entities resident, domiciled or headquartered in Brazil, who on December 31, 2016, held assets abroad in amount equivalent or greater than US$ 100,000 must submit the Annual Declaration of Brazilian Capital Abroad with the Brazilian Central Bank (BACEN) (“Annual Declaration”)

Besides the Annual Declaration, it is mandatory to submit quarterly the Declaration of Brazilian Capital Abroad if the amount of goods and rights held abroad is equivalent or greater than US$100 million according to the following schedule:

Base DataDeadline
03.31.201704.30 – 06.05.2017
06.30.201707.31 – 09.05.2017
09.30.201710.31 – 12.05.2017

Late submission of the Annual Declaration or its submission with false, inaccurate, incomplete or overdue information may result in fines of up to R$ 250,000.

More information regarding the Annual Declaration of Brazilian Capital Abroad can be found at the Brazil’s Central Bank website: http://www4.bcb.gov.br/rex/cbe/port/cbe2016.asp?idpai=CBE

_Brazil’s Supreme Court of Justice (STJ): D&O does not cover acts of insider trading

In an unprecedented and unanimous decision, the Brazilian Supreme Court of Justice (STJ) stated that insider-trading cases are not covered by the director and officer (D&O) liability insurance policies.

In this decision, the STJ rejected the request of the D&O insured, manager of a publicly traded company, who was claiming indemnity to cover the defense cost or a possible settlement with the Brazilian Securities Commission (CVM) incurred from an insider trading allegation.

ACCORDING TO THE REPORTING JUSTICE, FRAUDULENT OR DISHONEST ACTS FOR PERSONAL BENEFIT AND HARMFUL PRACTICES TOWARDS THE COMPANY AND THE CAPITAL MARKET, FOR INSTANCE THE INSIDER TRADING, ARE NOT INCLUDED IN THE D&O INSURANCE POLICY. THE D&O INSURANCE IS LIMITED TO WRONGFUL ACTS THAT THE COMPANY’S MANAGEMENT HAVE COMMITTED IN THEIR CAPACITY AS DIRECTORS OR OFFICES. IN THIS SENSE, THE D&O POLICIES DO NOT COVER WILLFUL MISCONDUCT FOR PERSONAL GAIN OF ONE OR MORE COMPANY’S MANAGERS.

It is worth noting that, in the opinion written by the Reporting Justice, since the omission regarding the insured’s willful misconduct was already under investigation by the CVM when the D&O insurance was being renewed, the D&O insurer was led to an error. He stated that the omission could result in the loss of the right to indemnity against the insurer.

The STJ’s decision is available in Portuguese at: http://www.stj.jus.br/sites/STJ/default/pt_BR/Comunica%C3%A7%C3%A3o/noticias/Not%C3%ADcias/Seguro-de-responsabilidade-civil-para-gestor-de-empresa-n%C3%A3o-cobre-atos-fraudulentos

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