In order to improve the remote voting system already implemented by some publicly-held companies for the annual general meetings (AGMs) held in 2017, the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM) issued, on December 20, 2017, Rule No. 594, changing rules and procedures set forth in Rule No. 481, which regulates, among other matters related to general meetings, remote voting.

}In the context of the public hearing for the issuance of the new rule, CVM emphasized that the proposed changes refer only to more critical issues. The agency informed that it will continue monitoring the operation of the remote voting system during the upcoming round of AGMs and will wait for a greater market assimilation before proposing more thorough adjustments.

Among the most relevant changes, we highlight the reduction in the list of companies subject to Rule No. 481. While, previously, the provisions set forth therein applied to all publicly-held companies listed in the "A" category with shares traded in a stock exchange, Rule No. 594 excluded from such list companies that do not have outstanding shares in the market. CVM’s goal was avoiding unnecessary costs to such companies related to the disclosure of documents and adoption of the remote voting system.

In addition, remote voting became mandatory also for extraordinary general meetings (EGMs) called to occur on the same date as the AGMs, regardless of the resolutions involved. This adjustment was based on the 2017 experience, when companies adopted different procedures regarding remote voting ballots in cases of AGMs/EGMs. With this new requirement, CVM sought to avoid giving different treatment to shareholders who participate in the meeting in person and those who vote remotely.

Also, Rule No. 594 increased the minimum time limit for inclusion of new candidates to the board of directors and the audit committee on the ballot. Now such inclusion is to be done up to 25 days before the meeting date. However, the minimum time limit for inclusion of new proposals on the ballot, of up to 45 days before the meeting, remain unchanged.

The possibility of resubmitting the ballot originally released by the company was also introduced by Rule No. 594 in the following situations: (i) to include new candidates to the board of directors and to the audit committee, up to 20 days before the relevant meeting; and (ii) exceptionally, to correct material errors and to adapt the proposals to the applicable regulation and bylaws. Despite having received comments contrary to this adjustment, on the grounds that it would cause instability to the ballots, the agency understood that its benefits would outweigh any negative effects and would favor shareholders, who would have better knowledge of the proposals to be discussed.

Finally, in addition to specific adjustments to the content of the ballots, Rule No. 594 requires companies to disclose, within seven business days after the meeting, a detailed final voting map consolidating the votes cast remotely and the votes cast in person. This map shall contain the first five numbers of the shareholders’ registration with the National Register of Corporate Taxpayers/National Register of Individual Taxpayers (CNPJ/CPF), each of the votes cast by them, and their respective shareholding ownership. CVM's intent was to enable shareholders to verify that their votes cast remotely were correctly considered by the company.

The adoption of the remote voting system, mandatory in 2017 only for publicly-held companies that were included in the IBrX-100 or Ibovespa indexes, is required in 2018 for all companies subject to Rule No. 481. The adjustments introduced by Rule No. 594 apply to the general meetings held as of March 5, 2018, and whose remote ballots are released from February 1st onwards.

In short, improving the remote voting system represents an important step in the corporate governance of publicly-held companies, which will experience a greater minority shareholders' activism and become more attractive to investors, especially foreign ones, who will have a simpler, more accessible, and less expensive channel for participating in corporate resolutions.