It is increasingly important for publicly traded companies to dedicate themselves to fully complying with the obligations imposed by current laws and regulations, keeping themselves up to date, and having an adequate Investor Relations Department and legal support structure. Important changes have been observed in sanctions rules, as well as a significant increase in the obligations to be fulfilled, which increases the risks of non-compliance. We emphasize the sanction actions of the Brazilian Securities and Exchange Commission (CVM) for companies listed as public companies and the regulations of B3 S.A. - Bolsa, Brasil, Balcão (B3) for companies listed in the B3.
As of October 14, mandatory publications by corporates must be carried out via the Public Digital Bookkeeping System (SPED), in the case of privately-held companies, and Empresas.NET, for publicly-held companies, in addition to the websites of these organizations themselves, and no longer in major newspapers.
In late June the CVM (Brazilian Securities and Exchange Commission) published four new rules establishing a new regulatory framework for procedures related to sanctioning actions by the authority. The first of them was CVM Instruction No. 607, of June 18. A week later, it was followed by CVM Instructions No. 608 and No. 609, which update the framework and the values for punitive fines, consolidating the applicable values of fines into a unified standard, and CVM Resolution No. 819, which amends procedures applicable to appeals to boards of the body against decisions issued by its commissioners.
Companies that want to access the capital markets or gain visibility as public companies should begin preparing the organization and its documentation in advance of the start of the registration process per se in order to make it more efficient and less costly.
CVM Instruction 606, published on March 25, promoted changes in CVM Instruction 555 in order to regulate the Incentivized Infrastructure Investment Funds (FI-Infra) under the terms of article 3 of Law No. 12,431/11. The objective of the measure was to incentivize the participation of the capital markets in the financing of infrastructure projects, whose progress has been hampered by the conditions of the political and economic scenario.
The Brazilian Corporations Law, in its article 115, provides that shareholders must abstain from voting at meetings on matters in which their interests and those of the companies are in conflict. The purpose of the law is to protect the company's (corporate) interest to the detriment of the individual interests of the shareholders. Therefore, the legal provision imposes on shareholders with a conflict the duty of abstention, under penalty of the vote being considered abusive and even cause for annulment of the resolution.
The civil liability insurance for directors and officers, or D&O Insurance, was adopted in Brazil in the 1990s, still in a very incipient form, and has gained relevance over time, with the transformations of the Brazilian economy, specifically the policies of privatization at the federal level and the commercialization of securities of Brazilian companies abroad. However, D&O insurance has never been so much talked about as it is today. The figures published on Susep's website show that the claim levels of this type of insurance went from approximately R$ 38 million in 2013 to R$ 228 million in 2017, and by August this year amounted to R$ 148 million.
CVM Guidance Opinion No. 38, issued on the 25th of this month, deals with the fiduciary duties of managers within the framework of indemnity agreements entered into between publicly-held companies and their management (officers, members of the board of directors or audit committee, members of committees established in bylaws, among others).
A few months after Law No. 13,506/2017 coming into force and a broad debate with various market participants, the Brazilian Securities and Exchange Commission (CVM) submitted for public hearing a draft new instruction that will regulate its sanctioning activity, therein adapting it to the new legislation. Comments can be presented until August 17, 2018.
The new version of the Issuer Manual approved by the Brazilian Securities and Exchange Commission (CVM) aligns mechanisms for disclosure of material facts with the changes introduced in CVM Instruction No. 358/2002 by CVM Instruction No. 590/2017, which amended paragraph 2 of article 5 of the previous text, now in force with the following wording:
In July, the Brazilian Securities and Exchange Commission (CVM) issued regulations pertaining to public offerings of securities on crowdfunding platforms (collaborative financing).