Executive Order No. 931, published on March 30 (MP 931), amended deadlines and procedures for compliance with legal obligations of corporations and limited liability companies, among other entities. The amendments are justified by the difficulty in complying with certain legal provisions in the face of the restrictions imposed by the measures to combat the covid-19 pandemic.

 

MP 931 included provisions in the Brazilian Corporations Law and in the Civil Code with new rules applicable to general meetings and partners’ meetings, including to expressly provide for the possibility of holding virtual general meetings. Below are the main changes implemented by MP 931:

General provisions

  • Extension of the terms of office of officers and directors, members of the audit committee, and other committees until the ordinary general meeting or partners' meeting, as the case may be (as an exception in this fiscal year); and
  • Possibility of submitting corporate acts signed as of February 16 to the competent board of trade as soon as work is resumed, giving the respective act retroactive effects (exceptionally due to the state of public emergency).

For limited liability companies

  • Holding of partners’ meetings within seven months of the end of the previous fiscal year, i.e., July 31, 2020 (exceptionally in this fiscal year);
  • Withdrawal of the effectiveness of contractual provisions requiring the holding of partners’ meetings before seven months from the end of the fiscal year (that is, July 31, 2020), as provided for in MP 931 (exceptionally in this fiscal year); and
  • Holding a partners' meeting with a vote and participation of partners remotely, under the terms of regulations to be issued by the DREI (National Department of Business Registration and Integration).

For corporations

  • Holding of ordinary general meetings within seven months of the end of the previous fiscal year, i.e., July 31, 2020 (exceptionally in this fiscal year);
  • Possibility for the board of directors to resolve, ad referendum, on urgent matters of exclusive competence of the general meeting (exceptionally in this fiscal year);
  • Competence on the board of directors or the board of executive officers to declare interim dividends, regardless of amendment of bylaws (exceptionally in this fiscal year);
  • Holding of general meetings by privately-held companies in which the shareholder can participate and vote remotely, under the terms of regulations to be issued by the DREI;
  • Option for CVM to authorize, in the case of publicly-traded companies: (i) the holding of a general meeting outside the company's headquarters; and (ii) the holding of a digital meeting.

The provisions listed above applicable to corporations are also valid for government-owned companies, government-controlled companies, and their subsidiaries.

 

Other topics

  • Temporary waiver of mandatory prior filing of acts for the issuance of securities and other legal transactions, as of March 1, 2020. The filing must be done at the corresponding board of trade within 30 days from the date on which the board restores services.

In addition to the amendments mentioned above, article 3, head paragraph and sole paragraph of MP 931 delegated to CVM the power to extend the deadlines established in the Brazilian Corporations Law for publicly-held companies, as well as to define the date of presentation of the financial statements by such issuers.

 

In order to give effectiveness to MP 931, CVM promulgated Resolution No. 849, of March 31, 2020. Among other issues, the standard establishes new deadlines for the submission of certain documents and information due in the 2020 fiscal year.

 

The deadlines amended by Resolution 849 are described below, with the new dates for submitting documents or information:

  • By May 31, 2020: (a) presentation of the complete annual financial statements and other related documents by the Brazilian issuers[1] (article 25, paragraph 2, of ICVM 480/09) and (b) submission of the standardized financial information form - DFP to CVM by Brazilian issuers (article 28, II, “a” of ICVM 480/09).
  • By June 29, 2020: presentation of financial statements for the 1st quarter of 2020 - ITR (article 29, II, of ICVM 480/09).
  • By June 30, 2020: presentation of the annual report by the debentureholders' fiduciary agent (provided for in article 68, paragraph 1, "b" of the Brazilian Corporations Law and article 15 of ICVM 583/16).
  • By July 31, 2020: (a) annual update of the Registration Form (article 23, sole paragraph, of ICVM 480/09); (b) annual update of the Reference Form (article 24, paragraph 1 of ICVM 480/09); and (c) sending of the report by securities distributors and consultants (article 7, paragraph 2, of ICVM 539/13).
  • By September 30, 2020: update of corporate governance report article 29-A, paragraph 1, of ICVM 480/09).

Among the changes introduced by MP 931 and, consequently, by Resolution 849, the following also stand out: (i) suspension of the effectiveness of the provisions of article 13 of ICVM 476/09, for a period of four months (term for trading securities offered in accordance with the instruction); and (iii) the possibility of holding general meetings of unitholders of investment funds on a virtual basis, as well as consider the financial statements approved if there is no quorum to call the meeting to order and the auditor's report does not contain a modified opinion.

 

Both regulations (MP 931 and Deliberation 849) entered into force on the date of their publication. However, the definitive effectiveness of MP 931 requires its conversion into law within 60 days from the date of publication and extendable for the same period. After this deadline, the text will lose its effectiveness if it is not approved by Congress.

 

[1] In relation to foreign issuers, our understanding is that the provisions of subsection I of Resolution No. 849 apply: financial statements must be submitted by May 31, 2020.