2014-02-06
Added · Updated
Issuers must submit registration requests to SEP with physical and electronic documents, including financial statements for the last three fiscal years and quarterly ITRs. Foreign issuers must appoint Brazilian legal representatives, replacing them within 15 business days if necessary, and disclose relevant facts regarding voluntary cancellation procedures. Cancellation requires proof of debt settlement or deposit, with Category B requests sent to SEP and Category A to SRE. Non-compliance risks coercive fines and inscription in the Defaulters Register.
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Regional Superintendence of São Paulo: Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors – Bela Vista – São Paulo – SP – CEP: 01333-010 – Brazil – Tel.: (11) 2146-2000 Regional Superintendence of Brasília: SCN Q.02 – Bl. A – Ed. Corporate Financial Center – S.404/4th Floor – Brasília – DF – CEP:70712-900 – Brazil – Tel.: (61)3327-2030/2031
CIRCULAR LETTER/CVM/SEP/N° 01/2014
Rio de Janeiro, February 06, 2014.
SUBJECT: General guidelines on procedures to be observed by public companies and foreign issuers
Dear Director of Investor Relations/Legal Representative,
The Circular Letters issued by the Department of Corporate Relations (SEP) aim to guide securities issuers on the procedures that must be observed in the sending of periodic and occasional information. Guidelines are also presented regarding interpretations given by the CVM Collegiate Board and by SEP concerning relevant aspects of legislation and regulation that must be considered by issuers when carrying out certain operations.
Through this document, SEP intends to foster the disclosure of corporate information in a manner consistent with best corporate governance practices, aiming for transparency and equity in relationships with investors and the market, as well as to minimize possible deviations and, consequently, reduce the need for formulation of demands and the application of coercive fines and penalties.
It is emphasized that from 2013, SEP's annual Circular Letter has also gathered the guidelines provided regarding the preparation of the Reference Form, to allow issuers to consult in a single document the area's guidelines on the main obligations of the company set forth in scattered norms.
This document consolidates the Circular Letters previously issued by SEP, however, not dispensing with the reading of applicable norms, and the update of corporate legislation and CVM regulation must be observed, especially those that occurred after this date.
It is also recommended, with regard to accounting matters, the reading of Circular Letters/SNC/SEP, available for consultation on the CVM website. Consultation of the pronouncements issued by CODIM, regarding best practices for information disclosure, is also recommended, available at http://www.codim.org.br/.
Sincerely,
FERNANDO SOARES VIEIRA
Superintendent of Corporate Relations
Table of Contents
Chapter 1. Issuer Registration..............................................................................................9
1.1. Issuer Categories........................................................................................................................9
1.2. Issuer Registration Request.............................................................................................................9
1.3. Foreign Issuers........................................................................................................................10
1.4. Requests for Category Conversion...................................................................................................11
1.5. Consequences of Non-Delivery of Information .................................................................................12
1.5.1. Coercive Fines...............................................................................................................12
1.5.2. Publication of the List of Non-Compliant Issuers...............................................................13
1.5.3. Suspension of Issuer Registration Ex Officio...........................................................................13
1.5.4. Cancellation of Issuer Registration Ex Officio Due to Non-Compliance with Information.............14
1.5.5. Administrative Sanction Process.....................................................................................14
1.6. Other Cases for Cancellation of Registration ..................................................................................15
1.6.1. Voluntary Cancellation of Registration................................................................................15
1.6.2. Ex Officio Cancellation of Issuer Registration Due to Its Extinction.........................17
Chapter 2. Periodic Information ...................................................................................... 18
2.1. Management Report .................................................................................................................18
2.2. Financial Statements.................................................................................................................19
2.2.1. Financial Institutions Authorized to Operate by the Central Bank of Brazil......................22
2.2.2. Advance Disclosure of Financial Information...............................................................24
2.2.3. Capital Budget .............................................................................................................25
2.3. Periodic Forms........................................................................................................................26
2.3.1. Registration Form ..............................................................................................................26
2.3.2. Reference Form .......................................................................................................26
a. Annual Delivery of the Form .......................................................................................................... 26
b. Update of the Reference Form.......................................................................................27
c. Resubmission of the Reference Form Due to Public Distribution Registration.........................29
2.3.3. Standardized Financial Statements – DFP ...................................................................29
2.3.4. Quarterly Information – ITR.................................................................................................30
2.3.5. Quarterly Report of Securitization Company.....................................................................31
2.4. Ordinary General Assembly – OGA.......................................................................................................31
2.4.1. Notice of Article 133 of Law No. 6.404/76.......................................................................32
2.4.2. Management Proposal for OGA ....................................................................................32
a. Issuers Registered in Category A............................................................................................. 32
b. Issuers Registered in Category B............................................................................................. 36
2.4.3. OGA Convocation Notice.................................................................................................38
2.4.4. Summary and Minutes of the OGA.............................................................................................................40
2.5. Report and Communications of the Trustee.................................................................................40
Chapter 3. Main Occasional Information........................................................................ 41
3.1. Act and Material Fact.............................................................................................................................41
3.1.1. Distinction between Material Fact and Market Communication ..................................................44
3.2. Extraordinary General Assembly (EGA) and Special Assembly............................................................45
3.2.1. EGA Convocation Notice..................................................................................................45
3.2.2. Management Proposal for EGA.....................................................................................47
a. Management Proposal – Category A ...................................................................................... 47
b. Management Proposal – Category B ...................................................................................... 50
3.2.3. Summary and Minutes of the EGA .............................................................................................................52
3.3. Projections.............................................................................................................................................52
3.4. Shareholders' Agreement............................................................................................................................53
3.5. Group of Companies Convention....................................................................................................54
3.6. Bankruptcy Petitions and Judgments..........................................................................................................54
3.7. Petitions and Judgments Involving Judicial and Extrajudicial Restructuring ...............................................54
3.8. Negotiations by Administrators and Related Persons with Securities Issued by the Company...................................................................................................................................................55
3.9. Relevant Shareholding .........................................................................................................56
3.9.1. Obligated Recipient.......................................................................................................57
3.9.2. Object of Relevant Participation ..........................................................................................57
a. Shares............................................................................................................................................... 57
b. Debentures Convertible into Shares, Subscription Warrants, Rights to Subscribe for Shares, Call Options on Shares and Others ....................................................................................... 58
c. ADR, GDR and BDR.............................................................................................................................. 58
d. Share Lending......................................................................................................................58
e. Indirect Participation....................................................................................................................... 59
3.9.3. Calculation of Increase or Reduction in Relevant Participation...................................................60
3.9.4. Group of Persons Acting in Concert or Representing the Same Interest.....................61
3.9.5. Responsibility of Administrator or Manager.......................................................................62
3.9.6. Time and Form of Disclosure ...........................................................................................62
3.9.7. Content of the Declaration of Increase and Reduction in Participation..........................................63
3.9.8. Disclosure of Declaration by Non-Resident Investor ........................................................64
3.10. Trading Policy ......................................................................................................................64
3.11. Disclosure Policy .......................................................................................................................65
3.12. Bylaws...................................................................................................................................65
3.13. Meetings of the Board of Directors and the Audit Committee........................................................66
3.14. Communication of Auditor Change ..............................................................................................66
Chapter 4. Guidelines Common to Periodic and Occasional Information............................... 67
4.1. Cooperation Agreement CVM and BM&FBOVESPA ...............................................................................67
4.2. General Guidelines..............................................................................................................................67
4.3. Obligation to Maintain a Website....................................................................................................68
4.4. Confidentiality Request ...............................................................................................................69
4.5. Documents in Foreign Language ....................................................................................................69
Chapter 5. Special Rules on Issuers........................................................................ 70
5.1. Issuers with High Market Exposure....................................................................................70
5.2. Issuers in Special Situation ..........................................................................................................70
5.2.1. Issuers in Extrajudicial Restructuring ................................................................................70
5.2.2. Issuers in Judicial Restructuring.........................................................................................71
5.2.3. Issuers in Bankruptcy.............................................................................................................71
5.2.4. Issuers in Liquidation.........................................................................................................72
Chapter 6. Relevant Corporate Events and Other Guidelines ........................................... 73
6.1. Guidelines Common to Ordinary and Extraordinary General Assemblies.........................................73
6.1.1. Representation of Shareholders in Assembly .........................................................................73
6.1.2. Public Requests for Proxy.............................................................................................74
6.1.3. Request for List of Shareholder Addresses (Article 126, Paragraph 3 of Law No. 6.404/76)......................................................................................................................................76
6.1.4. Installation of the Audit Committee and Election of its Members ....................................................77
a. Election of Alternate Members of the Audit Committee....................................................................... 80
6.1.5. Election of Members of the Board of Directors .............................................................80
6.2. Incorporation, Merger and Spin-off.........................................................................................................83
6.2.1. Requests for Waiver of Compliance with Requirements (CVM Resolution No. 559/08).............84
6.3. Acquisition of Commercial Company by Public Company ..................................................................85
6.4. Conversion of Shares.............................................................................................................................86
6.5. Withdrawal Right................................................................................................................................87
6.6. Capital Increase by Private Subscription........................................................................................88
6.6.1. Surplus Shares in Capital Increase with Credits..........................................................89
6.7. Capital Reduction ..............................................................................................................................90
6.8. Share Consolidation.........................................................................................................................91
6.9. Trading Prohibition Period .......................................................................................................91
6.10. Transactions with Related Parties................................................................................................92
6.11. Trading with Own Issued Shares......................................................................................93
6.12. Bonus Issue of Treasury Shares .................................................................................................94
6.13. Dividends on Preferred Shares (Article 203 of Law No. 6.404/76).................................................95
6.14. Communication Regarding Non-Payment of Mandatory Dividend Due to Company's Financial Situation.............................................................................................................................................................95
6.15. Late, Corrective or Complementary Declarations of Dividends............................................95
6.16. Competence of the Board of Directors to Deliberate on Issuance of Debentures ...........96
6.17. Composition of the Executive Board...................................................................................96
6.18. Request for Certificates of Entries in Corporate Books (Article 100 of Law No. 6.404/76)...........................................................................................................................................96
Chapter 7. Appeals, Inquiries, Hearings and Requests for Process Review........................ 98
7.1. Appeals Against Decisions or Understanding Manifestations of SEP ..............................................98
7.2. Inquiries by Public and Foreign Companies...............................................................................99
7.3. Communications with SEP ....................................................................................................................99
7.4. Requests for Hearings by Private Individuals..........................................................................................101
7.5. Request for Process Review ..............................................................................................................101
7.6. Term of Commitment.....................................................................................................................102
7.7. Calculation of Deadlines..........................................................................................................................103
Chapter 8. Systems Available for Preparation and Delivery of Information............. 104
8.1. Empresas.Net System.......................................................................................................................104
8.2. CVMWEB System..............................................................................................................................104
8.3. Periodic and Occasional Information System (IPE).......................................................................104
Chapter 9. Guidelines for Preparing the Reference Form............................. 106
9.1. Guidelines Applicable to the Entire Form......................................................................................106
9.1.1. General Rules on Preparation and Disclosure of Information.........................................106
9.1.2. Field "Other Information Judged Relevant" ...............................................................107
9.1.3. Scope and Content of Information Provided...........................................................107
9.1.4. Information Not Applicable ..................................................................................................108
9.2. Guidelines for Filling Out the Reference Form ...................................................108
9.2.1. Identification of Persons Responsible for the Content of the Form (Section 1)................108
9.2.2. Auditors (Section 2)...............................................................................................................109
a. Information on Independent Auditors (Item 2.1).......................................................... 109
b. Remuneration of Independent Auditors (Item 2.2) ............................................................... 109
c. Other Information Judged Relevant (Item 2.3)...................................................................... 110
9.2.3. Selected Financial Information (Section 3) ..................................................................110
a. Selected Financial Information (Item 3.1) ......................................................................... 110
b. Non-Accounting Measurements (Item 3.2) .............................................................................................. 111
c. Events Subsequent to the Last Financial Statements Closing the Fiscal Year (Item 3.3) ................................................................................................................... 111
d. Description of the Policy for Allocation of Results (Item 3.4)..................................................... 111
e. Dividend distributions and profit retention occurring in the last 3 fiscal years (item 3.5)................................................................................................................................. 112
f. Issuer's indebtedness level (item 3.7)............................................................................. 113
g. Issuer's obligations according to the nature and maturity date (item 3.8) ................ 113
h. Other relevant information (item 3.9) .................................................................................... 114
9.2.4. Risk factors (section 4) .....................................................................................................114
a. Description of risk factors (item 4.1)...................................................................................... 114
b. Comments on the expectation of reduction or increase in exposure to relevant risks (item 4.2) .......................................................................................................................... 115
c. Judicial, administrative, or arbitral proceedings in which the issuer or its subsidiaries are parties (item 4.3) ........................................................................................................................ 115
d. Judicial, administrative, or arbitral proceedings in which the issuer or its subsidiaries are parties and the opposing parties are administrators or former administrators, controllers or former controllers, or investors in the Company or its subsidiaries (item 4.4) ............................................................................................................................................ 117
e. Information on relevant confidential proceedings in which the issuer or its subsidiaries are parties that have not been disclosed in items 4.3 and 4.4 (item 4.5)..................................... 118
f. Repetitive or connected judicial, administrative, or arbitral proceedings, which are not confidential and which are relevant collectively, in which the issuer or its subsidiaries are parties (item 4.6)................................................................................................................................... 119
g. Other relevant contingencies not covered by the previous items (item 4.7)..................... 119
9.2.5. Market risks (section 5).................................................................................................119
a. Description of the main market risks (item 5.1)................................................................. 119
b. Description of the market risk management policy adopted by the issuer (item 5.2) ............................................................................................................................................ 120
9.2.6. Issuer's history (section 6)..............................................................................................121
a. Brief history of the issuer (item 6.3)........................................................................................... 121
b. Main corporate events through which the issuer or any of its subsidiaries or affiliates have passed (item 6.5) ........................................................................................... 121
c. Information on bankruptcy petitions, based on a relevant value, or on judicial or extrajudicial recovery of the issuer, and on the current status of such petitions (item 6.6) ............................................................................................................................................ 122
9.2.7. Issuer's activities (section 7) ...........................................................................................122
a. Main activities developed by the issuer and its subsidiaries (item 7.1)......................... 122
b. Information on the issuer's operational segments (item 7.2.)............................................ 122
c. Information on the products and services related to the operational segments disclosed in item 7.2 (item 7.3)....................................................................................................... 123
d. Information on the issuer's relevant long-term relationships (item 7.8)............................ 123
9.2.8. Economic group (section 8)..................................................................................................124
a. Description of the Economic Group in which the issuer is included (item 8.1)....................................... 124
b. Economic group organizational chart (item 8.2) ............................................................................. 125
c. Description of restructuring operations that occurred in the Economic Group (item 8.3) ............. 125
9.2.9. Relevant assets (section 9)...................................................................................................126
a. Description of non-current asset assets relevant for the development of the issuer's activities (item 9.1) ........................................................................................................ 126
9.2.10. Directors' comments (section 10) ...............................................................................126
a. Financial and equity conditions and Results of operations (items 10.1 and 10.2) ................. 127
b. Events with relevant effects, occurred and expected, in the financial statements (items 10.3).......................................................................................................................................... 128
c. Significant changes in accounting practices and Reservations and emphases present in the auditor's report (item 10.4).......................................................................................................... 129
d. Critical accounting policies (item 10.5).......................................................................................... 129
e. Internal controls related to the preparation of financial statements: degree of efficiency and deficiency and recommendations present in the auditor's report (item 10.6) ................. 130
9.2.11. Projections (section 11) ..........................................................................................................130
a. Disclosure of Projection (item 11.1).............................................................................................. 130
b. Monitoring and alteration of projections disclosed during the last 3 fiscal years (item 11.2)............................................................................................................................................................... 131
9.2.12. General assembly and administration (section 12)....................................................................131
a. Description of the issuer's administrative structure (item 12.1)..................................................... 131
b. Description of the rules, policies, and practices relating to general assemblies (item 12.2) ............. 132
c. Dates and newspapers of publication of the information required by Law No. 6.404/76 (item 12.3) .......... 133
d. Description of the issuer's rules, policies, and practices relating to the board of directors (item 12.4) .................................................................................................................................................. 133
e. Identification of administrators and members of the statutory audit committee (item 12.6) ............................ 134
f. Identification of members of statutory committees and of audit, risk, financial, and remuneration committees (item 12.7)........................................................................................... 135
g. Information on administrators and members of the statutory audit committee (item 12.8) ..................... 135
h. Subordination, service provision, or control relationships (item 12.10) ................................. 135
i. Agreements, including insurance policies, for payment or reimbursement of expenses borne by administrators (item 12.11)................................................................................. 136
j. Other information deemed relevant (item 12.12).................................................................. 136
9.2.13. Administrators' remuneration (section 13)..................................................................136
a. Description of the remuneration policy or practice of the board of directors, statutory and non-statutory management, statutory audit committee, statutory committees, and audit, risk, financial, and remuneration committees (item 13.1) ......................................... 136
b. Remuneration of the board of directors, statutory management, and statutory audit committee (item 13.2) .......................................................................................................................................... 137
c. Variable remuneration of the board of directors, statutory management, and statutory audit committee (item 13.3).................................................................................................................. 139
d. Information, by body, on the shareholdings held by members of the board of directors, statutory management, and statutory audit committee (item 13.5)........................................... 141
e. Share-based remuneration of the board of directors and statutory management (item 13.6) .......................................................................................................................................... 141
f. Options outstanding by the board of directors and statutory management at the end of the last fiscal year (item 13.7)...................................................................................................... 143
g. Options exercised and shares delivered relating to share-based remuneration of the board of directors and statutory management (item 13.8)..................................................... 143
h. Information necessary to understand the data disclosed in items 13.6 to 13.8 (item 13.9) .......................................................................................................................................... 144
i. Pension plans in force granted to members of the board of directors and statutory directors (item 13.10).............................................................................................. 144
j. Value of the highest, lowest, and average value of individual remuneration of the board of directors, statutory management, and statutory audit committee (item 13.11)......................................... 145
k. Contractual arrangements, insurance policies, or other instruments that structure remuneration or indemnification mechanisms for administrators (item 13.12)....................... 146
l. Percentage of the total remuneration of each body attributed to members of the board of directors, statutory management, or statutory audit committee who are related parties to the issuer's controllers (item 13.13)........................................................................................ 146
m. Remuneration of members of the board of directors, statutory management, or statutory audit committee received for any reason other than the function they hold (item 13.14)................ 146
n. Remuneration of members of the board of directors, statutory management, or statutory audit committee recognized in the results of the issuer's controllers, companies under common control, and subsidiaries of the issuer (item 13.15) .............................................................. 146
o. Other information deemed relevant (item 13.16).................................................................. 147
9.2.14. Human resources (section 14)............................................................................................148
a. Information on the issuer's human resources (item 14.1)................................................ 148
b. Description of the issuer's employee remuneration policy (item 14.3)......................... 148
9.2.15. Control (section 15)............................................................................................................148
a. Identification of controlling shareholder or group of controlling shareholders (item 15.1).............................. 148
b. Identification of shareholders, or groups of shareholders acting in concert or representing the same interest, with participation equal to or greater than 5% of the same class or species of shares (item 15.2)............................................................................................... 149
c. Capital distribution (item 15.3)................................................................................................ 151
d. Issuer's shareholders organizational chart (item 15.4) ................................................................... 152
e. Information on shareholder agreements that regulate the exercise of voting rights or the transfer of shares issued by the issuer (item 15.5) ............................................................... 152
f. Information on relevant changes in the holdings of members of the control group and administrators of the issuer (item 15.6) ........................................................................... 153
9.2.16. Transactions with related parties (section 16)................................................................153
9.2.17. Share capital (section 17).....................................................................................................154
9.2.18. Securities (section 18) ...........................................................................................154
a. Description of the rights of each class and species of share issued (item 18.1).............................. 154
b. Description of statutory rules that limit the voting rights of significant shareholders or that require the making of a public offer (item 18.2) ............................................................. 155
c. Description of other securities (item 18.5).................................................................. 155
d. Other information deemed relevant (item 18.10).................................................................. 156
9.2.19. Share repurchase plans and treasury securities (section 19)................................156
a. Information on the issuer's share repurchase plans (item 19.1)................................... 156
b. Movement of securities held in treasury (item 19.2).............................. 156
c. Securities held in treasury at the date of closure of the last fiscal year (item 19.3)................................................................................................................................ 157
d. Provide other information that the issuer deems relevant (item 19.4)................................. 157
9.2.20. Securities trading policy (section 20)..................................................157
9.2.21. Information disclosure policy (section 21) .............................................................158
9.2.22. Extraordinary business (section 22)..................................................................................158
Chapter 1. Issuer Registration
1.1. Issuer categories
In accordance with CVM Instruction No. 480/09, there are two categories of registration for issuers of securities, according to the species of securities admitted to public trading (article 2):
Category A, which authorizes the trading of any of the issuer's securities in regulated securities markets; and Category B, which authorizes the trading of the issuer's securities in regulated securities markets, except those identified below:
a) shares and depositary receipts of shares; or b) securities that confer on the holder the right to acquire the securities mentioned in letter "a", as a result of their conversion or the exercise of the rights inherent to them, provided that they are issued by the issuer of the securities referred to in letter "a" or by a company belonging to the group of the said issuer. Note that Chapter III (Issuer's Obligations) of the Instruction establishes in its sections II and III, which deal respectively with mandatory periodic and occasional information, some differentiated rules for each category of issuer regarding the discipline of information provision. As provided for in article 2 of CVM Instruction No. 480/09, issuers of securities will indicate, at the time of registration, in which of the categories they wish to register, according to the species of securities they intend to have publicly traded. Thus, it will be up to the issuer to choose the regime of obligations to which they wish to submit themselves. Finally, we draw attention to the fact that, in accordance with article 2 of Annex 32-I of CVM Instruction No. 480/09, foreign companies are registered in Category A.
1.2. Issuer registration request
The issuer registration request must be sent to SEP, accompanied by the documents indicated in Annex 3 of CVM Instruction No. 480/09. These documents must be sent both in physical and electronic media.
The financial statements required for the purpose of analyzing the issuer registration request, in accordance with Annex 3 of CVM Instruction No. 480/09, are as follows:
a) financial statements specially prepared for registration purposes, in accordance with articles 25 and 26 of the Instruction, referring to: (i) the last fiscal year, provided that such statements adequately reflect the issuer's equity structure at the time of the registration request protocol; or (ii) a subsequent date, preferably coinciding with the date of closure of the last quarter of the current year, but never prior to 120 (one hundred and twenty) days counted from the date of the registration request protocol, in case: (i) there has been a relevant change in the issuer's equity structure after the date of closure of the last fiscal year; or (ii) the issuer was constituted in the same year as the registration request. It is emphasized that the presentation of financial statements specially prepared for registration purposes with a reference date subsequent to the closure of the year should only occur in cases where there has been an actual change in the issuer's equity structure; b) financial statements for the last 3 (three) fiscal years, prepared in accordance with the accounting standards applicable to the issuer in the respective years. These are historical financial statements prepared according to the rules and deadlines applicable at the time of their preparation; c) quarterly information form – ITR, in accordance with art. 29 of the Instruction, referring to the quarters of the current fiscal year, provided that more than 45 (forty-five) days have elapsed since the closure of each quarter. The standardized financial statements form – DFP and the quarterly information form – ITR will correspond to the dates of the respective financial statements, according to the criteria mentioned above. The financial statements for the closure of the fiscal year must serve as the basis for filling out the DFP, and the interim financial statements, for the ITR. It is emphasized that paragraph 1 of article 4 of CVM Instruction No. 480/09 provides that the counting of the analysis period for the registration request provided for in the main text will only begin on the date of the protocol of the last document that completes the set of documents necessary for the instruction of the registration request, as indicated in Annex 3 of that Instruction.
1.3. Foreign issuers
According to Annex 32-I of CVM Instruction No. 480/09, an issuer will not be considered foreign if:
a) it has its headquarters in Brazil; or b) its assets located in Brazil correspond to 50% (fifty percent) or more of those contained in the individual, separate, or consolidated financial statements, prevailing that which best represents the economic essence of the business for the purposes of this classification.
The classification as a foreign issuer will be verified at the time of the registration request (i) of an issuer with the CVM, (ii) of a public distribution offer of depositary receipts of shares – BDR, and (iii) of a BDR program. At the time of these requests, the legal representative must sign a document containing:
a) a declaration that the issuer does not fall under any of the hypotheses mentioned in letters “a” and “b” of the previous paragraph; and b) a calculation memorandum made by the issuer to verify the percentage of assets located in Brazil.
It is worth noting that the CVM may, exceptionally, waive the verification of the classification as a foreign issuer in the case of a public distribution offer of depositary receipts of shares – BDR, upon a reasoned request from the issuer, in accordance with paragraph 4 of article 1 of Annex 32-I of CVM Instruction No. 480/09.
Foreign issuers registered with the CVM as foreign before the entry into force of CVM Instruction No. 480/09 (01/01/2010) are exempt from proving their qualification as foreign issuers at the time of the application for registration of a public offering of distribution of depositary receipts of shares – BDR or of a BDR program.
Article 3 of Annex 32 - I of CVM Instruction No. 480/09 provides that the following persons shall appoint legal representatives domiciled and resident in Brazil, with powers to receive summonses, notifications, and intimations relating to actions proposed against the issuer in Brazil or based on Brazilian laws or regulations, as well as to represent them broadly before the CVM, including receiving correspondence, intimations, notifications, and requests for clarification:
a) the foreign issuer that sponsors a depositary receipts of shares program – Level II or Level III BDR; b) the directors or persons who perform functions equivalent to those of a director in the foreign issuer that sponsors a depositary receipts of securities program – Level II or Level III BDR; and c) the members of the board of directors, or equivalent body, of the foreign issuer that sponsors a depositary receipts of shares program – Level II or Level III BDR.
Legal representatives must accept the appointment in writing, in a document indicating awareness of the powers conferred upon them and the responsibilities imposed by Brazilian laws and regulations. In the event of resignation, death, interdiction, impediment, or change of status that disqualifies the legal representative from exercising the function, the issuer has a period of 15 (fifteen) business days to promote its replacement.
It is also alerted that paragraph 2 of Article 44 of CVM Instruction No. 480/09 provides that the legal representative of foreign issuers is equated to the Investor Relations Director (IRD) for all purposes provided for in the legislation and regulation of the securities market.
Information regarding the Legal Representative must be included in item 5 of the Registration Form (Responsible person or equivalent person), without prejudice to the inclusion of information regarding the Company's IRD, if any. Furthermore, minutes of Board meetings, Board of Directors meetings, general assemblies, or other documents dealing with the election or removal of the Legal Representative must be sent via the IPE System, within the deadlines provided for in CVM Instruction No. 480/09.
It should be highlighted that foreign issuers are subject to Law No. 6.385/76, even though Brazilian corporate law (Law No. 6.404/76) is not applicable to them. Therefore, their corporate operations, as well as the performance of their administrators, are subject to the corporate rules of their country of origin and their bylaws, with such foreign issuers being subject to the supervision of the regulatory body of that country.
Thus, with regard to the performance of the CVM, it is incumbent upon this Autarchy to regulate and supervise the disclosure of information by foreign companies, especially with respect to CVM Instructions No. 358/02 and 480/09.
1.4. Requests for conversion of categories
Once registered, issuers may request the conversion of one registration category into another, through a request sent to SEP, whose procedures and requirements are regulated in Articles 8 to 12 of CVM Instruction No. 480/09.
1.5. Consequences of non-delivery of information
Issuers must pay attention to compliance with the legal and regulatory requirements imposed, especially with regard to the delivery of periodic and occasional information provided for in CVM Instruction No. 480/09. Non-compliance with the delivery of information subjects the issuer to the sanctioning procedures commented below.
1.5.1. Coercive fines
Initially, it is worth clarifying that coercive fines are imposed, observing the provisions of applicable regulation, notably CVM Instruction No. 452/07, without excluding the assessment of responsibility for non-compliance with the provisions contained in corporate legislation, as well as for non-compliance with a specific order issued by the CVM.
CVM Instruction No. 480/09 regulates the application of coercive fines for non-compliance with the deadlines for delivering information.
In accordance with Article 58 of the Instruction, the issuer who fails to comply with the prescribed deadlines for delivering the periodic information listed in Article 21 of CVM Instruction No. 480/09 will be subject to a daily coercive fine, according to the following values:
a) R$ 500.00 (five hundred reais) for issuers registered in Category A; and b) R$ 300.00 (three hundred reais) for issuers registered in Category B.
Note that from the decision to apply coercive fines, an appeal may be filed with the CVM Collegiate Body, within a period of 10 (ten) days, in accordance with Article 13 of CVM Instruction No. 452/07.
In this sense, the need to maintain updated registration data, notably the company's address and the IRD's address, as recommended in this circular (see items 2.3.1, 8.2, 8.3), is highlighted.
Appeals must be filed through the CVM website (www.cvm.gov.br), on the link "Inspection Fee and Coercive Fine"/"Appeal against Coercive Fine – Ordinary and Extraordinary"/"CVMWeb Login".
In accordance with paragraph 1 of Article 13 of CVM Instruction No. 452/07, the appeal will be received with a devolutive effect and, in case of justifiable fear of difficult or uncertain repair resulting from the appealed decision, the Superintendent may, ex officio or upon request, grant a suspensive effect to the appeal.
Notwithstanding, it is worth informing that the CVM Collegiate Body, in a meeting on 23.11.2010 (CVM Process RJ/2010/16497), expressed itself in the sense that item VI of CVM Deliberation No. 463/03 (which provides that if the request for suspensive effect is totally or partially denied, the Superintendent must, immediately, notify the appellant and send a copy of the appeal and the decision to the President of the CVM, who will be responsible for re-examining the decision denying the suspensive effect) does not apply to cases involving coercive fines.
It is stressed that, in accordance with item IX of CVM Deliberation No. 463/03, in the case of the existence of error, omission, obscurity, or material inaccuracies in the decision, contradiction between the decision and its grounds, the Collegiate Body will appreciate requests for reconsideration of its decision regarding the appeal.
It is worth noting that paragraph 4 of Article 11 of Law 6.385/76, which provides for an appeal to the CRSFN, refers to penalties possibly applied by the CVM, and should not be confused with coercive fines, which have legal provision in paragraph 11 of the same article, from which a voluntary appeal lies to the Collegiate Body, in accordance with paragraph 12 of Article 11 of Law No. 6.385/76.
It is also clarified that CVM Deliberation No. 447/02, amended by CVM Deliberations No. 467/04 and No. 483/05, provides for the installment payment of coercive fines applied and that CVM Deliberation No. 501/06 provides for the incidence of late payment interest on debts arising, including from coercive fines.
In this sense, it is recommended that issuers contact the CVM's Collection Management to verify if they are up to date with the payment of inspection fees and coercive fines, avoiding inscription in the Defaulters Register (CADIN) and in the Active Debt.
Finally, it is worth highlighting that the coercive fines provided for in Article 58 of CVM Instruction No. 480/09 do not confuse with the penalties provided for in the caput of Article 11 (and respective items I to VIII) of Law No. 6.385/76, which will only be imposed with the observance of the procedure provided for in paragraph 2 of Article 9 of Law No. 6.385/76 (administrative process preceded by an investigative stage).
1.5.2. Publication of the list of non-compliant issuers
Article 59 of CVM Instruction No. 480/09 provides that the CVM will publish semi-annually, on its website, a list of issuers who are in default for at least 3 (three) months in fulfilling any of their periodic obligations.
It is worth noting that the published list refers to a specific date, so there is no talk of updating or correcting the list, except in the case of undue inclusion.
1.5.3. Ex officio suspension of issuer registration
Article 52 of CVM Instruction No. 480/09 provides that SEP is responsible for suspending the registration of issuers who fail to comply, for a period exceeding 12 (twelve) months, with their periodic obligations.
As provided for in the sole paragraph of Article 52 of CVM Instruction No. 480/09, SEP will inform the issuer about the suspension of its registration through a letter sent to its headquarters, according to the data contained in its Registration Form (see item 2.3.1), and through a communication on the CVM website.
The issuer whose registration is suspended may request the reversal of the suspension through a reasoned request, sent to SEP, accompanied by documents proving compliance with periodic and occasional obligations that are overdue, including those with delivery deadlines subsequent to the suspension of registration.
The deadlines and procedures to be observed in this request are regulated in Article 53 of CVM Instruction No. 480/09.
It is worth remembering that, in accordance with Article 60 of CVM Instruction No. 480/09, the repeated non-observance of the deadlines fixed for the presentation of periodic and occasional information provided for in this instruction constitutes a serious offense for the purposes of paragraph 3 of Article 11 of Law No. 6.385/76, subjecting those responsible to the penalties provided for in said Article 11, with the observance of the procedure provided for in paragraph 2 of Article 9 of Law No. 6.385/76.
It is stressed that, in accordance with Article 55 of CVM Instruction No. 480/09, the cancellation and suspension of registration do not exempt the issuer, its controlling shareholder, and its administrators, from the responsibility arising from any infractions committed before the cancellation of the registration.
1.5.4. Ex officio cancellation of issuer registration due to non-compliance with information
Article 54 of the Instruction provides for two hypotheses for the ex officio cancellation of issuer registration:
a) the extinction of the issuer; b) the suspension of its registration for a period exceeding 12 (twelve) months.
As in the cases of registration suspension, SEP will inform the issuer about the cancellation of its registration through a letter sent to its headquarters, according to the data contained in its Registration Form (see item 2.3.1), and through a communication on the CVM website, in accordance with the sole paragraph of Article 55 of CVM Instruction No. 480/09.
It is stressed that, in accordance with Article 55 of CVM Instruction No. 480/09, the cancellation and suspension of registration do not exempt the issuer, its controlling shareholder, and its administrators, from the responsibility arising from any infractions committed before the cancellation of the registration.
1.5.5. Administrative sanctioning process
As provided for in Article 60 of CVM Instruction No. 480/09, it constitutes a serious offense, for the purposes provided for in paragraph 3 of Article 11 of Law No. 6.385/76:
a) the disclosure to the market or delivery to the CVM of false, incomplete, inaccurate, or misleading information; b) the repeated non-observance of the deadlines fixed for the presentation of periodic and occasional information provided for in the instruction; and c) the non-observance of the deadline fixed in Article 132 of Law No. 6.404/76, for the holding of the ordinary general assembly.
In turn, in accordance with Article 18 of CVM Instruction No. 358/02, it constitutes a serious offense, for the purposes provided for in paragraph 3 of Article 11 of Law No. 6.385/76, the transgression of the provisions of that Instruction, and the CVM must communicate to the Public Ministry the occurrence of the events provided for in said Instruction that constitute a crime.
Therefore, the CVM may investigate through an administrative process the eventual responsibility of the administrators (and when applicable, the trustee, the syndics, the judicial administrator, the judicial manager, or the liquidator), members of the fiscal council, and shareholders of open companies for non-compliance with the provisions contained in said Instructions (Article 9, item V, of Law No. 6.385/76).
In this sense, and in accordance with Article 11 of Law No. 6.385/76, the penalties provided for in items I to VIII of the same article will only be imposed with observance of the administrative process mentioned in the previous paragraph, also observing the provisions of CVM Deliberation No. 538/08.
1.6. Other hypotheses for cancellation of registration
1.6.1. Voluntary cancellation of registration
CVM Instruction No. 480/09 establishes different rules for the voluntary cancellation of registration, depending on the category in which the issuer is registered.
Article 47 of the Instruction conditions the cancellation of registration of issuers from Category B to the proof of compliance with one of the conditions below:
a) non-existence of securities in circulation; b) redemption of securities in circulation; c) maturity of the deadline for payment of securities in circulation; d) consent of all holders of securities in circulation regarding the cancellation of registration; or e) any combination of the hypotheses indicated in the previous items, provided that the totality of securities is reached.
If the redemption of securities in circulation or the maturity of the deadline for payment of securities in circulation has occurred, without the total amount having been paid to investors, the issuer must deposit the due amount in a commercial bank and leave it at the disposal of investors. The issuer who has made this deposit must also disclose a Relevant Fact stating:
a) the decision to cancel the registration with the CVM; b) the realization of the deposit, mentioning the value, banking institution, branch, and account; and c) the procedures that should be adopted by holders who have not yet received their credits to receive them.
As provided for in paragraph 3 of Article 47, the consent of all holders of securities in circulation regarding the cancellation of registration may be alternatively proven by:
a) declaration of the fiduciary agent, if any; b) declaration of securities holders attesting that they are aware and agree that, due to the cancellation of registration, the issuer's securities can no longer be traded on regulated markets; or c) unanimous resolution in an assembly in which the totality of securities holders is present.
As for the cancellation of registration in Category A, it will be conditioned, as established in Article 48 of the Instruction, to the proof that:
a) the conditions of Article 47 mentioned above have been met regarding all securities, except shares and depositary receipts of shares, which have been publicly distributed or admitted to trading on regulated securities markets; and b) the requirements of the public offering for the acquisition of shares for cancellation of registration for trading of shares in the market have been met, in accordance with CVM Instruction No. 361/02.
It is worth commenting that CVM Instruction No. 361/02 regulates that the cancellation of registration of an open company must be preceded by a Public Tender Offer for Shares (OPA), formulated by the controlling shareholder or by the open company itself, having as its object all the shares issued by the target company, as provided for in paragraph 4 of Article 4 of Law No. 6.404/76 and according to the procedure stipulated therein.
As provided for in Article 34 of said Instruction, exceptional situations that justify the acquisition of shares without a public offer or with a differentiated procedure will be appreciated by the CVM Collegiate Body, for the purpose of dispensing or approving procedures and formalities to be followed, including with regard to the disclosure of information to the public, when applicable.
It is stressed that CVM Instruction No. 480/09 provides that a foreign issuer that sponsors a depositary receipts of shares program – Level II or Level III BDR and wishes to cancel its issuer registration must submit to the prior approval of the CVM the procedures for discontinuation of the program, in accordance with the sole paragraph of its Article 48.
The procedures to be observed in requests for voluntary cancellation are regulated in Articles 49 and 50 of CVM Instruction No. 480/09, it being worth noting that the Instruction determines that requests for cancellation formulated by issuers registered in Category B must be addressed to SEP, while requests formulated by issuers registered in Category A must be addressed to the Superintendence of Securities Registration – SRE.
It is worth remembering that Article 51 of CVM Instruction No. 480/09 provides that the issuer is responsible for disclosing the information of approval or denial of the cancellation of registration to investors, in the same manner established for the disclosure of a relevant fact.
It is alerted that the constitution of a wholly-owned subsidiary does not bring as a consequence the cancellation of the issuer's registration. In these cases, it is necessary to send a request for cancellation of registration to SEP, formalizing the request, without which the company, although a wholly-owned subsidiary, remains subject to all obligations and penalties provided for in the current regulation, including those regarding the updating of the registration maintained with the CVM.
It is also worth noting that it is mandatory to send the periodic documents and information whose delivery deadline is prior to the date of cancellation of the issuer's registration.
Finally, it is clarified that the issuer is debtor of the inspection fee referring to the quarter in which the cancellation of its registration occurs. Thus, if the issuer has its registration cancelled in the 1st quarter and does not present the DFP form relative to the previous fiscal year, it must inform the CVM of the net assets of the previous fiscal year (which will serve as the basis for calculating said fee) through supporting documentation, such as, for example, the publication of financial statements.
1.6.2. Ex officio cancellation of issuer registration due to its extinction
In accordance with Article 219 of Law No. 6.404/76, the company is extinguished by the closing of liquidation, as well as by incorporation or merger, and by spin-off with transfer of all assets to other companies.
In cases of incorporation, merger, or spin-off, the cancellation of the company's registration results from its extinction and is independent of the date of homologation by a government body, with the company being removed from the list of open companies from the date of the EGA that deliberated the incorporation, merger, or spin-off. In addition to the mandatory sending of the Minutes of the respective EGA via the IPE System, the company or its successor is requested to formally communicate its extinction to SEP.
It is worth noting that it is mandatory to send the periodic documents and information whose delivery deadline is prior to the date of cancellation of the company's registration.
It is also clarified that the company is debtor of the inspection fee referring to the quarter in which its extinction occurs. Thus, if the company is extinguished in the 1st quarter, it must inform the CVM of the net assets of the previous fiscal year (which will serve as the basis for calculating said fee) through supporting documentation, such as, for example, the publication of financial statements.
It is stressed that, in view of Article 223, paragraph 3, of Law No. 6.404/76, if the incorporation, merger, or spin-off involves an open company, the succeeding company will also be open, and must obtain the respective registration and, if applicable, promote the admission of trading of the new shares in the secondary market, within a maximum period of 120 (one hundred and twenty) days, counted from the date of the assembly that approved the operation, observing the pertinent norms issued by the Securities and Exchange Commission.
In accordance with paragraph 4, non-compliance with the provisions of Article 223, paragraph 3, gives the shareholder the right to withdraw from the company, through reimbursement of the value of their shares (Article 45), within 30 (thirty) days following the end of the period referred to therein, observing the provisions of paragraphs 1 and 4 of Article 137.
CVM Instruction No. 480/09, in its Article 54, item I, provides that one of the hypotheses for ex officio cancellation of issuer registration is its extinction.
SEP will inform the issuer about the cancellation of its registration through a letter sent to its headquarters, according to the data contained in its Registration Form (see item 2.3.1), and through a communication on the CVM website, in accordance with the sole paragraph of Article 54 of CVM Instruction No. 480/09.
Chapter 2. Periodic Information
2.1. Management Report
Article 133 of Law No. 6.404/76 establishes that, in addition to the financial statements and other documents cited, open companies must publish the management report on social business and on the main administrative events that occurred in the last fiscal year. This document must be sent to the CVM included in the financial statements and in the DFP form (see items 2.2 and 2.3.3).
It is worth noting that, regardless of the publication provided for in paragraph 3 of Article 133 of Law No. 6.404/76, the caput of the same article requires that documents pertinent to matters included in the agenda of the OGA be made available to shareholders, at the company's headquarters, up to one month before the date set for the holding of the OGA (30 days). It is also required by Article 9 of CVM Instruction No. 481/09, for issuers registered in Category A, that, on this date, the documents and information be available on the CVM website.
The Management Report must be prepared by issuers in line with the recommendations contained in CVM Orientation Opinion No. 15/87 and with the information disclosed by them in section 10 of the Reference Form (Directors' Commentary).
It is emphasized that Article 2 of CVM Instruction No. 381/03 determines that issuers must disclose in the Management Report the following information regarding the provision, by the independent auditor or related parties, of any service other than external audit:
a) the date of contracting, the duration, if greater than one year, and the indication of the nature of each service provided; b) the total value of contracted fees and its percentage relative to fees for external audit services; c) the policy or procedures adopted by the company to avoid the existence of conflict of interest, loss of independence, or objectivity of its independent auditors; and d) a summary of the justification presented by the auditor to the issuer's management regarding the reasons why it understood that the provision of other services did not affect the independence and objectivity necessary for the performance of external audit services (Article 3 of the Instruction). Even in the case where independent auditors have not provided other services besides external audit, the company must make this information clear in the Management Report. It is emphasized that paragraph 2 of CVM Instruction No. 381/03 allows issuers to refrain from disclosing the information required in letter "a" above, when the total value of contracted fees represents less than 5% (five percent) of the fees for external audit services. We draw attention that even in this case, the issuer's obligation to provide the other information demanded in Article 2 of CVM Instruction No. 381/03, cited above, will persist in the Management Report. Let us recall, finally, that CVM Instruction No. 381/03 also requires that the information provided in the Management Report on the subject be updated in the ITR Forms when there is a change resulting from the signing, cancellation, or modification of a service provision contract that is not for audit (item II of paragraph 1 of Article 2 of the Instruction). The required update must be carried out in the ITR Forms in the field designated for "Performance Commentary".
2.2. Financial Statements
As provided for in paragraph 2 and the caput of Article 25 of CVM Instruction No. 480/09, the issuer must deliver to the CVM, via the IPE System (see item 8.3), the financial statements and, if applicable, the consolidated financial statements on the same date they are made available to the public, a date that must not exceed, in the case of:
a) domestic issuers, 3 (three) months from the end of the fiscal year; and b) foreign issuers, 4 (four) months from the end of the fiscal year.
It is alerted that paragraph 1 of Article 25 of CVM Instruction No. 480/09 determines that the financial statements of domestic or foreign issuers must be accompanied by the following documents:
a) management report; b) independent auditor's report; c) opinion of the statutory audit committee or equivalent body, if any, accompanied by any dissenting votes; d) capital budget proposal prepared by management, if any; e) declaration by directors that they reviewed, discussed, and agree with the opinions expressed in the independent auditor's report, stating the reasons in case of disagreement; f) declaration by directors that they reviewed, discussed, and agree with the financial statements; g) summary annual report of the audit committee, if any (CVM Instruction No. 509/11, item VI of Art. 31-D); and h) in the case of a securitization company, financial statements relating to each of the separate estates, for the issuance of receivables certificates under fiduciary regime. It should be noted that, due to the amendment promoted by CVM Instruction No. 509/11, paragraph 1 of Article 25 of CVM Instruction No. 480/09 now provides, as cited above, for the mandatory submission, together with the financial statements, of the summary annual report of the statutory audit committee, whenever installed. The presentation of the summary annual report of the Statutory Audit Committee is mandatory for all companies that use the prerogative established in the caput of Article 31-A of CVM Instruction No. 308/99, with the wording given by Article 1 of CVM Instruction No. 509/2011, as they meet, among other things, the requirements established in this article and in Articles 31-B and 31-C of CVM Instruction No. 308/99. Not having a Statutory Audit Committee for the purposes of Article 31-A of CVM Instruction No. 308/99, the company will only be obliged (in the form of Article 25, paragraph 1, item III, of CVM Instruction No. 480/09 and paragraph 1 of Article 9 of CVM Instruction No. 481/09) to present an opinion on the financial statements issued by an audit committee (statutory or not) or an equivalent body to the statutory audit committee, if that committee or body has issued said opinion. It is emphasized that, if a statutory audit committee is in operation, the company must, in any case, send, together with the financial statements, the opinion issued by this body, accompanied by any dissenting votes. The financial statements of domestic issuers must be prepared in accordance with Law No. 6.404/76 and CVM norms and audited by an independent auditor registered with the CVM. In this sense, it is worth remembering that, through OFFICIAL CIRCULAR/CVM/SNC/SEP/No. 001/2013, of 8/2/2013, the CVM issued guidance regarding relevant aspects to be observed in the preparation of Accounting Statements for the fiscal year ending on 12/31/2012. As provided for in Article 27 of CVM Instruction No. 480/09, the financial statements of foreign issuers must be prepared in Portuguese, in national currency, and these issuers may opt to prepare them according to:
a) Law No. 6.404/76 and CVM norms; or b) international accounting standards issued by the International Accounting Standards Board – IASB.
Given that the standards issued by the CVM are fully convergent with international standards, the consolidated financial statements must be prepared in conformity with these rules.
It is worth remembering that, for fiscal years starting from 2012, foreign issuers headquartered in a Mercosur member country must prepare and disclose financial statements in accordance with international accounting standards issued by the IASB, according to MERCOSUR DECISION No. 31/10 incorporated through CVM Deliberation No. 659/11. The financial statements of foreign issuers must be audited by an independent auditor registered with the CVM or by a competent body in the issuer's country of origin (item II of Article 27). In the latter case, the report issued must be accompanied by a special review report prepared by an independent auditor registered with the CVM, as required in paragraph 2 of Article 27 of CVM Instruction No. 480/09. For publicly held companies, Article 133 of Law No. 6.404/76 provides for the need to publish financial statements up to 5 (five) days before the holding of the Ordinary General Assembly (AGO), it being worth remembering that, under Article 295, paragraph 1, item "c" of the same law, consolidated financial statements must also be published. In this case, it is also necessary to publish a Notice to Shareholders, 1 (one) month before the AGO (30 days), informing of the availability of the financial statements at the company's headquarters. The requirement of availability is considered met if the financial statements are disclosed on the company's website, with their filing at the CVM, via the IPE System (Category: "Notice to Shareholders", Type: "Communication art. 133 of Law No. 6.404/76"), on the same date. If the publication of the financial statements is made with a 1 (one) month advance from the date of the AGO (30 days), the publication of said notice becomes unnecessary.
Article 289 of Law No. 6.404/76 determines that the publications ordered therein must be made in the official gazette of the Union, State, or Federal District, according to the location of the company's headquarters, and in another newspaper of large circulation edited in the locality where the company's headquarters is located.
The publications will always be made in the same newspaper, chosen in a meeting of the Board of Directors, and any change must be preceded by notice to shareholders in the excerpt of the minutes of the AGO, according to paragraph 3, of Article 289, of Law No. 6.404/76.
Domestic issuers must send the financial statements prepared according to the criteria mentioned above to the CVM, via the IPE System, category "Economic-Financial Data", type "Complete Annual Financial Statements".
It is noted that the financial statements and other documents listed in Article 25 of CVM Instruction No. 480/09 must be presented in a single file, in DOC or PDF format, in the form of an "audit book", and the sending of the digitized version of the newspaper publication or other formats that hinder reading or printing is not admissible.
In this sense, we draw attention that the sending of a PDF version of the Standardized Financial Statements Form (DFP Form) does not fulfill the purpose of delivering the financial statements required by force of Article 25, caput and paragraph 2, of CVM Instruction No. 480/09.
When sending the financial statements, the fields referring to the dates and newspapers of the publications must be filled in, and in the case of publication according to paragraph 3, of Article 133, of Law No. 6.404/76, the expected publication date must be indicated.
Foreign issuers must send the financial statements to the CVM, via the IPE System, prepared in accordance with Law No. 6.404/76 and CVM norms or in accordance with international accounting standards issued by the IASB, in Portuguese and in national currency. In the case of financial statements prepared in accordance with international accounting standards issued by the IASB, the sending must be done via the category "Economic-Financial Data", type "Financial Statements in International Standards", species "Financial Statements in IFRS". Given the importance of the document, in line with the provisions of Article 5 of CVM Instruction No. 358/02, the company must disclose its Financial Statements, whenever possible, before the start or after the end of trading on the stock exchange or organized over-the-counter market where its securities are admitted to trading. It is emphasized that the sending of the DFP Form does not dispense with the sending of the financial statements that served as the basis for its completion.
2.2.1. Financial institutions authorized to operate by the Central Bank of Brazil
The CVM, through CVM Instruction No. 457/07, determined that publicly held companies must, from the fiscal year ending in 2010, present their consolidated financial statements adopting the international accounting standard, according to the pronouncements issued by the International Accounting Standards Board – IASB.
Regarding issuers that are financial institutions, it is worth observing that Article 22 of Law No. 6.385/76 establishes, in its paragraph 2, that the norms issued by the CVM regarding the management report and financial statements, as well as accounting standards, apply to financial institutions and other entities authorized to operate by the Central Bank of Brazil, insofar as they are not conflicting with the norms issued by it. The Central Bank of Brazil, through Resolution No. 3.786/09, established the following:
Financial institutions and other institutions authorized to operate by the Central Bank of Brazil, constituted as publicly held companies or that are obliged to constitute an audit committee in accordance with current regulation, must, from the base date of December 31, 2010, prepare and disclose annually consolidated accounting statements adopting the international accounting standard, according to the pronouncements issued by the International Accounting Standards Board (IASB), translated into Portuguese by a Brazilian entity accredited by the International Accounting Standards Committee Foundation (IASC Foundation).
Thus, there is a convergence between the norms issued by the CVM and the norms issued by the Central Bank of Brazil regarding the accounting standard to be adopted, in the consolidated financial statements, by entities authorized to operate by the Central Bank of Brazil. It is worth observing that the exceptions of criteria and deadlines provided, respectively, in Circular Letter No. 3.435/10 and in Circular No. 3.516/10, applied only to consolidated financial statements, prepared based on the international accounting standard issued by the IASB, referring to the base date of December 31, 2010. In view of this, it is worth noting, under paragraph 3 of Article 177 of Law No. 6.404/76, that the financial statements of publicly held companies will observe the norms issued by the CVM and will be mandatory submitted to audit by independent auditors registered therein (Wording given by Law No. 11.941/09). Also in this sense, Article 26 of CVM Instruction No. 480/09 establishes that the financial statements of domestic issuers must be (i) prepared in accordance with Law No. 6.404/76 and CVM norms; and (ii) audited by an independent auditor registered with the CVM. Under Article 133 of Law No. 6.404/76, administrators must communicate, up to 1 (one) month before the date set for the holding of the Ordinary General Assembly, that they are available to shareholders, among other documents, a copy of these financial statements. This same Law also establishes, in its Article 132, that the Ordinary General Assembly must examine, discuss, and vote on these financial statements, in the 4 (four) first months following the end of the fiscal year. In light of the above, issuers that are institutions authorized to operate by the Central Bank of Brazil must prepare and make available to their shareholders, within the period mentioned in art. 133, of Law No. 6.404/76 (i) individual financial statements of fiscal year end prepared in observance of the norms issued by the Central Bank and the norms issued by the CVM, insofar as they do not conflict with norms issued by the Central Bank regarding the same matter; and (ii) consolidated financial statements prepared according to international accounting standard, according to the pronouncements issued by the International Accounting Standards Board – IASB. These financial statements, individual and consolidated, must be disclosed, via IPE System, Category "Economic-Financial Data", Type "Complete Annual Financial Statements". It is noted that the respective DFP Form must be filled in with the data of these financial statements.
Circular Letter No. 3.435/10 established that, for the purpose of preparing the opening balance sheet of consolidated accounting statements, according to the pronouncements issued by the IASB, the following opening dates should be observed:
I - January 1, 2010, for institutions that do not present consolidated accounting statements in a comparative manner; II - January 1, 2009, for institutions that opt to make the comparative presentation of consolidated accounting statements of the years 2010 and 2009; or III - January 1, 2008, for institutions that opt to make the comparative presentation of consolidated accounting statements of the years 2010, 2009 and 2008. Circular No. 3.516/10 extended to up to one hundred and twenty days the deadline provided for in art. 1 of Circular No. 3.472, of October 23, 2009, for the disclosure of consolidated accounting statements, prepared based on the international accounting standard issued by the International Accounting Standards Board (IASB), referring to the base date of December 31, 2010.
If Companies prepare and publicly disclose consolidated financial statements in a different accounting standard (for example, in observance of the norms issued by the Central Bank) they must send them, via IPE System, on the same date of their disclosure to the public, through the Category "Economic-Financial Data", Type "Additional Financial Statements". Regarding quarterly information, the Central Bank of Brazil, through Resolution CMN No. 3853/10, determined that "financial institutions [...] constituted as publicly held companies [...] that disclose intermediate consolidated accounting statements, must observe the pronouncements issued by the International Accounting Standards Board (IASB), translated into Portuguese by a Brazilian entity accredited by the International Accounting Standards Committee Foundation (IASC Foundation)". However, through Circular Letter 3.447/10, the Central Bank of Brazil clarified that "art. 1 of Resolution CMN No. 3.853, of April 29, 2010, by applying exclusively to institutions that disclose intermediate consolidated accounting statements prepared in the international accounting standard, in conformity with the pronouncements issued by the International Accounting Standards Board (IASB), did not establish the obligation to disclose intermediate consolidated accounting statements in this standard, nor did it prohibit the disclosure of intermediate consolidated accounting statements prepared in a different accounting standard". It is verified that the norms issued by the Central Bank of Brazil do not prohibit, but make optional, the disclosure of intermediate consolidated accounting statements prepared in the international accounting standard. Item I of Article 29 of CVM Instruction No. 480/09 establishes that the ITR Form must be filled in with the data of the quarterly accounting information prepared in accordance with the accounting rules applicable to the issuer. During 2013, the Brazilian Federation of Banks – FEBRABAN presented a consultation to the Superintendence of Corporate Relations, through which it requested that the understanding be adopted that the preparation of intermediate consolidated financial statements in IFRS would not be mandatory for financial institutions. For this reason and in view of the provisions of Article 22 of Law No. 6.385/76, the Superintendence of Corporate Relations submitted the matter to the appreciation of the Central Bank of Brazil, which is reviewing the issue.
2.2.2. Early disclosure of financial information
The early disclosure of financial information must be carried out exceptionally.
If the company opts for the early disclosure of certain data, it must do so in an equitable manner and emphasize that they are preliminary information, informing, if applicable, whether they were, or were not, audited.
It is worth remembering that, under Article 14 of CVM Instruction No. 480/09, the information disclosed must be true, complete, consistent, and must not induce investors to error.
It is emphasized that this exceptional disclosure must be made via a Relevant Fact, under the terms of CVM Instruction No. 358/02.
Finally, it is worth remembering that, in the event of early disclosure of financial information, the trading blackout period provided for in Article 13, paragraph 4, of CVM Instruction No. 358/02 is also advanced.
2.2.3. Capital Budget
Article 196 of Law No. 6.404/76, transcribed below, provides that the capital budget to be approved in a general assembly must comprise all sources of resources and applications of capital, fixed or circulating, and will be submitted by the administration bodies to the assembly, with the justification of profit retention proposed.
Profit Retention
Art. 196. The general assembly may, by proposal of the administration bodies, deliberate to retain a portion of the net profit of the fiscal year provided for in a capital budget previously approved by it.
§ 1 The budget, submitted by the administration bodies with the justification of the proposed profit retention, must comprise all sources of resources and applications of capital, fixed or circulating, and may have a duration of up to 5 (five) fiscal years, except in the case of execution, for a longer period, of an investment project. § 2 The budget may be approved by the ordinary general assembly that deliberates on the balance sheet of the fiscal year and reviewed annually, when it has a duration greater than one fiscal year. Regarding issuers registered in category A, it is alerted that CVM Instruction No. 481/09 requires, through item II of paragraph 1 of Article 9 and item 15 of Annex 9-1-II, that, in the event of a proposal for profit retention provided for in a capital budget, the company must make available to shareholders, up to one month before the date set for the holding of the AGO, information on the amount of the proposed retention, as well as a copy of the capital budget prepared in accordance with Article 196 of Law No. 6.404/76. Issuers registered in category B, although not subject to the form and content of the information required by CVM Instruction No. 481/09, must make available to shareholders, up to one month before the date set for the holding of the AGO, information on the amount of the proposed retention, as well as a copy of the capital budget prepared in accordance with Articles 133 and 196 of Law No. 6.404/76. The capital budget must be sent to the CVM, via IPE System, category "Assembly", type "AGO" or "AGO/E", species "Management Proposal", subject "Capital Budget", without prejudice to its sending accompanying the financial statements, as provided for in Article 25, paragraph 1, item IV, of CVM Instruction No. 480/09 (see item 2.2). It is highlighted, finally, that the capital budget must also be inserted in the Capital Budget Proposal table of the DFP form.
2.3. Periodic Forms
2.3.1. Cadastral Form
The Cadastral Form is an electronic document, submitted periodically and occasionally, provided for in article 22 of CVM Instruction No. 480/09, whose content reflects Annex 22 of the said Instruction.
Its objective is to gather in a single document information about the main data and characteristics of the issuer and the securities issued by it, which were previously made available to the market in a dispersed manner.
The Cadastral Form must be filled out and submitted to the CVM through the Empresas.Net program, available for download on the CVM website, at the "Document Submission" link.
The issuer must proceed to update the Cadastral Form whenever any of the data contained therein is altered, within 7 (seven) business days counted from the fact that caused the alteration, as determined in article 23 of CVM Instruction No. 480/09.
It is also alerted that, independently of this update, annually the issuer must confirm, between May 1st and May 31st of each year, that the information contained in the cadastral form remains valid, as provided for in the sole paragraph of article 23 of CVM Instruction No. 480/09.
This confirmation must be made by delivering a new version of the Cadastral Form between 05/01 and 05/31 of each year, even if it has already been delivered before this period. We remind you that the submission of Reference Forms, DFPs or ITRs, between May 1st and May 31st, does not exempt the Company from the necessary delivery of the Cadastral Form during this period for the purpose of confirming the validity of the data present in the form, required by the sole paragraph of article 23 of CVM Instruction No. 480/09. Finally, regardless of the update of cadastral data through the submission of the Cadastral Form, it is worth noting that the data of the DRI or equivalent person must also be updated in the IPE System (see items 8.2 and 8.3).
2.3.2. Reference Form
a. Annual Submission of the Form
The Reference Form is an electronic document, submitted periodically and occasionally, provided for in article 24 of CVM Instruction No. 480/09, whose content reflects Annex 24 of the said Instruction. In the case of issuers registered in Category B, the fields marked with "X" are optional to fill out.
According to the aforementioned article 24 of CVM Instruction No. 480/09, the Reference Form must be delivered fully updated annually, within a period of up to 5 (five) months counted from the date of closing of the fiscal year.
The annual presentation of the reference form should occur, preferably, after the holding of the OGA and always include the information contained in the financial statements of the previous year that are discussed and voted on in that conclave. With this procedure, it will already be possible to include in the document, for example, information on the eventual election and remuneration of administrators. In this sense, it is alerted that all updated information that has been provided due to the update rules provided for in paragraphs 3 and 4 of article 24 of the Instruction must be reflected in the Reference Form when of its annual presentation, regardless of the existence of a command in Annex 24 regarding the provision of information relating to the current exercise. After the holding of the OGA and before the end of the deadline for annual submission of the Reference Form provided for in article 24 of CVM Instruction No. 480/09, if any of the events that impose the update of the document occur, the issuer may opt to (i) resubmit the Reference Form of the previous year; or (ii) present the document relating to the current exercise. In this case, the issuer must pay attention to (i) not resubmit the document relating to the previous year as if it were the Reference Form updated with all the information of the current year; or (ii) not present the Reference Form updated with all the information of the current year as if it were the resubmission of the document relating to the previous year. In the annual delivery of the Reference Form, the end date of the fiscal year to which the Form to be delivered refers must be indicated as "Reference of the FRE". The Reference Form must be filled out and submitted to the CVM through the Empresas.Net program (see item 8.1), available for download on the CVM website, at the "Document Submission" link. The guidelines for preparing the Form can be consulted in this circular (see Chapter 9).
b. Update of the Reference Form
CVM Instruction No. 480/09 provides, in paragraphs 3 and 4 of article 24, certain events that impose the obligation of issuers registered in Categories A and B to update, within 7 (seven) business days counted from the date of occurrence of the event, the fields of the Reference Form whose information are affected by the incidence of the events described below:
a) change of administrator or member of the fiscal council of the issuer; b) change in social capital; c) issuance of new securities, even if subscribed privately; d) change in the rights and advantages of the securities issued; e) change in controlling shareholders, direct or indirect, or variations in their shareholdings equal to or greater than 5% (five percent) of the same species or class of shares of the issuer;
f) when any natural or legal person, or group of people representing the same interest, reaches a direct or indirect participation equal to or greater than 5% (five percent) of the same species or class of shares of the issuer, provided that the issuer has knowledge of such change; g) variations in the shareholding position of the above-mentioned persons greater than 5% (five percent) of the same species or class of shares of the issuer, provided that the issuer has knowledge of such change; h) incorporation, share incorporation, merger or spin-off involving the issuer; i) change in projections or estimates or disclosure of new projections and estimates; j) celebration, alteration or termination of a shareholders' agreement filed at the issuer's headquarters or of which the controller is a party regarding the exercise of voting rights or control power of the issuer; and k) declaration of bankruptcy, judicial reorganization, liquidation or judicial homologation of extrajudicial reorganization. In the same way, issuers registered in Category B, under the terms of paragraph 4 of article 24 of the said Instruction, must also update, within 7 (seven) business days, counted from their occurrence, the fields of the form whose information are affected by the incidence of the following events:
a) change of administrator; b) issuance of new securities, even if subscribed privately; c) change in controlling shareholders, direct or indirect, or variations in their shareholdings equal to or greater than 5% (five percent) of the same species or class of shares of the issuer; d) incorporation, share incorporation, merger or spin-off involving the issuer; e) change in projections or estimates or disclosure of new projections and estimates; and f) declaration of bankruptcy, judicial reorganization, judicial or extrajudicial liquidation or judicial homologation of extrajudicial reorganization. In the update of a Reference Form already delivered, issuers must indicate as "Reference of the FRE" the end date of the same fiscal year to which the Form to be updated refers. It will also be indicated in the "Reason for Resubmission" field the sections and items altered, with the inclusion, whenever possible, of a brief description of the reason for the alteration. Category B issuers who opt to present information indicated in Annex 24 as optional for their category must: (a) maintain the optional information that was provided in all updates of the Reference Form that may be presented by the company; and (b) update the optional information provided in the manner provided for in paragraphs 3 and 4 of article 24 of CVM Instruction 480/09. There is no impediment, however, for the issuer to cease presenting the optional information when delivering the Reference Form of the subsequent fiscal year. It is worth alerting, finally, that the general guidelines contained in Annex 1 of this Circular Letter regarding updatable fields of the Reference Form do not constitute and should not be understood as an exhaustive list, being the obligation of the issuer to verify and update all fields of the Form that, in its specific case, are impacted by the occurrence of the events provided for in paragraphs 3 and 4 of article 24.
c. Resubmission of the Reference Form due to registration of public distribution
CVM Instruction No. 480/09 provides in paragraph 2 of article 24 that, in case of request for registration of public distribution, issuers must resubmit the Reference Form fully updated on the same date that the request is filed with the CVM.
In the case of request for registration of public distribution, the issuer may opt to resubmit the Reference Form of the previous year or to present the Reference Form of the current year, provided that the information relating to the previous year is filled in.
In the resubmission of the Reference Form, issuers must indicate as "Reference of the FRE" the end date of the same fiscal year to which the Form to be resubmitted refers. In addition, it will also be indicated in the "Reason for Resubmission" field the sections and items altered, with the inclusion of a brief description of the reason for the alteration. As stated in the declaration signed by the DRI and the President of the company, the Reference Form must be a true, precise and complete portrait of the issuer's economic-financial situation, and the information contained therein must be useful, true, complete and consistent, as provided for in articles 14 and 17 of CVM Instruction No. 480/09. Thus, we alert issuers that the persons responsible for the content of the Reference Form must ensure the permanent quality of the document, it not being expected that in the resubmission resulting from a request for registration of public distribution the information contained therein undergoes substantial alterations, beyond those that would necessarily have to be made to update the document in this situation, including in cases expressly provided for in Annex 24 of CVM Instruction No. 480/09.
2.3.3. Standardized Financial Statements – DFP
The Standardized Financial Statements Form (DFP) is an electronic document, of periodic submission provided for in article 21, item IV, of CVM Instruction No. 480/09, whose submission to the CVM must be done through the Empresas.Net System (see item 8.1).
According to article 28 of CVM Instruction No. 480/09, the DFP form must be filled out with the data from the financial statements prepared in accordance with the accounting rules applicable to the issuer, under the terms of articles 25 to 27 of the Instruction, and delivered:
a) by the national issuer, within 3 (three) months after the closing of the fiscal year or on the same date of sending the financial statements, if this occurs on an earlier date; b) by the foreign issuer, within 4 (four) months of the closing of the fiscal year or on the same date of sending the financial statements, if this occurs on an earlier date. It is emphasized that the submission of the DFP form is mandatory and its delivery does not dispense with the sending of the financial statements that served as the basis for its filling out and vice versa. In the case of financial institution issuers, attention is drawn to the understanding exposed in this Circular Letter (see item 2.2.1). If it discloses projections, the issuer must confront in the DFP form, in the field "Commentary on the behavior of business projections", the projections disclosed in the Reference Form with the results actually obtained in the quarter, indicating the reasons for any differences, as determined in paragraph 4 of article 20 of CVM Instruction No. 480/09. Given the importance of the document, in line with the provisions of article 5 of CVM Instruction No. 358/02, the company must disclose its DFP Form, whenever possible, before the start or after the closing of trading on the stock exchange or organized over-the-counter market where the securities issued by it are admitted to trading.
2.3.4. Quarterly Information – ITR
Article 29 of CVM Instruction No. 480/09 provides for the submission of forms relating to quarterly information (ITR) by registered issuers, whose submission to the CVM must be done through the Empresas.Net system (see item 8.1).
According to article 29 of CVM Instruction No. 480/09, the ITR form must be filled out with the data from the quarterly accounting information prepared in accordance with the accounting rules applicable to the issuer, under the terms of articles 25 to 27 of the Instruction, and delivered within 45 (forty-five) days after the end of each quarter of the fiscal year, except the last one. It is worth clarifying that the information of the last quarter will be included in the DFP form (article 28 of the Instruction), which includes the entire fiscal year. If there is a statutory alteration that results in a fiscal year longer or shorter than one year (sole paragraph of article 175 of Law No. 6,404/76), it may be the case that the company presents more or less than 3 (three) ITR forms. As CVM Instruction No. 480/09 provides, with wording given by CVM Instruction No. 511/11, all registered issuers must send the ITR form within the same period of up to 45 (forty-five) days after the end of each quarter of the fiscal year, accompanied by a special review report, issued by an independent auditor registered with the CVM. It is worth alerting that the ITR form of open companies registered in Category A must contain consolidated accounting information whenever such issuers are obliged to present consolidated financial statements, under the terms of Law No. 6,404/76, as determined in paragraph 2 of article 29 of CVM Instruction No. 480/09. In the case of financial institution issuers, attention is drawn to what is stated in this Circular Letter (see item 2.2.1). If it discloses projections, the issuer must confront quarterly, in the appropriate field of the ITR form and the DFP form (in the case of the last quarter), the projections disclosed in the Reference Form with the results actually obtained in the quarter, indicating the reasons for any differences, as determined in paragraph 4 of article 20 of CVM Instruction No. 480/09. Given the importance of the document, in line with the provisions of article 5 of CVM Instruction No. 358/02, the company must disclose its ITR Form, whenever possible, before the start or after the closing of trading on the stock exchange or organized over-the-counter market where the securities issued by it are admitted to trading.
2.3.5. Quarterly Report of Securitization Company
CVM Instruction No. 480/09 stipulates that issuers whose object is the securitization of credits must send a quarterly report to the CVM, within the same deadline for submission of quarterly information forms – ITR and standardized financial statements – DFP.
The objective of the new form is to expand and improve the volume of information provided on securitization operations, allowing the investor to have more facilitated and detailed access to the data of these operations, contributing to the development of this market.
The Quarterly Report of Securitization Companies, whose content must reflect the provisions of Annex 32-II to CVM Instruction No. 480/09, must be sent through the Empresas.Net system (see item 8.1).
Guidelines for preparing the Quarterly Report of Securitization Companies can be obtained in the CIRCULAR LETTER/CVM/SIN/SEP/N°01/2012 4
2.4. Ordinary General Assembly – OGA
According to the statement of article 132 of Law No. 6,404/76, annually, in the first four months following the end of the fiscal year, there must be an ordinary general assembly (OGA) to take the accounts of the administrators, examine, discuss and vote on the financial statements, deliberate on
the destination of the net profit of the year and the distribution of dividends and elect the administrators and, if applicable, the members of the Fiscal Council.
Under the terms of article 60, item III, of CVM Instruction No. 480/09, the non-observance of the deadline fixed in article 132 of Law No. 6,404/76 for the holding of the ordinary general assembly is considered a serious offense.
2.4.1. Communication of article 133 of Law No. 6,404/76
Article 133 of Law No. 6,404/76 establishes that administrators must communicate, up to 1 (one) month before the date set for the holding of the OGA, by announcements published in the manner provided for in article 124 (see item 2.4.3), that they are at the disposal of shareholders the documents indicated below, and it must be specified in the announcements the location or locations where shareholders can obtain copies of these documents:
a) the administration report on social business and the main administrative facts of the closed year; b) the copy of the financial statements; c) the report of independent auditors, if any; d) the opinion of the fiscal council, including dissenting votes, if any; and e) other documents pertinent to matters included on the agenda.
Up to at least 5 (five) days before the date set for the holding of the OGA, the company must publish the documents cited in letters "a" to "c" above (paragraph 3 of article 133).
It is highlighted that, independently of this publication, the caput of article 133 of Law No. 6,404/76 requires that documents pertinent to matters included on the agenda of the OGA be made available to shareholders, at the company's headquarters, up to one month before the date set for the holding of the assembly (30 days).
The OGA that brings together all shareholders may consider the lack of publication of the announcements or the non-observance of the deadlines referred to in article 133 of Law No. 6,404/76 as cured, but the publication of the documents before the holding of the assembly is mandatory, however (paragraph 4 of article 133).
The publication of the announcements provided for in article 133 is dispensed with when the documents cited in letters "a" and "c" above are published up to 1 (one) month before the date set for the holding of the OGA (paragraph 5 of article 133).
Thus, the communication provided for in article 133 of Law No. 6,404/76 must be filed in the IPE System on the same date of its publication, if any.
2.4.2. Administration Proposal for OGA
a. Issuers registered in Category A
Regarding the minimum documents and information that must be made available to shareholders when convening the OGA, open companies registered in category A must pay attention to the provisions of CVM Instruction No. 481/09 – which applies exclusively to open companies that have shares admitted to trading in regulated markets –, especially regarding the provisions of articles 8 to 21 of this Instruction. It is worth highlighting that, independently of the publication provided for in paragraph 3 of article 133 of Law No. 6,404/76, the caput of this article requires that documents pertinent to matters included on the agenda of the OGA be made available to shareholders, at the company's headquarters, up to one month before the date set for the holding of the OGA (30 days), and it is also required by article 9 of CVM Instruction No. 481/09, for issuers registered in category A, that, on this date, the following documents and information are available on the CVM's Internet page:
a) administration report on social business and the main administrative facts of the closed year (included in Financial Statements and in DFP form – see items 2.2 and 2.3.3); b) copy of the financial statements (sent by the IPE System – see item 2.2); c) commentary of administrators on the financial situation of the company, under the terms of item 10 of the Reference Form ("Directors' Comments") (sent, by the IPE System, in the "Assembly" category, type "OGA" or "OGA/E", species "Administration Proposal", subject "Commentary of administrators on the financial situation of the company"); d) report of independent auditors (included in Financial Statements and in DFP form – see items 2.2 and 2.3.3); e) opinion of the fiscal council, including dissenting votes, if any (included in Financial Statements and in DFP form – see items 2.2 and 2.3.3, as well as sent by the IPE System by virtue of item VI of article 30 of CVM Instruction No. 480/09, in the "Board Meeting" category, type "Fiscal Council", species "Minutes", subject "Opinion on Financial Statements)"); f) DFP form (sent by the Empresas.Net System – see item 8.1); g) proposal for the destination of the net profit of the year which must contain, at minimum, the information indicated in Annex 9-1-II of the Instruction (sent by the IPE System by the "Assembly" category, type "OGA" or "OGA/E", species "Administration Proposal", subject "Destination of Results"); and h) opinion of the audit committee, if any (sent by the IPE System by the "Board Meeting" category, type "Audit Committee", species "Minutes", subject "Opinion on Financial Statements" – see item 2.2). It should be noted that the administration's proposal for the destination of net profit must contain, at minimum, the information required in Annex 9-1-II of CVM Instruction No. 481/09, and should not be limited to the enumeration of the items to be submitted to assembly deliberation, once
how this procedure would make it a mere repetition of information already contained in the Call Notice.
According to the Collegiate Board's decision of 09/27/2011 (Process CVM RJ/2010-14687) 5, companies that have reported a loss for the fiscal year are exempt from presenting the information indicated in Annex 9-1-II of CVM Instruction No. 481/09.
Companies that fall into this situation must inform in the Management Proposal that Annex 9-1-II of CVM Instruction No. 481/09 is not being presented due to the reporting of a loss for the fiscal year.
It is also recommended that companies disclose in the management proposal information regarding the eventual incidence of tax on the proposed dividends.
Item V of Article 133 of Law No. 6.404/1976 establishes that the company must make available to shareholders, at the company's headquarters, up to one month before the date scheduled for the holding of the OGM (30 days), in addition to the documents indicated in the Law, the other documents pertinent to matters included on the agenda. The sole paragraph of Article 6 of CVM Instruction No. 481/09, in turn, determines that the documents and information required therein shall be made available to shareholders by the date of publication of the first call announcement, unless Law No. 6.404/76, the Instruction, or another CVM norm establishes a longer deadline.
In light of this, we alert issuers that, if the election of administrators or members of the fiscal council or the fixing of their remuneration are included on the agenda of the OGM, the issuer registered in Category A must provide, at least, the documents and information required by Articles 10 and 12 of CVM Instruction No. 481/09 within a period of 1 (one) month before the date scheduled for the holding of the meeting.
Such information must be included in the management proposal, which must be sent via the IPE System, category "Assembly", type "OGM" or "OGM/E", species "Management Proposal", subject "Election of members of the Boards of Administration and Fiscal" or "Remuneration of administrators and councilors".
It should be noted that the definition of the number of members of the Board of Administration, when the corporate bylaws provide for a minimum and maximum number, must be the subject of deliberation at the general meeting of shareholders.
Thus, without prejudice to the provisions of paragraph 7 of Article 141 of Law No. 6.404/76 6, the most appropriate procedure is the disclosure, in the call notice, that on its agenda will be deliberated the number of members to compose the Board of Administration of the Company.
See http://www.cvm.gov.br/port/descol/respdecis.asp?File=7312-1.HTM
Art. 141
§ 7º Whenever, cumulatively, the election of the board of administration takes place by the system of multiple voting and the holders of ordinary or preferred shares exercise the prerogative to elect councilors, it shall be assured to a shareholder or group of shareholders linked by a voting agreement who hold more than 50% (fifty percent) of the shares with voting rights the right to elect councilors in a number equal to those elected by the other shareholders, plus one, regardless of the number of councilors that, according to the bylaws, compose the body.
Furthermore, the management proposal must contain the possible scenarios regarding the number of members to be elected, either by means of multiple voting or, if this is not requested, by majority voting. This is because this represents fundamental information for minority shareholders, in order to subsidize their mobilization regarding the multiple voting process.
In this sense, it is recommended that the controlling shareholder/management inform the number (fixed or minimum) of councilors for a certain mandate that would be elected by multiple or majority voting (for example, 10 members), such that this number could be increased by up to 2 members due to separate elections (that is, reaching the number of 11 or 12 councilors).
In line with the provisions of art. 6, item II, of CVM Instruction No. 481/09, companies must disclose information about candidates for the Board of Administration and Fiscal Council proposed by non-controlling shareholders, giving these candidates the same transparency and disclosure currently given to candidates proposed by the management or by controlling shareholders by virtue of art. 10 of CVM Instruction No. 481/09.
This procedure will also facilitate the exercise of the right to vote by holders of Depositary Receipts traded abroad (as is the case with ADRs). In this sense, it is emphasized that, if it is possible for holders of DRs to exercise voting, it appears necessary that such prerogative be exercised to the maximum degree of equality possible with shareholders.
The suggested form of disclosure is via the IPE System, in the category "Notice to Shareholders", type "Other Notices", including in the Subject that it concerns the indication of candidates for member of the board of administration/fiscal council presented by minority shareholders.
We draw attention to the fact that some companies already adopt this practice and allow in their Corporate Bylaws that non-controlling shareholders present candidates for the Board of Administration, provided that these shareholders present information about the candidates up to a certain deadline prior to the date scheduled for the meeting.
These practices, however, must be regarded as faculties granted to shareholders to facilitate their articulation and the exercise of rights granted in Law No. 6.404/76. According to the understanding issued by SEP in the analysis of a concrete case, requirements for the presentation of information about candidates prior to the meeting, even if provided in the Corporate Bylaws, cannot be used as an imposition, to obstruct the right of shareholders provided for in Law No. 6.404/76 to indicate and elect members to the Board of Administration and the Fiscal Council at the very moment of the assembly.
In order to allow investors a better understanding of the remuneration proposal (item I of Article 12 of CVM Instruction No. 481/09) and subsidize the decision to be made by them, it is recommended that issuers include, in the remuneration proposal, information on:
a) period to which the remuneration proposal refers (for example, from the current OGM until the next);
b) values approved in the previous proposal and values actually realized, clarifying the reason for any differences; and
c) any differences between the values of the current proposal and the previous proposal and those contained in item 13 of the company's Reference Form, clarifying, for example, if they are due to the non-correspondence between the period covered by the proposals (letter "a") and the period covered by the Reference Form (social fiscal year).
The documents made available to shareholders must contain the information necessary for the understanding of the matters to be discussed at the meeting. As provided in CVM Instruction No. 481/09, the information and documents provided to shareholders must be true, complete and consistent, drafted in clear, objective and concise language and must not induce investors to error.
To facilitate reading by users, it is recommended that the document with the Management Proposal contain an index.
Whenever there is a need to resubmit the Management Proposal due to compliance with CVM requirements or spontaneously, the Company must indicate in the field "Reason for Resubmission" the fact motivating the resubmission. In the case of compliance with a requirement formulated by the CVM, reference must be made to the office issued.
b. Issuers registered in Category B
Although CVM Instruction No. 481/09 does not apply to open companies registered in category B, it is worth alerting that these issuers are obliged, under Article 133, item V, of Law No. 6.404/76 and Article 21, item VIII, of Instruction No. 480/09, to send the other documents pertinent to matters included on the agenda of the meeting (sent via the IPE System, category "Assembly", type "OGM" or "OGM/E", species "Management Proposal", choosing pertinent subjects according to the orientations provided in this Circular (see item "a" above).
The management proposal for the OGM must be delivered up to one month before the date scheduled for the holding of the meeting (30 days).
The documents made available to shareholders must contain the information necessary for the understanding of the matters to be discussed at the meeting. As provided in CVM Instruction No. 480/09, the information and documents provided to shareholders must be true, complete and consistent, drafted in clear, objective and concise language and must not induce investors to error.
If the OGM is also called to elect administrators or members of the fiscal council or to fix the remuneration of administrators, the issuers registered in category B must provide sufficient information so that shareholders can know the candidates indicated for election and the proposed remuneration policy. Such information must be included in the management proposal, which must be sent via the IPE System, category "Assembly", type "OGM" or "OGM/E", species "Management Proposal", subject "Election of members of the Boards of Administration and Fiscal" or "Remuneration of administrators and councilors".
It should be noted that the definition of the number of members of the Board of Administration, when the corporate bylaws provide for a minimum and maximum number, must be the subject of deliberation at the general meeting of shareholders.
Thus, without prejudice to the provisions of paragraph 7 of Article 141 of Law No. 6.404/76 7, the most appropriate procedure is the disclosure, in the call notice, that on its agenda will be deliberated the number of members to compose the Board of Administration of the Company.
Furthermore, the management proposal must contain the possible scenarios regarding the number of members to be elected, either by means of multiple voting or, if this is not requested, by majority voting. This is because this represents fundamental information for minority shareholders, in order to subsidize their mobilization regarding the multiple voting process.
In this sense, it is recommended that the controlling shareholder/management inform the number (fixed or minimum) of councilors for a certain mandate that would be elected by multiple or majority voting (for example, 10 members), such that this number could be increased by up to 2 members due to separate elections (that is, reaching the number of 11 or 12 councilors).
In line with the provisions of art. 6, item II, of CVM Instruction No. 481/09, companies must disclose information about candidates for the Board of Administration and Fiscal Council proposed by non-controlling shareholders, giving these candidates the same transparency and disclosure currently given to candidates proposed by the management or by controlling shareholders by virtue of art. 10 of CVM Instruction No. 481/09.
This procedure will also facilitate the exercise of the right to vote by holders of Depositary Receipts traded abroad (as is the case with ADRs). In this sense, it is emphasized that, if it is possible for holders of DRs to exercise voting, it appears necessary that such prerogative be exercised to the maximum degree of equality possible with shareholders.
The suggested form of disclosure is via the IPE System, in the category "Notice to Shareholders", type "Other Notices", including in the Subject that it concerns the indication of candidates for member of the board of administration/fiscal council presented by minority shareholders.
We draw attention to the fact that some companies already adopt this practice and allow in their Corporate Bylaws that non-controlling shareholders present candidates for the Board of Administration, provided that these shareholders present information about the candidates up to a certain deadline prior to the date scheduled for the meeting.
These practices, however, must be regarded as faculties granted to shareholders to facilitate their articulation and the exercise of rights granted in Law No. 6.404/76. According to the understanding issued by SEP in the analysis of a concrete case, requirements for the presentation of
Art. 141
§ 7º Whenever, cumulatively, the election of the board of administration takes place by the system of multiple voting and the holders of ordinary or preferred shares exercise the prerogative to elect councilors, it shall be assured to a shareholder or group of shareholders linked by a voting agreement who hold more than 50% (fifty percent) of the shares with voting rights the right to elect councilors in a number equal to those elected by the other shareholders, plus one, regardless of the number of councilors that, according to the bylaws, compose the body.
information about candidates prior to the meeting, even if provided in the Corporate Bylaws, cannot be used as an imposition, to obstruct the right of shareholders provided for in Law No. 6.404/76 to indicate and elect members to the Board of Administration and the Fiscal Council at the very moment of the assembly.
According to the Collegiate Board's decision of 09/27/2011 (Process CVM RJ/2010-14687) 8, companies that have reported a loss for the fiscal year are exempt from presenting the information regarding the destination of the result of the fiscal year.
Companies that fall into this situation must inform in the Management Proposal that the information regarding the destination of the result of the fiscal year is not being presented due to the reporting of a loss for the fiscal year.
To facilitate reading by users, it is recommended that the document with the Management Proposal contain an index.
Whenever there is a need to resubmit the Management Proposal due to compliance with CVM requirements or spontaneously, the Company must indicate in the field "Reason for Resubmission" the fact motivating the resubmission. In the case of resubmission of the proposal for compliance with a requirement formulated by the CVM, reference must be made to the office issued.
2.4.3. Call Notice for OGM
In accordance with item II of paragraph 1 of Article 124 of Law No. 6.404/76, the calling of a general meeting of an open company shall be made by means of an announcement published at least three times, containing, in addition to the location, date and time of the meeting, the agenda, with the deadline for the first call being 15 (fifteen) days and for the second call, 8 (eight) days.
It is emphasized that for the holding of a meeting in second call, the publication of a new Call Notice is necessary. It is considered irregular to include the second call of the OGM already in the Call Notice of the first call.
Thus, in the event that the OGM is not installed in the first call, a new call must occur through the publication of a new notice which must inform, in addition to the agenda, the location, date and time at which the meeting will be held in second call. The said meeting cannot be held, in second call, in a period less than 8 (eight) days, counted from the date on which the second notice was published (item II, of paragraph 1, of Article 124, of Law No. 6.404/76).
The call notices for OGM and OGM/E of issuers registered in both Category A and Category B must explicitly enumerate, on the agenda, all matters to be deliberated, being prohibited the use of the rubric "general matters" for matters that require assembly deliberation.
In the case of meetings intended to elect members to the Board of Administration, the minimum percentage of participation in the voting capital necessary to request the adoption of
See http://www.cvm.gov.br/port/descol/respdecis.asp?File=7312-1.HTM
multiple voting, in accordance with Article 141 of Law No. 6.404/76, must appear, obligatorily, in the call notice, as determined in Article 4 of CVM Instruction No. 481/09 and in Article 3 of CVM Instruction No. 165/91.
Upon receipt of a request for the adoption of the multiple voting process and verified that it meets the provisions of Article 141 of Law No. 6.404/76 and CVM Instruction No. 165/91, it is recommended that the company disclose, via the IPE System, in the category "Notice to Shareholders", type "Other Notices", that the election of the board of administration may take place by this process, as this is important information to instruct the decision to be taken by shareholders at the meeting.
It should be noted that the definition of the number of members of the Board of Administration, when the corporate bylaws provide for a minimum and maximum number, must be the subject of deliberation at the general meeting of shareholders.
Thus, without prejudice to the provisions of paragraph 7 of Article 141 of Law No. 6.404/76 9, the most appropriate procedure is the disclosure, in the call notice, that on its agenda will be deliberated the number of members to compose the Board of Administration of the Company.
Furthermore, the management proposal must contain the possible scenarios regarding the number of members to be elected, either by means of multiple voting or, if this is not requested, by majority voting. This is because this represents fundamental information for minority shareholders, in order to subsidize their mobilization regarding the multiple voting process.
In this line, it is recommended that the controlling shareholder/management inform the number (fixed or minimum) of councilors for a certain mandate that would be elected by multiple or majority voting (for example, 10 members), such that this number could be increased by up to 2 members due to separate elections (that is, reaching the number of 11 or 12 councilors).
A copy of the call notice for the ordinary general meeting must be sent to the CVM, via the IPE System, category "Assembly", types "OGM" or "OGM/E", species "Call Notice", on the same day of its publication by the press, in accordance with item VII of Article 21 of CVM Instruction No. 480/09.
We remind, finally, that Law No. 12.431/11 amended provisions of Law No. 6.404/76, which now provides in the sole paragraph of Article 121 that, in open companies, the shareholder may participate and vote remotely in the general meeting, in accordance with CVM regulation.
Although the said regulation has not yet been issued, it is emphasized that the CVM has already publicly manifested that there is no impediment for companies to hold meetings
Art. 141
§ 7º Whenever, cumulatively, the election of the board of administration takes place by the system of multiple voting and the holders of ordinary or preferred shares exercise the prerogative to elect councilors, it shall be assured to a shareholder or group of shareholders linked by a voting agreement who hold more than 50% (fifty percent) of the shares with voting rights the right to elect councilors in a number equal to those elected by the other shareholders, plus one, regardless of the number of councilors that, according to the bylaws, compose the body.
in which remote voting is used. To this end, it is recommended that companies ensure that the means chosen to confer remote voting: (a) are made available to all shareholders; (b) preserve the security of the votes, including allowing verification of the shareholder status of those who will exercise the right to vote; and (c) guarantee the possibility of subsequent verification of how each shareholder voted.
2.4.4. Summary and Minutes of the OGM
According to the provisions of items IX and X of Article 21 of CVM Instruction No. 480/09, the summaries of decisions of the ordinary general meeting must be sent, via the IPE System, on the same day of its holding, by the category "Assembly", types "OGM" or "OGM/E", species "Summary of Decisions", as well as the minutes of the OGMs, within up to 7 (seven) business days of its holding, with indication of the dates and newspapers of their publication by the category "Assembly", types "OGM" or "OGM/E", species "Minutes".
In this sense, it should be noted that the summary of decisions taken at the meeting (provided for in item IX of Article 21 of CVM Instruction No. 480/09) is not confused with the minutes of the OGM (provided for in item X of Article 21 of CVM Instruction No. 480/09), which, in accordance with paragraph 1 of Article 130 of Law No. 6.404/76, may be drawn up in the form of a summary of the facts that occurred.
Therefore, the summary provided for in item IX of Article 21 of CVM Instruction No. 480/09 deals only with the result of the deliberations of the meeting.
It is highlighted that CVM Instruction No. 480/09 exempts the issuer from delivering the summary of decisions to the issuer that delivers the minutes of the general meeting on the same day of its holding, as provided for in paragraph 2 of Article 30 and in the sole paragraph of Article 31. For the use of this facility, however, it is necessary that the issuer send the complete minutes of the general meeting on the same day of the holding of the meeting.
In this sense, we highlight that the minutes of the OGM must be accompanied, in the same file, by any opinions and manifestations of dissenting votes, as well as by all documents referenced and related to the deliberations of the meeting, such as contracts.
Whenever possible, OGM minutes archived at the CVM must also contain the attendance list, the exact quorum for installation, as well as the qualification of shareholders, discrimination of the quantity, species and class of shares held by each one. It is also recommended that the minutes contain, at least, the indication of relevant shareholders who elected members to the board of administration and fiscal council.
2.5. Report and Communications of the Trustee
Law No. 6.404/76 determines, in letters "b" and "c" of paragraph 1 of Article 68, that trustees must, respectively:
a) annually, prepare and make available to debenture holders, within 4 (four) months of the end of the company's social fiscal year, a report informing relevant facts that occurred during the fiscal year, relating to the execution of obligations assumed by the company, to the assets guaranteeing the debentures and to the constitution and application of the amortization fund, if any, should
appear in the report, as well as a declaration by the agent regarding their fitness to continue exercising the function; b) notify debenture holders, within a maximum period of 60 (sixty) days, of any default by the company in fulfilling obligations assumed in the issuance deed.
Thus, it is incumbent upon issuers of debentures admitted to trading in regulated markets in Brazil to send the report provided for in item XI of article 21 of CVM Instruction No. 480/09, via the IPE System, under the category "Economic-Financial Data", type "Trustee Agent Report", within 4 (four) months of the end of the fiscal year or on the same day of its disclosure by the trustee agent, whichever occurs first.
Furthermore, without prejudice to the provisions of article 3 of CVM Instruction No. 358/02, communications by the trustee agent prepared in compliance with article 68, paragraph 1, item "c" of Law No. 6.404/76 must be sent by the issuers to the CVM, immediately after receipt of the notification sent by the trustee agent, via the IPE System, category "Economic-Financial Data", type "Notification of the trustee agent to debenture holders", as provided for in articles 30, item XX, and article 31, item IX, both of CVM Instruction No. 480/09.
The rights, obligations, and duties established by Law No. 9.514, of 1997, and by the rules governing the exercise of the function of trustee agent for debenture holders, apply to the trustee agent of Real Estate Receivable Certificates (CRI). In this way, CRI trustee agents must obligatorily send their report regarding CRI issuances whose public offering registration requests were made after 03/01/2005, in accordance with CVM Instruction No. 414/04. The same applies to the trustee agent of Agricultural Receivable Certificates (CRA), when applicable, as per the decision issued by the CVM Collegiate Body on 18/11/2008 10.
Chapter 3. Main Information on eventual matters
3.1. Material fact and relevant event
In accordance with article 157, paragraph 4, of Law No. 6.404/76, the administrators of the public company are obliged to immediately notify the stock exchange and disclose through the press any resolution of the general assembly or the company's administrative bodies, or any material fact occurring in their business, that may significantly influence the decision of investors in the market to sell or buy securities issued by the company.
In CVM Instruction No. 358/02, the disclosure and use of information on material facts or relevant events are regulated, as well as the disclosure of information in the trading of securities issued by public companies by controlling shareholders, directors, members of the board of directors, the fiscal council, and any bodies with technical or consultative functions created by statutory provision, and also in the acquisition of a significant block of shares issued by a public company, and the trading of shares of a public company pending the disclosure of a material fact to the market.
It should be noted that on 05/02/2014, CVM Instruction No. 547/14 was published, amending CVM Instruction No. 358/02, which flexibilizes the regime for disclosing information on material facts or relevant events. The main objective of this reform is to offer public companies the option to disclose communications on material facts through news portals present on the internet and not only in major circulation newspapers, as they do today.
The new instruction will enter into force on 10/03/2014. However, to facilitate the use of this Circular Letter, the references made to the rules of CVM Instruction No. 358/02 already comprise the modifications brought by the new CVM Instruction No. 547/14.
According to article 3 of CVM Instruction No. 358/02, it is incumbent upon the DRI to send to the CVM, via an electronic system available on the CVM's page on the worldwide web, and, if applicable, to the stock exchange and organized over-the-counter market entity where the company's securities are admitted to trading, any material fact or relevant event occurring or related to its business (defined in article 2 of this Instruction), as well as to guarantee its broad and immediate dissemination, simultaneously, in all markets where such securities are admitted to trading.
Following the guidance of article 5 of CVM Instruction No. 358/02, the disclosure of the material fact or relevant event must be made, whenever possible, before the start or after the close of trading on the stock exchanges and organized over-the-counter market entities where the company's securities are admitted to trading.
The sending of the file with the text of the material fact or relevant event must be done through the IPE System, category "Material Fact", before or simultaneously with its disclosure through the channels provided for in art. 3, paragraph 4, of CVM Instruction No. 358/02 (major circulation newspapers usually used by the company or news portal present on the Internet), indicating the respective locations and dates of disclosure.
The obligation to disclose through the IPE System is independent of the issuer's registration category, as determined in article 30, item X, and article 31, item VI, of CVM Instruction No. 480/09.
Corporate legislation does not prevent relevant information from being disseminated and discussed in meetings of trade associations, investors, analysts, or with a selected audience, in the country or abroad. However, ensuring equitable treatment of all market participants, and to prevent, among other things, the possibility of using insider information, it requires that the material fact in question be disclosed, prior to or simultaneously with the meeting, to the entire market, as determined in the caput and paragraph 3 of article 3 of CVM Instruction No. 358/02.
If controlling shareholders, directors, members of the board of directors, the fiscal council, and any bodies with technical or consultative functions created by statutory provision, have personal knowledge of a material fact or relevant event and find that the DRI has omitted compliance with its duty to communicate and disclose, including in the case of the sole paragraph of article 6 of CVM Instruction No. 358/02, they will only be exempt from liability if they immediately communicate the material fact or relevant event to the CVM.
Exceptionally, according to §5 of article 157 of Law No. 6.404/76 and the caput of article 6 of CVM Instruction No. 358/02, material facts or relevant events may fail to be disclosed if controlling shareholders or administrators believe that their disclosure would put at risk the legitimate interest of the company.
In the case where controlling shareholders or administrators believe that the revelation of the material fact or relevant event may put the legitimate interest of the Company at risk, a request for exception to immediate disclosure may be addressed to the President of the CVM in a sealed envelope, in which the word "Confidential" must appear, as per article 7, paragraph 1, of CVM Instruction No. 358/02.
Nevertheless, by virtue of the sole paragraph of article 6 of CVM Instruction No. 358/02, administrators and controlling shareholders are obliged to, directly or through the DRI, immediately disclose the material fact or relevant event, in the event that the information escapes control or if there is an atypical fluctuation in the quotation, price, or quantity traded of the securities issued by the public company or referenced to them.
In order to give effect to the aforementioned rule, it is recommended that the DRI, whenever possible, prepare a document on the material fact or relevant event kept in confidence that can be disclosed in the cases provided for in the cited provision. It is also advisable that the DRI have pre-approved documents drafted in the languages of all countries where the securities are admitted to trading, so that disclosure can be made quickly in case of urgency.
In these cases, the need to request the suspension of trading of the company's securities should also be evaluated, as provided for in paragraph 2 of article 5 of CVM Instruction No. 358/02.
It should be highlighted that the CVM has been understanding that, in the event of a leak of information or if the company's securities fluctuate atypically, the material fact must be immediately disclosed, even if the information refers to operations in negotiation (not concluded), initial negotiations, feasibility studies, or even merely the intention to carry out the business (see judgment of Process CVM RJ/2006/5928 11 and PAS CVM No. 24/05 12). If the relevant information escapes the control of the administration or if there is an atypical fluctuation in the quotation, price, or quantity traded of the securities issued by the public company or referenced to them, the DRI should inquire of persons with access to material facts or relevant events, with the aim of verifying whether they have knowledge of information that should be disclosed to the market.
Thus, in cases where failures in the disclosure of material facts or relevant events are identified, without prejudice to the investigation of possible use of insider information, the DRI, as well as controlling shareholders, other directors, members of the board of directors, the fiscal council, and any bodies with technical or consultative functions created by statutory provision, are subject to the determination of liability for any infringement of the aforementioned articles 3, 4, and 6 of CVM Instruction No. 358/02 and articles 155, paragraph 1, and 157, paragraph 4 of Law No. 6.404/76, as applicable.
Once the dissemination of news in the press involving information not yet disclosed by the issuer or the dissemination of news that adds a new fact to already disclosed information is confirmed, it is incumbent upon the company's administration and, in particular, its DRI to analyze the potential impact of the news on trading and, if applicable, to manifest themselves immediately regarding the aforementioned news, via the IPE System, and not only after receiving a query from the CVM or BM&FBOVESPA.
10 See http://www.cvm.gov.br/port/infos/Comunicado%20CRA.asp
11 See http://www.cvm.gov.br/port/inqueritos/2007/rordinario/inqueritos/2007_05_04_RJ2006_5928.asp 12 See http://www.cvm.gov.br/port/inqueritos/2008/rordinario/inqueritos/2405ata2%C2%AAsessao_Nova%20informa%C3%A7%C3%A3o%20inclu%C3%ADda.asp
The decision regarding the disclosure of material facts or relevant events is the competence of the company's administration itself, with the CVM being responsible for ensuring the quality of information brought to the market, prioritizing transparency and combating information asymmetry.
In this sense, it is worth alerting that it is incumbent upon administrators and controlling shareholders, in addition to the other persons indicated in paragraph 1 of article 3 of CVM Instruction No. 358/02, to evaluate the need to disclose sentences issued in the context of proceedings, including arbitration, of which they have knowledge, when these can be characterized as relevant information, capable of affecting investors' decisions to buy, sell, or hold the securities issued by the company.
The information subject to disclosure must be expressed in clear and objective language, must be true, complete, consistent, and must not induce the investor to error, as required in article 3, paragraph 5, of CVM Instruction No. 358/02, and in articles 14 to 19 of CVM Instruction No. 480/09.
For example, the company must refrain from expressing value judgments, especially regarding the progress of judicial disputes and decisions rendered therein, which must reflect the exact wording of such decisions.
It is also worth noting that the same rules provided for in the norms dealing with the disclosure of information apply to disclosures made on social media, notably those that regulate the disclosure of relevant information (CVM Instruction No. 358/02) and establish general rules on content and form of the information that issuers must observe (articles 14 to 19 of CVM Instruction No. 480/09). This means, for example, that administrators and controlling shareholders: (a) Can only disclose information relating to material facts or relevant events on social networks, after or simultaneously with the disclosure of this information through the communication media currently admitted in CVM Instruction No. 358/02; and (b) Must disclose on social networks, as well as in any other medium or document, true, complete, consistent information that does not induce the investor to error, as required in article 14 of CVM Instruction No. 480.
Backed by article 3, paragraph 6, and article 4 of CVM Instruction No. 358/02, the CVM may determine the disclosure, correction, amendment, or republication of information on the material fact or relevant event, as well as request additional clarifications regarding its disclosure.
In accordance with paragraph 7 of article 3 of CVM Instruction No. 358/02, any alteration in the communication channels used by the company must be preceded by the disclosure of the change to be implemented, in the manner previously used by the company for the disclosure of its material facts.
It is alerted that, in accordance with article 18 of CVM Instruction No. 358/02, a serious offense, for the purposes provided for in paragraph 3 of article 11 of Law No. 6.385/76, constitutes the transgression of the provisions contained in said Instruction.
3.1.1. Distinction between Material Fact and Market Communication
CVM Instruction No. 358/02 defines as a material fact or relevant event any decision of the controlling shareholder, resolution of the general assembly or the administrative bodies of the public company, or any other act or fact of a political-administrative, technical, business, or economic-financial nature occurring or related to its business that may significantly influence:
a) the quotation of the securities issued by the public company or referenced to them; b) the decision of investors to buy, sell, or hold those securities; c) the decision of investors to exercise any rights inherent to the status of holder of securities issued by the company or referenced to them.
Unlike the Market Communication, the disclosure of a material fact or relevant event is subject to a specific formality: immediate disclosure to the CVM, to stock exchanges, or to organized over-the-counter market entities where the public company trades its securities, and disclosure through the press (publication in a major circulation newspaper usually used by the company) or by a news portal present on the Internet (which provides, in a section available for free access, the information in its entirety). The submission to the CVM and the exchange is done through the filing of the information in the IPE System, in the "Material Fact" category.
The "Market Communication" represents a category that was created in the IPE System for the disclosure of communications provided for in CVM Instruction 358/02 (such as the communication of acquisition or alienation of relevant participations provided for in article 12, whose publication is only required in the cases provided for in paragraph 5 of this article) or of other information not characterized as a material fact or relevant event, which the company considers useful to disclose to shareholders or the market (such as material disclosed in meetings with analysts, etc.). Also filed in this category, for example, are clarifications provided by companies regarding queries formulated by the CVM or by the exchange. It should be noted that for each of these cases there is an appropriate "type" within the chosen "category" in the IPE System.
The distinction between the material fact or relevant event and the "Market Communication" lies, therefore, in the content of the disclosed information. If the company believes that the information has the potential to affect quotations or investment decisions, it should be treated internally and disclosed in the manner required for relevant information, which includes publication in major circulation newspapers usually used by the company or disclosure in a news portal present on the Internet (which provides, in a section available for free access, the information in its entirety), as provided for in CVM Instruction No. 358/02.
It is worth clarifying that there is no requirement that the disclosure of relevant information be made with the placement of a specific title in the document, such as "Material Fact" (as occurs in the disclosure of financial statements or minutes of meetings of administrative bodies where there is a resolution that characterizes a material fact or relevant event), although it is useful and recommended for good communication with shareholders and the market that there be an indication of the importance of the disclosed information.
3.2. Extraordinary General Assembly (EGA) and Special Assembly
3.2.1. Call Notice for EGA
In accordance with item II, of paragraph 1, of article 124, of Law No. 6.404/76, the calling of a general assembly of a public company shall be made by announcement published at least three times, containing, in addition to the location, date, and time of the assembly, the agenda, and, in the case of statute reform, the indication of the matter, with the advance period of the first call being 15 (fifteen) days and that of the second call being 8 (eight) days.
It should be noted that for the holding of an assembly in a second call, the publication of a new Call Notice is necessary. It is considered irregular to include the second call of the EGA already in the Call Notice of the first call.
Thus, in the event that the assembly is not installed in the first call, a new call must be made by publishing a new notice that must inform, in addition to the agenda, the location, date, and time at which the assembly will be held in the second call. The said assembly cannot be held, in the second call, in a period less than 8 (eight) days, counted from the date on which the second notice was published (item II, of paragraph 1, of article 124, of Law No. 6.404/76).
As in the case of EGAs, the call notices for Extraordinary General Assemblies (EGA) of issuers registered in both category A and category B must explicitly enumerate, in the agenda, all matters to be deliberated, and the use of the rubric "general matters" for matters that require assembly deliberation is prohibited.
In the case of assemblies intended for the election of members to the Board of Directors of issuers registered in both category A and category B, the minimum percentage of participation in the voting capital necessary to request the adoption of multiple voting, in accordance with article 141, of Law No. 6.404/76, must appear, obligatorily, in the call notice, as determined in article 4 of CVM Instruction No. 481/09 and article 3 of CVM Instruction No. 165/91.
Upon receipt of a request for the adoption of the multiple voting process and verified that it meets the provisions of article 141 of Law No. 6.404/76 and CVM Instruction No. 165/91, the company must disclose, via the IPE System, in the "Notice to Shareholders" category, type "Other Notices", that the election of the board of directors may take place by this process, as this is important information to instruct the decision to be taken by shareholders in the assembly.
It should be observed that the definition of the number of members of the Board of Directors, when the corporate statute provides for a minimum and maximum number, must be the subject of deliberation in the general assembly of shareholders.
Thus, without prejudice to the provisions of paragraph 7 of article 141 of Law No. 6.404/76 13, the most appropriate procedure is the disclosure, in the call notice, that in its agenda the number of members to compose the Board of Directors of the Company will be deliberated.
13 Art. 141
§ 7º Whenever, cumulatively, the election of the board of directors takes place by the multiple voting system and the holders of ordinary or preferred shares exercise the prerogative to elect a councilor, it shall be assured to a shareholder or group of shareholders linked by a voting agreement that hold more than 50% (fifty percent) of the shares with voting rights the right to elect councilors in a number equal to those elected by the other shareholders, plus one, regardless of the number of councilors that, according to the statute, compose the body.
Furthermore, the administration's proposal must contain the possible scenarios regarding the number of members to be elected, either through multiple voting or, if this is not requested, by majority vote. This is because this represents fundamental information for minority shareholders, in order to subsidize their mobilization regarding the multiple voting process.
In this line, it is recommended that the controlling shareholder/administration inform the number (fixed or minimum) of councilors for a certain mandate that would be elected by multiple or majority voting (for example, 10 members), such number could be increased by up to 2 members due to separate elections (that is, reaching the number of 11 or 12 councilors).
According to item I of articles 30 and 31 of CVM Instruction No. 480/09, issuers must send, via the IPE System, category "Assembly", type "EGA", "AGESP" or "AGDEB", species "Call Notice", the call notices for extraordinary, special, and debenture holder assemblies, whose publications follow the mold of article 124, paragraph 1, item II, of Law No. 6.404/76.
We remind that Law No. 12.431/11 altered provisions of Law No. 6.404/74, which came to provide in the sole paragraph of article 121 that, in public companies, the shareholder may participate and vote remotely in the general assembly, in accordance with CVM regulation.
Although the aforementioned regulation has not yet been issued, it is worth noting that the CVM has publicly manifested that there is no impediment for companies to hold an assembly in which remote voting is used. To this end, it is recommended that companies ensure that the means chosen to confer remote voting: (a) are made available to all shareholders; (b) preserve the security of the votes, including allowing the verification of the quality of shareholder of the persons casting the vote; and (c) guarantee the possibility of subsequent verification of how each shareholder voted.
3.2.2. Administration Proposal for EGA
a. Administration Proposal – Category A
As provided for in paragraph 3 of article 135 of Law No. 6.404/76 and item II of article 30 of CVM Instruction No. 480/09, the documents pertinent to the matter to be debated in the EGA must be made available to shareholders, at the company's headquarters, upon publication of the first announcement of calling of the general assembly.
In the case of issuers registered in category A, it is worth alerting that CVM Instruction No. 481/09 came to dispose of the minimum documents and information that must be made available to shareholders whenever the general assembly is called to deliberate on certain matters provided for in the Instruction. Such documents and information must be sent to the CVM, via the IPE system (see item 8.3), by the date of publication of the first calling announcement, except when Law No. 6.404/76, CVM Instruction No. 481/09, or another norm issued by the CVM establishes a longer period.
Thus, when convening a general shareholders' meeting, issuers registered in Category A must pay attention to the provisions of CVM Instruction No. 481/09, especially regarding Articles 8 to 21.
The submission of documents and information required in Articles 8 and 10 to 21 for issuers registered in Category A must be made, via the IPE System, in the manner specified below, upon the publication of the first notice of convening the general shareholders' meeting:
a) information provided for in Article 8 of CVM Instruction No. 481/09, to be included in the management proposal and sent via the "Assembleia" (Shareholders' Meeting) category, type "AGO/E", "AGE" or "AGESP", species "Management Proposal", subject "Matter of special interest to a related party";
b) information indicated in Article 10 of CVM Instruction No. 481/09, to be sent via the "Assembleia" category, type "AGO/E", "AGE", species "Management Proposal", subject "Election of members of the Board of Directors and Audit Committee";
c) information provided for in Article 11 of CVM Instruction No. 481/09, to be included in the management proposal and sent via the "Assembleia" category, type "AGO/E", "AGE" or "AGESP", species "Management Proposal", subject "Bylaw Reform";
d) Information indicated in Article 12 of CVM Instruction No. 481/09 to be sent via the "Assembleia" category, type "AGO/E", "AGE", species "Management Proposal", subject "Remuneration of executives and board members";
e) information indicated in Article 13 of CVM Instruction No. 481/09, to be sent via the "Assembleia" category, type "AGO/E", "AGE", species "Management Proposal", subject "Share-based Compensation Plan";
f) information indicated in Article 14 of CVM Instruction No. 481/09, to be sent via the "Assembleia" category, type "AGO/E", "AGE", species "Management Proposal", subject "Capital Increase", with the exception of:
(i) the opinion of the Audit Committee on capital increase (Item 4 of Annex 14 of CVM Instruction No. 481/09), to be sent via the "Board Meeting" category, type "Audit Committee", species "Minutes", subject "Opinion on capital increase";
(ii) reports and studies that supported the setting of the issuance price in a capital increase (Item 5, letter "k", of Annex 14 of CVM Instruction No. 481/09) to be sent via the "Economic-Financial Data" category, type "Valuation Report", subject "Report used in capital increase";
(iii) valuation report of assets (Item 5, letter "s", sub-item "iii", of Annex 14 of CVM Instruction No. 481/09) to be sent via the "Economic-Financial Data" category, type "Valuation Report", subject "Asset valuation report".
g) information indicated in Article 15 of CVM Instruction No. 481/09, to be sent via the "Assembleia" category, type "AGO/E" or "AGE", species "Management Proposal", subject "Issuance of debentures" or "Issuance of subscription warrants";
h) information indicated in Article 16 of CVM Instruction No. 481/09, to be sent via the "Assembleia" category, type "AGO/E", "AGE", species "Management Proposal", subject "Capital Reduction", with the exception of the Audit Committee's Opinion on capital reduction (Item 3 of Annex 16 of CVM Instruction No. 481/09), to be sent via the "Board Meeting" category, type "Audit Committee", species "Minutes", subject "Opinion on capital reduction";
i) information indicated in Article 17 of CVM Instruction No. 481/09, to be sent via the "Assembleia" category, type "AGO/E", "AGE", "AGESP", species "Management Proposal", subject "Creation of preferred shares or alteration in their preferences, advantages or redemption or amortization conditions";
j) information indicated in Article 18 of CVM Instruction No. 481/09, to be sent via the "Assembleia" category, type "AGO/E", "AGE", species "Management Proposal", subject "Reduction of mandatory dividend";
k) information indicated in Article 19 of CVM Instruction No. 481/09, to be sent via the "Assembleia" category, type "AGO/E", "AGE", species "Management Proposal", subject "Acquisition of control of another company", with the exception of the studies and reports that supported the negotiation of the control acquisition price (Item 13 of Annex 19 of CVM Instruction No. 481/09), to be sent via the "Economic-Financial Data" category, type "Valuation Report", subject "Report used in control acquisition";
l) information indicated in Article 20 of CVM Instruction No. 481/09, to be sent via the "Assembleia" category, type "AGO/E", "AGE", species "Management Proposal", subject "Right of Withdrawal", noting that the reports that serve as the basis for the calculation provided for in Item 9, letter "a", of Annex 20 of CVM Instruction No. 481/09 must be sent via the "Economic-Financial Data" category, type "Valuation Report", subject "Report based on net asset value at market prices or other criterion accepted by CVM"; and
m) information indicated in Article 21 of CVM Instruction No. 481/09, to be sent via the "Assembleia" category, type "AGO/E", "AGE", species "Management Proposal", subject "Choice of Appraisers".
Even in cases where the meeting will address more than one of the subjects related in CVM Instruction No. 481/09, a single "Management Proposal" document containing the respective attachments must be submitted via the IPE System, mentioning in the subject the respective items of the agenda.
It should be noted that, even when the subjects included in the agenda of the Annual General Shareholders' Meeting are not provided for in CVM Instruction No. 481/09, it is necessary to present a proposal with the information and documents necessary for shareholders to understand the matter to be deliberated at the meeting. This is because, as provided for in CVM Instruction No. 480/09, the information and documents provided to shareholders must be true, complete and consistent, drafted in clear, objective and concise language and must not induce investors to error.
Furthermore, in any case, the management proposal must not be limited to listing the items to be submitted to the shareholders' meeting deliberation, as such a procedure would make it a mere repetition of information already contained in the Convening Notice.
To facilitate reading by users, it is recommended that the document with the Management Proposal contain an index.
In line with the provisions of art. 6, item II, of CVM Instruction No. 481/09, companies must disclose information about candidates for the Board of Directors and Audit Committee proposed by non-controlling shareholders, giving these candidates the same transparency and disclosure currently given to candidates proposed by the management or by controlling shareholders by virtue of art. 10 of CVM Instruction No. 481/09. This procedure will also facilitate the exercise of voting rights by holders of Depositary Receipts traded abroad (such as ADRs). In this sense, it is emphasized that, if it is possible for holders of DRs to exercise voting rights, it appears necessary that this prerogative be exercised to the maximum degree of equality possible with shareholders. The suggested form of disclosure is via the IPE System, in the "Notice to Shareholders" category, type "Other Notices", including in the Subject that it is an indication of candidates for member of the board of directors/audit committee presented by minority shareholders. We draw attention to the fact that some companies already adopt this practice and allow in their Bylaws that non-controlling shareholders present candidates for the Board of Directors, provided that these shareholders present information about the candidates up to a certain deadline prior to the date scheduled for the meeting. These practices, however, must be regarded as faculties granted to shareholders to facilitate their articulation and the exercise of rights granted in Law No. 6,404/76. According to the understanding issued by SEP in the analysis of a concrete case, requirements for the presentation of information about candidates prior to the meeting, even if provided for in the Bylaws, cannot be used as an imposition to obstruct the right of shareholders provided for in Law No. 6,404/76 to indicate and elect members to the Board of Directors and the Audit Committee at the very moment of the meeting. Whenever there is a need to resubmit the Management Proposal due to compliance with CVM requirements or spontaneously, the Company must indicate in the "Reason for Resubmission" field the fact motivating the resubmission. In the case of resubmission of the proposal to comply with a requirement formulated by CVM, reference must be made to the letter issued.
b. Management Proposal – Category B
As provided for in paragraph 3 of Article 135 of Law No. 6,404/76 and in item II of Article 31 of CVM Instruction No. 480/09, the documents pertinent to the matter to be debated at the Annual General Shareholders' Meeting must be made available to shareholders at the company's headquarters, upon the publication of the first notice of convening the general shareholders' meeting. Thus, even if CVM Instruction No. 481/09 does not apply to issuers registered in Category B, these must send, on the same date of publication of the first notice of convening the meeting, by virtue of the provisions of paragraph 3 of Article 135 of Law No. 6,404/76 and item II of Article 31 of CVM Instruction No. 480/09, the documents and information necessary for the exercise of voting rights at the AGMs, including those expressly required by Law No. 6,404/76 or by Instructions issued by CVM. The submission of documents and information necessary for the exercise of voting rights must be done via the IPE System, category "Assembleia", type "AGO/E", "AGE" or "AGESP", as appropriate, species "Management Proposal", choosing relevant subjects according to the guidelines provided in this letter (see item "a"). It should be noted that, even in cases where the meeting will address more than one subject, a single "Management Proposal" document containing the respective attachments must be submitted via the IPE System, mentioning in the subject the respective items of the agenda. In any case, the management proposal must not be limited to listing the items to be submitted to the shareholders' meeting deliberation, as such a procedure would make it a mere repetition of information already contained in the Convening Notice. The documents must contain the information necessary for the understanding of the matters to be discussed at the meeting. As provided for in CVM Instruction No. 480/09, the information and documents provided to shareholders must be true, complete and consistent, drafted in clear, objective and concise language and must not induce investors to error. In line with the provisions of art. 6, item II, of CVM Instruction No. 481/09, companies must disclose information about candidates for the Board of Directors and Audit Committee proposed by non-controlling shareholders, giving these candidates the same transparency and disclosure currently given to candidates proposed by the management or by controlling shareholders by virtue of art. 10 of CVM Instruction No. 481/09. This procedure will also facilitate the exercise of voting rights by holders of Depositary Receipts traded abroad (such as ADRs). In this sense, it is emphasized that, if it is possible for holders of DRs to exercise voting rights, it appears necessary that this prerogative be exercised to the maximum degree of equality possible with shareholders. The suggested form of disclosure is via the IPE System, in the "Notice to Shareholders" category, type "Other Notices", including in the Subject that it is an
indication of candidates for member of the board of directors/audit committee presented by minority shareholders. We draw attention to the fact that some companies already adopt this practice and allow in their Bylaws that non-controlling shareholders present candidates for the Board of Directors, provided that these shareholders present information about the candidates up to a certain deadline prior to the date scheduled for the meeting. These practices, however, must be regarded as faculties granted to shareholders to facilitate their articulation and the exercise of rights granted in Law No. 6,404/76. According to the understanding issued by SEP in the analysis of a concrete case, requirements for the presentation of information about candidates prior to the meeting, even if provided for in the Bylaws, cannot be used as an imposition to obstruct the right of shareholders provided for in Law No. 6,404/76 to indicate and elect members to the Board of Directors and the Audit Committee at the very moment of the meeting. To facilitate reading by users, it is recommended that the document with the Management Proposal contain an index. Whenever there is a need to resubmit the Management Proposal due to compliance with CVM requirements or spontaneously, the Company must indicate in the "Reason for Resubmission" field the fact motivating the resubmission. In the case of resubmission of the proposal to comply with a requirement formulated by CVM, reference must be made to the letter issued.
3.2.3. Summary and minutes of the AGM
Issuers registered in Categories A and B must mandatorily submit, in accordance with items III and IV of Articles 30 and 31 of CVM Instruction No. 480/09, the summaries of decisions, on the same day of the holding of the meeting, via the IPE System, category "Assembleia", types "AGE", "AGESP" or "AGDEB", species "Summary of Decisions", as well as the minutes of the meetings, within 7 (seven) business days of their holding, via the IPE System, category "Assembleia", types "AGE", "AGESP" or "AGDEB", species "Minutes". In this sense, it is worth noting that the summary of decisions taken at the meeting (provided for in item III of Articles 30 and 31 of CVM Instruction No. 480/09) is not the same as the minutes of the AGM (provided for in item IV of Articles 30 and 31 of CVM Instruction No. 480/09), which, in accordance with paragraph 1 of Article 130 of Law No. 6,404/76, may be drawn up in the form of a summary of the events that occurred. Therefore, the summary provided for in item III of Articles 30 and 31 of CVM Instruction No. 480/09 deals only with the result of the deliberations of the meeting. It is worth noting that CVM Instruction No. 480/09 dispenses with the delivery of the summary of decisions to the issuer that delivers the minutes of the general shareholders' meeting on the same day of its holding, as provided for in paragraph 2 of Article 30 and the sole paragraph of Article 31. For the use of this facility, however, it is necessary that the issuer send the complete minutes of the general shareholders' meeting on the same day of the holding of the meeting. In this sense, we highlight that the minutes of the AGM must be accompanied, in the same file, by any opinions and dissenting votes, as well as by all documents referenced and related to the deliberations of the meeting, such as contracts. Whenever possible, AGM minutes filed with CVM should also contain the attendance list, the exact quorum for installation, as well as the qualification of shareholders, discrimination of the quantity, species and class of shares held by each one. It is also recommended that the minutes contain, at least, the indication of relevant shareholders who elected members to the board of directors and audit committee.
3.3. Projections
The disclosure of projections is information of a relevant nature, subject to the determinations of CVM Instruction No. 358/02, and the company's Disclosure Policy must contemplate the adoption of this practice.
CVM Instruction No. 480/09, in its Article 20, provides that the disclosure of projections and estimates is optional and determines that, when the issuer decides to disclose them, they must be:
a) included in the reference form; b) identified as hypothetical data that do not constitute a promise of performance; c) reasonable; and d) accompanied by the relevant premises, parameters and methodology adopted, and if these are modified, the issuer must disclose, in the appropriate field of the Reference Form, that it made changes to the premises, parameters and methodology of previously disclosed projections and estimates (paragraph 3).
As determined by paragraph 2 of Article 20 of CVM Instruction No. 480/09, projections and estimates must be revised periodically, at a time interval appropriate to the object of the projection, which in no case must exceed 1 (one) year.
The issuer must also compare, quarterly, in the "Commentary on the behavior of business projections" field of Forms ITR and DFP (see items 2.3.3 and 2.3.4), the projections disclosed in the Reference Form with the results actually obtained in the quarter, indicating the reasons for any differences (paragraph 4 of Article 20 of CVM Instruction No. 480/09). It is worth noting that whenever the premises of projections and estimates are provided by third parties, the sources must be indicated (paragraph 5 of Article 20 of CVM Instruction No. 480/09). If the company uses calculated financial metrics, such as EBITDA - earnings before interest, taxes, depreciation and amortization, it must present the reconciliation with the accounting items expressed directly in the financial statements, in accordance with CVM Instruction No. 527/12. Finally, if the disclosed projections are discontinued, this fact must be reported in the appropriate field of the Reference Form, accompanied by the reasons that led to their loss of validity, as well as disclosed in the form of a Relevant Fact, as provided for in CVM Instruction No. 358/02.
3.4. Shareholder Agreement
Without prejudice to the disclosure of a Relevant Fact regarding the signing of shareholder agreements, in accordance with Article 2 of CVM Instruction No. 358/02, issuers registered in Category A must submit to CVM, via the IPE System:
a) Shareholder agreements and other corporate pacts filed with the issuer, within 7 (seven) business days counted from their filing, category "Shareholder Agreement"; b) Information about shareholder agreements of which the controlling shareholder or controlled and affiliated companies of the controlling shareholder are parties, regarding the exercise of voting rights in the issuer or the transfer of the issuer's securities, containing, at minimum, date of signing, term of validity, parties and description of the provisions relating to the issuer, category "Information on shareholder agreements provided for in Article 30, item XIX, of IN No. 480/09".
It is worth noting that the alteration of its clauses, its extinction due to term or resolutory condition, or the signing of a new shareholder agreement implies its update with CVM.
3.5. Group Convention
According to item IX of Article 30 of CVM Instruction No. 480/09, the controlling company and its controlled companies that constitute, in the manner of Article 265 of Law No. 6,404/76, groups of companies, obligating themselves to combine resources or efforts to carry out their respective objects, or to participate in common activities or ventures, are obliged to send a copy of the convention to CVM, via the IPE System, category "Group Convention", within a period of up to 7 (seven) business days counted from its signing. It is worth noting that Law No. 6,404/76, when providing for Groups of Companies in Articles 265 to 277 (Chapter XXI), stipulated in the sole paragraph of Article 267 that only groups organized in accordance with the cited chapter may use the designation with the words "group" or "group of companies".
3.6. Bankruptcy Petitions and Sentences
Without prejudice to the disclosure of a Relevant Fact regarding the petition or confession of bankruptcy, in accordance with Article 2 of CVM Instruction No. 358/02, issuers must present to CVM, via the IPE System, the following documents provided for in Article 30, items XXVI and XXVII, and in Article 31, items XVII and XVIII, of CVM Instruction No. 480/09, on the same day of their knowledge by the issuer:
a) bankruptcy petition, provided it is based on a relevant value, via the category "Bankruptcy Petitions"; b) sentence denying or granting the bankruptcy petition, via the category "Bankruptcy Sentence", subjects "Sentence denying the bankruptcy petition" or "Sentence granting the bankruptcy petition", as appropriate.
It is alerted that the declaration of bankruptcy is one of the hypotheses for updating the Reference Form, in accordance with paragraphs 3 and 4 of Article 24 of CVM Instruction No. 480/09 (see item 2.3.2.b).
3.7. Petitions and Sentences Involving Judicial and Extrajudicial Recovery
Without prejudice to the disclosure of a Relevant Fact regarding the petition or declaration of judicial or extrajudicial recovery, in accordance with Article 2 of CVM Instruction No. 358/02, issuers must present to CVM, via the IPE System, the following documents provided for in Article 30, items XXI to XXV, and in Article 31, items XII to XVI, of CVM Instruction No. 480/09, within the deadlines indicated:
a) initial petition for judicial recovery, with all documents that support it, on the same day of the protocol in court, in the category "Information on Companies in Judicial or Extrajudicial Recovery", type "Initial Petition"; b) judicial recovery plan, on the same day of the protocol in court, in the category "Information on Companies in Judicial or Extrajudicial Recovery", type "Recovery Plan";
c) a judicial sentence denying or granting the request for judicial reorganization, indicating, in the latter case, the judicial administrator appointed by the judge, on the same day the issuer becomes aware of it, in the category “Information of Companies in Judicial or Extrajudicial Reorganization”, type “Sentences”; d) a request for homologation of the extrajudicial reorganization plan, with the accounting statements prepared specifically to support the request, on the same day of filing in court, in the category “Information of Companies in Judicial or Extrajudicial Reorganization”, type “Request for homologation of extrajudicial reorganization plan”; e) a judicial sentence denying or granting the homologation of the extrajudicial reorganization plan, on the same day the issuer becomes aware of it, in the category “Information of Companies in Judicial or Extrajudicial Reorganization”, type “Sentences”.
It is alerted that the decree of judicial reorganization and the judicial homologation of extrajudicial reorganization are hypotheses for updating the Reference Form, in accordance with paragraphs 3 and 4 of Article 24 of CVM Instruction No. 480/09 (see item 2.3.2.b).
3.8. Trading by administrators and related parties with securities issued by the company
As provided in Article 11, caput and paragraph 4, of CVM Instruction No. 358/02, directors, members of the board of directors, the fiscal council, and any bodies with technical and consultative functions created by statutory provision, are obliged to communicate to the publicly-held company (via the DRI) the quantity, characteristics, and manner of acquisition of the securities issued by it and by controlled or controlling companies, or referenced to it, which they hold:
a) within 5 (five) days after each transaction is carried out; b) on the first business day after assuming office; and c) when submitting the documentation for the registration of the company as publicly-held.
As set forth in paragraph 2 of Article 11, the natural persons mentioned in that article shall also indicate the securities that are owned by a spouse from whom they are not judicially separated, a partner, any dependent included in their annual income tax return, and companies directly or indirectly controlled by them.
To avoid duplication, when the same person is a member of the board of directors and the executive board, the securities held by them must be disclosed exclusively in the total amount of securities held by the members of the board of directors.
If the company presents information regarding the traded and held securities of controlling shareholders, only the positions of controlling shareholders who are not administrators (member of the board of directors, executive board, fiscal council, and technical or consultative bodies) should be reported, given that the positions of controllers who are administrators will be reported according to their executive function (board of directors, executive board, fiscal council, and technical or consultative bodies).
The DRI shall send, in accordance with paragraph 5 of Article 11 of CVM Instruction No. 358/02, the information subject to the cited article, monthly to the CVM, until 10 (ten) days after the end of each month in which changes in held positions are verified or in the month in which the appointment of the aforementioned persons occurs.
Such information must be forwarded via the IPE System, category “Securities Traded and Held (Article 11 of Instr. CVM No. 358)”, type “Consolidated Position” and “Individual Position”, noting that the model forms for completion are available on the CVM website, under the link “Document Submission”, “XML File Standards and others”.
With the objective of having complete and reliable information, it is requested that Companies voluntarily send the forms, even in months when no movements or changes in the positions of administrators and related parties have been verified. In this case, the forms must be filled out with the information that, during that period, there was no trading in securities of the company, its controlled, controlling, or affiliated companies, repeating the initial balance in the final balance.
It should be emphasized that this rule aims at the disclosure of all movements carried out by administrators and related parties, with securities issued by the Company and its controlled or controlling companies. Thus, any transaction carried out by the aforementioned persons must be reported to the DRI and will result in the obligation to send to the CVM the Form provided for in paragraph 6 of Article 11 of CVM Instruction No. 358/02 within 10 days after the end of the month in which such movement is verified, regardless of modification of the final balance.
Some companies disclose in the Form the motivation of relevant transactions carried out by administrators, which is a recommended practice.
The information must be forwarded in only two files, one containing the forms of the individual positions held by each administrator or related party and the other, the consolidated position of each body (executive board, board of directors, fiscal council, and technical or consultative bodies), noting that only the consolidated positions will be available to the external public in the IPE System.
In the “Day” field of each form, the date of the purchase or sale operation (and not the date of physical or financial settlement of the operation) must be reported.
3.9. Relevant Shareholding
By virtue of Article 12 of CVM Instruction No. 358/02, any natural or legal person, or group of persons, acting jointly or representing the same interest, who acquires or alienates a relevant participation in shares or class of shares representing the share capital of a publicly-held company, is obliged to, immediately after the transaction, communicate to the Company the change in their participation.
According to the wording of Article 12 of the aforementioned Instruction, it is noted that the relevant participation must be computed specifically with respect to the class or species of shares, in order to qualify the participation, allowing the identification of rights attributed to it.
It should also be noted that, in accordance with Article 20 of Instruction No. 358/02, the obligation of communication commented here:
a) applies to both transactions carried out on stock exchanges and in the over-the-counter market, organized or not, as well as those carried out without the intervention of an institution part of the distribution system in Brazil and abroad; and b) extends to transactions carried out directly or indirectly by the persons referred to in Article 12 of the aforementioned norm, whether such transactions take place through a controlled company or through third parties with whom a trust or portfolio management or share administration contract is maintained.
It is also alerted that indirect transactions are not considered those carried out by investment funds of which the persons mentioned in Article 12 are unitholders, provided that such funds are not exclusive, nor can the administrator’s trading decisions be influenced by the unitholders, as provided in the sole paragraph of Article 20 of CVM Instruction No. 358/02.
3.9.1. Recipient of the Obligation
In accordance with Article 12 of CVM Instruction No. 358/02, it is incumbent upon the acquirer or alienator of a relevant participation to send a notice to the publicly-held company, reporting the transaction (see items 3.9.6 and 3.9.7).
As provided in this article, the increase or reduction in relevant participation can occur both by an individual investor as well as by a group of persons, acting jointly or representing the same interest.
According to Article 20 of CVM Instruction No. 358/02, the aforementioned obligation to inform extends to transactions carried out indirectly through “third parties with whom a trust or portfolio management or share administration contract is maintained”, except, in accordance with the sole paragraph of the provision, for transactions carried out by funds under discretionary management.
It is extracted from Article 12 combined with Article 20 of the Instruction that the obligation to forward the information to the publicly-held company belongs to the investor, whether natural or legal person, as they, in the capacity of owner, will appear in the custody register of the shares and other securities of the publicly-held company.
Even in cases where operations take place through third-party contractors, whether they are administrators, managers, or representatives of non-resident investors, the obligation to disclose the information provided for in Article 12 remains with the investor, considering the totality of their direct and indirect transactions, however, it is necessary to pay attention to the specific responsibilities of administrators, managers, or representatives of non-resident investors commented on in this Circular (see items 3.9.5 and 3.9.8).
3.9.2. Object of the Relevant Participation
a. Shares
According to the caput of Article 12, the focus of the disclosure obligation is the shareholdings held directly and indirectly in the share capital of the publicly-held company.
b. Debentures convertible into shares, Subscription Warrants, Rights to subscribe for shares, Share Purchase Options, and others
As can be seen from the combined reading of the caput with paragraphs 1, 2, and 3 of Article 12 of CVM Instruction No. 358/02, the relevant participation also refers to any rights over shares and other securities mentioned in the same article.
For this purpose, debentures convertible into shares, subscription warrants, rights to subscribe for shares, share purchase options, and any other securities representative or convertible into shares, as well as any contracts that may result in the exercise of rights based on shares issued by a publicly-held company, must be considered.
Thus, financial derivative instruments that have physical settlement in shares issued by a publicly-held company are covered by these provisions.
In the case of financial derivative instruments that provide for exclusively financial settlement, the disclosure of the execution of such instruments is still recommended.
c. ADR, GDR, and BDR
American Depositary Receipts – ADRs, Global Depositary Receipts – GDRs, and other securities of Brazilian companies issued and/or listed abroad under foreign regulation must also be considered for the purposes of disclosure under Article 12 of CVM Instruction No. 358/02, insofar as they are titles representing shares of Brazilian publicly-held companies.
It is clarified that BDRs must also be considered for the purposes of disclosure provided for in the article in question, given the provision of Article 21 of CVM Instruction No. 358/02, which imposes on sponsoring companies of BDR programs levels II and III the rules of the aforementioned Instruction, provided they are compatible with the provisions applicable in the countries where the shares serving as collateral for such securities were issued.
It should be noted that in the case of the securities mentioned in the previous paragraphs, the acquisitions, movements, and alienations subject to reporting in a notice to the market are those that correspond to 5% or more of the class or species of the issuer's share represented by means of these titles.
d. Share Lending
It is worth noting that the investor or group of investors who attains, even through ownership of shares acquired by lending, a participation corresponding to 5% (five percent) or more of the species or class of shares representing the capital of a publicly-held company, must proceed with the disclosure of the declaration provided for in Article 12 of CVM Instruction No. 358/02.
Likewise, the shares subject to lending must be considered in the calculation of the increase or reduction of relevant participation for the purposes of the caput and paragraphs 1 and 4 of the same article.
In this sense, the declarations referred to in Article 12 of CVM Instruction No. 358/02 must discriminate the portion of the shares held by the declaring investor that was acquired or alienated through share lending.
The obligation to communicate the relevant participation partially or entirely composed of shares taken by lending is applicable regardless of the purpose to which these operations are intended.
e. Indirect Participation
The indirect participation referred to in CVM Instruction No. 358/02 refers to that held through a vehicle that is under the control or decisive influence of the investor, as illustrated by the examples below:
a) a company controlled, directly or indirectly, by the investor; b) an exclusive investment fund, whose only unitholder is the investor; c) an investment fund or portfolio where the administrator's decisions can be influenced by the investor; d) a person with whom the investor maintains a trust contract.
In examples “b”, “c”, and “d”, according to the rules mentioned in this Circular (see item 3.9.1), it is the investor who must proceed with the disclosure of the Declaration provided for in Article 12 of CVM Instruction No. 358/02, given the total of shares held by them directly and indirectly.
In cases where the indirect participation occurs through other companies, as in example “a” above, the indirect participation should only be taken into consideration, for the purposes of compliance with Article 12 of CVM Instruction No. 358, in cases where the relevant participation is reached, increased, or reduced by a group of persons, acting jointly or representing the same interest (see item 3.9.4).
Thus, if investor X does not hold any other direct or indirect shareholdings, but is the controlling shareholder of company Y, which in turn attains a participation corresponding to 5% of the ordinary or preferred shares of the publicly-held company, it is company Y that must proceed with the disclosure of the Declaration provided for in Article 12 of CVM Instruction No. 358/02, and investor X is not obliged to make another Declaration to disclose their indirect participation in the capital of the publicly-held company.
On the other hand, if investor X holds a direct participation in the publicly-held company and is also the controlling shareholder of company Y, which also holds a participation in the publicly-held company, it is investor X who must proceed with the disclosure of the Declaration provided for in Article 12 of CVM Instruction No. 358/02, if the sum of these participations reaches 5% or more of the ordinary or preferred shares of the publicly-held company.
As already commented, note that indirect transactions are not considered those carried out by investment funds of which the persons mentioned in Article 12 are unitholders, provided that such funds are not exclusive, nor can the administrator’s trading decisions be influenced by the unitholders.
3.9.3. Calculation of the Increase or Reduction of Relevant Participation
Regarding the increase in shareholding, the aforementioned Instruction determined the disclosure of a declaration on two occasions: (i) when the total direct and indirect participation reaches 5% or more of the species or class of shares representing the capital of a publicly-held company, that is, crossing the 5% mark (Article 12, caput); (ii) each time the relevant participation of the holder of 5% or more of the species or class of shares representing the capital of a publicly-held company increases by 5% of the total of the species or class of shares, that is, suffers a positive variation of 5% (Article 12, paragraph 1).
To illustrate the incidence of the mentioned situations, suppose that a holder of 4% (four percent) of a species of shares of a publicly-held company acquires another 2% (two percent) of this same species, totaling 6% (six percent) shareholding. In this case, by virtue of the caput of Article 12 of CVM Instruction No. 358/02, such an operation will entail the disclosure of an acquisition declaration, insofar as it crossed the 5% (five percent) shareholding mark.
If the investor increases this participation from 6% (six percent), acquiring, in a first moment, 4% (four percent) of the same species, and, in a second moment, 2% (two percent) of the same species, totaling a participation of 12% (twelve percent), the obligation to disclose a new relevant participation declaration will only materialize from the second acquisition, as, in accordance with paragraph 1 of Article 12 of CVM Instruction No. 358/02, it was at that moment that a positive variation of 5% (five percent) was verified.
Regarding the decreases in shareholding, CVM Instruction No. 358/02 prescribed the obligation to disclose a declaration on two occasions: (i) when the total direct and indirect participation of the holder of 5% or more of the species or class of shares representing the capital of a publicly-held company reaches the percentage of 5% of the total of this species or class, that is, decreases, crossing the 5% mark (Article 12, paragraph 4, first part); (ii) each time the relevant participation of the holder of 5% or more of the species or class of shares representing the capital of a publicly-held company is reduced by 5% of the total of the species or class, that is, suffers a negative variation of 5% (Article 12, paragraph 4, in fine).
Exemplifying, it is the same investor mentioned above, holder of 12% (twelve percent) of the total of a species of shares of a publicly-held company, who alienates 5% (five percent) of their participation, moving their position to 7% (seven percent), will have the obligation to disclose the declaration, based on Article 12, paragraph 4, in fine, due to the negative variation of 5% (five percent) in their participation.
A new disclosure of declaration will be demanded in the event that this same investor, holder of 7% (seven percent) of a species of shares of a publicly-held company, alienates at least 2% (two percent) of their shareholding, reaching the mark of 5% (five percent) of the total of shares of this species, as provided in the first part of Article 12 of CVM Instruction No. 358/02.
It is alerted that the variation in shareholding is not exclusively linked to a single operation, being also assessed cumulatively, and referring to the acquisition, alienation, or extinction of shares and rights over shares in both onerous (purchase and sale, exchange, and lending) and gratuitous (donation) modalities.
3.9.4. Group of persons acting jointly or representing the same interest
The obligation to communicate the variation in relevant shareholding covers not only individual investors, but also groups of persons acting jointly or representing the same interest. With the objective of facilitating the understanding of the concept covered by the expression “representing the same interest”, the following are exemplary hypotheses of linkage between shareholders:
a) link due to kinship, contract, or shareholders’ agreement that provides for voting rights; b) two or more companies that are under common control; c) a company and its direct or indirect controller; d) an exclusive fund and its only unitholder; and e) cases where there is common discretionary management of resources.
Considering the concept of indirect participation (see item 3.9.2.e) and except as provided in the following paragraph, if the relevant shareholding has been reached by a set of investors acting jointly or representing the same interest, the Declaration must discriminate them, one by one, with indication of their respective participations, even if none of these investors holds or moves the percentage of 5% (five percent) individually. It must also identify investors with indirect participation in the share capital of the publicly-held company and indicate the total participation held, directly and indirectly, by them.
If the relevant participation is reached by a set of investors under common discretionary management, the declaration to be filed by the administrator must identify the manager and indicate the total shareholding held, jointly, by the funds and portfolios under their management. It is not mandatory to discriminate the funds or portfolios and their respective shareholdings, according to a Decision of the CVM Collegiate Body, in an extraordinary meeting held on 11/03/2011 (CVM Process RJ/2011/2324) 14.
It is worth clarifying that, in accordance with the same Decision, in the case of a relevant participation being reached exclusively by a certain fund or portfolio under discretionary management, the Declaration must identify the manager and the total shareholding held, jointly, by all funds or portfolios under their management, and it is not mandatory to reveal the fund holding the relevant participation.
14 See http://www.cvm.gov.br/port/descol/resp.asp?File=2011-009ED11032011.htm
3.9.5. Responsibility of the Administrator or Manager
Pursuant to the sole paragraph of Article 14 of CVM Instruction No. 306, the administrator of a securities portfolio must ensure, through adequate internal control mechanisms, the permanent compliance with current regulations and rules, referring to the various alternatives and modalities of investment, the activity of portfolio administration itself, and standards of ethical and professional conduct.
Thus, in the event of the investor's omission regarding compliance with the provisions of Article 12 of CVM Instruction No. 358/02, the administrator of securities portfolios or the manager of resources may eventually be held administratively liable for providing such information, based on Article 14 of CVM Instruction No. 306/99, when: (i) representing the same interest of its clients, being directly and exclusively responsible for the operation; (ii) having unequivocal knowledge regarding the effective possibility of reaching a relevant shareholding; and (iii) being able to exercise discretionary political rights of shares of a company acquired for its clients.
3.9.6. Timing and Form of Disclosure
In accordance with Article 12 of CVM Instruction No. 358/02, the communication of an increase or decrease in relevant shareholding must be made immediately after the relevant shareholding referred to therein is reached. As a rule, to observe the deadline established in the aforementioned article, disclosure must occur in the case of the acquisition of shares on a stock exchange and in the over-the-counter market, until the beginning of the next trading session following the physical settlement of the operation, without prejudice to the provisions of Article 3 of the same instruction, in cases where the increase in shareholding constitutes a Relevant Fact (see item 3.9.6).
In cases where contracts are entered into that may result in the exercise of rights based on shares that, considering the shareholding already held by the investor, may represent a relevant percentage of the species or class of shares issued by a public company, disclosure must be made on the day the contract is executed.
The communication of relevant shareholding in debentures convertible into shares, subscription bonuses, other rights to subscribe to shares, and options to purchase shares or securities convertible into shares must be promoted both at the time of their acquisition and upon their exercise or conversion into shares, or, if applicable, upon their alienation or non-exercise.
As a rule, an increase in shareholding of more than 5% does not need to be disclosed in the press. Only in cases where the acquisition results from or was carried out with the objective of altering the composition of control or the administrative structure of the company, as well as in cases where the acquisition generates the obligation to make a public offer, in accordance with CVM Instruction No. 361/02, the acquirer, in addition to sending the aforementioned declaration to the Company, must promote its disclosure through the press or a news portal present on the Internet, in accordance with Article 3, paragraph 4, of CVM Instruction No. 358/02.
Alienators of relevant shareholding, in accordance with Article 12, paragraph 4, of the aforementioned regulation, must inform the alienation or extinction of their shares issued by a public company by sending a "Declaration of Alienation of Relevant Shareholding" to the Company.
The "Declarations of Acquisition of Relevant Shareholding" and the "Declarations of Alienation of Relevant Shareholding" must be sent to the Corporate Relations Department (DRI) of the public company.
Once received by the Company, the DRI must forward the declarations via the IPE System, category "Market Communication," type "Acquisition/Alienation of Relevant Shareholding (Article 12 of CVM Instruction No. 358)" and species "Declaration of alienation of relevant shareholding – Article 12, paragraph 4, of CVM Instruction No. 358/02" or "Declaration of acquisition of relevant shareholding – Article 12 of CVM Instruction No. 358/02". In the case of declarations that have been published, pursuant to paragraph 5 of Article 12 or voluntarily, the dates and newspapers in which the publication was carried out must be informed.
The DRI must, likewise, promote the necessary update of the information provided on the subject in the Reference Form, in accordance with paragraphs 3, items V, VI, and VII, and 4, item III, of Article 24 of CVM Instruction No. 480/09.
3.9.7. Content of the Declaration of Increase and Decrease in Shareholding
In the case of acquirers, the aforementioned communication must be made through a "Declaration of Acquisition of Relevant Shareholding," which must contain the following information:
a) name and qualification of the acquirer, indicating the registration number in the National Registry of Legal Entities or the National Registry of Individuals; b) objective of the shareholding and quantity sought, containing, if applicable, a declaration by the acquirer that its purchases do not aim to alter the composition of control or the administrative structure of the company; c) number of shares, subscription bonuses, as well as rights to subscribe to shares and options to purchase shares, by species and class, already held, directly or indirectly, by the acquirer or a person affiliated with him; d) number of debentures convertible into shares, already held, directly or indirectly, by the acquirer or a person affiliated with him, specifying the quantity of shares subject to possible conversion, by species and class; and e) indication of any agreement or contract regulating the exercise of voting rights or the purchase and sale of securities issued by the company.
It should be noted that, in the case of funds and managed portfolios, the information provided in letter "a" above must refer to the manager, as guided in this circular (see item 3.9.4).
The communication must also include the identification of the vehicles that led to the relevant acquisition (see item 3.9.2.e).
Regarding the objective of the shareholding provided for in letter "b" above, if applicable, the acquirer must inform that it is an operation carried out with the objective of hedging obligations assumed by him in derivative contracts.
Finally, it is recommended that, in the communication regarding the alienation or extinction of relevant shareholdings, the information provided in letters "a", "c", "d", and "e" above be included.
3.9.8. Disclosure of Declaration by Non-Resident Investor
In accordance with Articles 12 and 21 of CVM Instruction No. 358/02, it is the responsibility of the shareholder, regardless of his domicile, to disclose the declaration of acquisition or alienation of relevant shareholding by forwarding the information to the Company.
In the case of the non-resident investor, it is the responsibility of his legal representative, in accordance with item V of Article 5 of CMN Resolution No. 2.689/00, "to immediately communicate to the Central Bank of Brazil and to the Securities and Exchange Commission the cancellation of the representation contract referred to in item I of this article, as well as, observing the respective competencies, the occurrence of any irregularity of his knowledge."
In cases where the non-resident investor omits compliance with the provisions of Article 12 of CVM Instruction No. 358/02, his legal representative may eventually be held administratively liable, based on item V of Article 5 of CMN Resolution No. 2.689/00.
3.10. Trading Policy
The trading policy for securities, provided for in Article 15 of CVM Instruction No. 358/02, is optional. However, such a policy is very useful for issuers to establish a code of conduct for transactions involving, primarily, the shares issued by the company itself.
The preparation of a securities trading policy acquires greater relevance in the case of issuers who adopt or will adopt incentive programs for their employees and executives, such as stock option plans, because, by establishing internal rules, these companies define a general line of guidance, while simultaneously making it clear to their investors that they are attentive to the fairness and transparency of transactions involving the securities issued by them, with emphasis on those of a private nature.
In the event that issuers opt to prepare a trading policy, the requirements provided for in Article 15 of CVM Instruction No. 358/02 must be fully observed. Thus, the policy cannot be approved or altered pending a relevant act or fact not yet disclosed, and must necessarily:
a) have the express adherence of the controlling shareholders of the issuer, direct or indirect, directors, members of the board of directors, the supervisory board, and any bodies with technical or consultative functions, created by statutory provision, who wish to benefit from this policy and who must strictly observe it; b) include the prohibition of transactions, at least, in the 15 (fifteen) day period prior to the disclosure of the issuer's quarterly (ITR) and annual (DFP) information; and c) adopt procedures that ensure that under no circumstances will the issuer trade its own shares during the prohibition periods established in CVM Instruction No. 358/02 and in the trading policy itself.
Issuers registered in Category A who have this policy must forward it via the IPE System, category "Company's Stock Trading Policy," as provided for in Article 30, item XI, of CVM Instruction No. 480/09.
Although this obligation does not exist for issuers registered in Category B, it is recommended that they voluntarily send it in the manner described above.
If the issuer opts to prepare the trading policy and the disclosure policy as a single document, it must be forwarded via the IPE System, both through the category "Company's Stock Trading Policy" and through the category "Disclosure Policy for Relevant Act or Fact."
3.11. Disclosure Policy
The disclosure policy for relevant acts or facts is a mandatory document established in Article 16 of CVM Instruction No. 358/02, applicable to all issuers. Such a document must include, at a minimum, the channel or channels of communication used to disseminate information about relevant acts and facts (in accordance with Art. 3, §4, of CVM Instruction No. 358/02) and the procedures regarding the maintenance of confidentiality about relevant undisclosed information.
CVM Instruction No. 358/02 did not make any restriction or exception to the obligation to adopt the document. Therefore, as long as the company is regularly registered with the CVM, regardless of the corporate organization and the nature of the securities issued, it has the duty to adopt the disclosure policy.
Issuers must forward the Disclosure Policy to the CVM via the IPE System, category "Disclosure Policy for Relevant Act or Fact," as provided for in Article 30, item XII (for issuers registered in Category A), and in Article 31, item VII (for issuers registered in Category B), both of CVM Instruction No. 480/09.
If the issuer opts to prepare the trading policy and the disclosure policy as a single document, it must be forwarded via the IPE System, both through the category "Company's Stock Trading Policy" and through the category "Disclosure Policy for Relevant Act or Fact."
The disclosure policy for relevant acts or facts must be updated whenever there is any change in the communication channels used by the company, in accordance with paragraph 7 of Article 3 of CVM Instruction No. 358/02, prior to the implementation of the change.
3.12. Bylaws
In accordance with CVM Instruction No. 480/09, issuers registered in Category A are obligated, pursuant to item XIII of Article 30 of the aforementioned Instruction, to submit the consolidated bylaws, within 7 (seven) business days counted from the date of the assembly that deliberated the amendment. The submission must be made via the IPE System, in the category "Bylaws."
Although there is no regulatory obligation to submit the consolidated bylaws for issuers registered in Category B, it is recommended that they be forwarded in the manner described above, since such a document is mandatory presented at the time of the request for registration as a securities issuer in Category A or Category B.
3.13. Meetings of the Board of Directors and the Supervisory Board
CVM Instruction No. 480/09 determines, in items V and VI of Article 30, that issuers registered in Category A must forward, via the IPE System, the following information, within the deadlines indicated:
a) minutes of Board of Directors meetings, provided they contain deliberations intended to produce effects vis-à-vis third parties, within 7 (seven) business days counted from their execution, via the category "Administration Meeting," type "Board of Directors," species "Minutes"; b) minutes of Supervisory Board meetings, which approved opinions, within 7 (seven) business days counted from the date of disclosure of the act or fact subject to the opinion, via the category "Administration Meeting," type "Supervisory Board," species "Minutes."
It should be noted that issuers registered in Category B are obligated to forward only, via the IPE System, in the manner described above, excerpts of minutes of Board of Directors meetings whose agenda contains matters that may affect the rights or quotation of the issuer's securities admitted to trading in regulated securities markets, within 7 (seven) business days counted from their execution, as provided for in item V of Article 31 of CVM Instruction No. 480/09.
For issuers whose securities are admitted to trading in organized markets, it is recommended that the rules established by the entities administering such markets regarding the deadline for providing information on Board of Directors deliberations that impact the rights and the manner of trading of the securities issued by them be observed.
Due to the provision in Article 14 of CVM Instruction No. 480/09 which states that "the issuer must disclose true, complete, consistent information that does not mislead the investor," the content of the minutes of administration meetings must inform the reasons that led to any dissenting vote, as well as must contain any individual manifestations that have been presented by its members, in cases where such information may influence the investor's decision.
Finally, although minutes related to management meetings have not been included in the Instruction among the eventual mandatory presentation information, voluntary forwarding is recommended.
3.14. Communication of Auditor Change
As determined by Article 28 of CVM Instruction No. 308/99, it is the responsibility of the audited entity's administration, within 20 (twenty) days, to communicate the change of auditor to the CVM, whether or not there is a termination of the audit services contract, with justification for the change, which must include the consent of the replaced auditor.
Such communication must be sent to the CVM, by the Company's DRI, via the IPE System, category "Market Communication," type "Change of auditor (Article 28, CVM Instruction No. 308/99)."
It should be highlighted that, according to Article 29 of the aforementioned Instruction, it is the responsibility of the audited entity's supervisory board, when functioning, to verify the correct compliance by the administrators with the provisions of Article 28.
It should also be noted that, regardless of the disclosure of the aforementioned communication, the issuer must resubmit the Registration Form with the updated data of the independent auditor within 7 (seven) business days counted from the effective substitution, in accordance with Article 23 of CVM Instruction No. 480/09.
Chapter 4. Common Guidelines for Periodic and Event-Related Information
4.1. CVM and BM&FBOVESPA Cooperation Agreement
On 12/13/2011, in order to avoid overlapping efforts, the CVM and BM&FBOVESPA S.A. - Stock, Commodities, and Futures Exchange, signed an agreement establishing mechanisms of cooperation and organization of the supervisory activities exercised by the CVM and by this exchange, within the scope of their competencies, regarding the monitoring of the disclosure of information provision to the market by issuers with securities traded on the exchange.
As provided for in the agreement, the SEP and the Exchange's Regulation of Issuers Directorate (DRE) also signed, on 12/13/2011, a Work Plan, establishing the information and documents whose disclosure will be supervised by BM&FBOVESPA and how the SEP's action in support of the exchange will occur, whether by exercising consultative and training activities, or by acting with the companies, in cases where the exchange's requests are not met.
Thus, we draw the attention of issuers with securities traded on BM&FBOVESPA to the need to comply with the requests that may be issued by the exchange based on the aforementioned agreement.
The full version of the agreement can be consulted on the CVM's internet page (www.cvm.gov.br), under the link "Legislation and Regulation."
4.2. General Guidelines
The forwarding of periodic and event-related information provided for in CVM Instruction No. 480/09, CVM Instruction No. 481/09, Article 28 of CVM Instruction No. 308/02, and CVM Instruction No. 358/02 must be done as follows:
a) Registration Form, Reference Form, DFP and ITR Forms, and Quarterly Report of Securitization Company – via the Empresas.Net System (see item 8.1); b) other periodic information and event-related information – via the IPE System (see item 8.3).
It should be noted that the final deadlines for submitting periodic and event-related information are non-extendable, as there is no express authorization in the legislation to authorize, for any reason, a request for extension of the deadline for submitting this information.
For information whose submission deadline is not stipulated in CVM Instruction No. 480/09 in business days, it should be informed that, coinciding with Saturday, Sunday, or a national holiday, the final date for presenting periodic and event-related information will be the following business day, as established by Article 66 of Law No. 9.784/99.
An issuer who fails to comply with the obligations to submit periodic information provided for in CVM Instruction No. 480/09 will be subject to a daily coercive fine (see item 1.5.1), according to the values related in Article 58 of the aforementioned Instruction, without prejudice to the assessment of possible responsibilities of the administrators for non-compliance with the deadlines (and, when applicable, the receiver, the trustee, the judicial administrator, the judicial manager, or the liquidator), in accordance with Articles 9, item V, and 11 of Law No. 6.385/76.
Furthermore, it is emphasized that transgression of the provisions of CVM Instruction No. 358/02, as provided for in its Article 18, as well as the disclosure to the market or delivery to the CVM of false, incomplete, or inaccurate information that misleads the investor and the repeated non-observance of the deadlines fixed for the presentation of event-related information provided for in CVM Instruction No. 480/09, in accordance with its Article 60, constitutes a serious offense, for the purposes provided for in paragraph 3 of Article 11 of Law No. 6.385/76.
Without prejudice to the provisions of the two preceding paragraphs, it is finally highlighted that the company must keep the market informed about any difficulty in meeting the deadlines provided for the presentation of periodic and event-related information.
4.3. Obligation to Maintain a Website Page
CVM Instruction No. 480/09 determines, in its Article 13, that the issuer must send to the CVM and to the entities administering the markets in which its securities are admitted to trading the periodic and event-related information, according to content, form, and deadlines established in Chapter III of the Instruction, which provides, among other things, the obligation to send via an electronic system available on the CVM's page on the World Wide Web.
In addition, the periodic and event-related information provided for in the Instruction must also be placed and made available to investors at the issuer's headquarters for 3 (three) years, counted from the date of disclosure.
The issuer registered in Category A must also place and keep the information disclosed by it on its website page for 3 (three) years, counted from the date of disclosure.
It should be noted that this archiving rule refers to all periodic and event-related information provided for in the legislation and regulation issued by the CVM, not limited only to those listed in Article 30 of CVM Instruction No. 480/09. Thus, there is a need to archive communications provided for in CVM Instruction No. 358/02, such as, for example, those regulated in Articles 11 and 12 of this Instruction.
It is also necessary to clarify that there is a requirement for the effective archiving of information on the company's website. The simple insertion of a link on the company's website, directing investors to documents archived on the CVM or exchange website, in the IPE System, is not considered a valid procedure for compliance with the provision of the regulation.
4.4. Confidentiality Request
In accordance with Article 56 of CVM Instruction No. 480/09, the SEP may request the sending of additional information and documents beyond those required by this Instruction or ask for clarification on information and documents sent, through communication sent to the issuer, granting a deadline for compliance with the request. Such information and documents will be considered public by the SEP, as provided in paragraph 2 of Article 56 of Law No. 480/11.
As provided in Article 56, paragraph 3, of CVM Instruction No. 480/09, exceptional requests for confidential treatment of such information and documents must be accompanied by the presentation of reasons why the issuer believes that their disclosure to the public would place the issuer's legitimate interest at risk.
According to paragraphs 4 and 5 of Article 56, confidential information must be sent inside a sealed envelope, addressed to the Presidency of the CVM, with the word "confidential" appearing on the envelope, and the issuer and its administrators, directly or through the DRI, will be responsible for immediately disclosing to the market the information for which the CVM has granted confidential treatment, in the event that the information escapes control or if there is an atypical fluctuation in the quotation, price, or quantity traded of the issuer's securities.
It is worth noting that CVM Instruction No. 480/09 provides that the SEP may, in any way, determine that the issuer disclose the information or document, if it understands that the information and documents subject to the request are relevant or differ in some way from what was previously disclosed by the issuer.
It is also worth remembering that, in accordance with Article 7 of CVM Instruction No. 358/02, the CVM, at the request of administrators, any shareholder, or on its own initiative, may decide on the provision of information that has failed to be disclosed, in the form of the caput of Article 6 of the same Instruction.
Such request must be addressed to the President of the CVM in a sealed envelope, in which the word "Confidential" must appear, in accordance with paragraph 1 of the cited article.
4.5. Documents in Foreign Languages
By analogy to the provision in Article 22, paragraph 1, of Law No. 9.784/99 and observing the interpretation given to Article 13 of the Federal Constitution combined with Article 224 of the Brazilian Civil Code, all documents drafted in a foreign language to have legal effects in the country must be translated into Portuguese, the official language in Brazil, which is why all information and documents presented through the IPE and Empresas.Net Systems must be translated into the Portuguese language.
In this sense, documents provided to foreign exchanges that, in accordance with Article 2 of CVM Instruction No. 248/96, must be disclosed by the issuer, may, if necessary, exceptionally, be archived in a foreign language, with the issuer required to provide for the subsequent archiving of the translated version of the document, in the shortest possible time.
Chapter 5. Special Rules on Issuers
5.1. Issuers with Significant Market Exposure
In accordance with Article 34 of CVM Instruction No. 480/09, issuers with significant market exposure are those that cumulatively meet the following requirements:
a) have shares traded on an exchange for at least 3 (three) years; b) have timely complied with their periodic obligations in the last 12 (twelve) months; and c) whose market value of shares in circulation is equal to or greater than R$5,000,000,000.00 (five billion reais), according to the closing quotation on the last business day of the quarter prior to the date of the public offering registration request for the distribution of securities.
The status of issuer with significant market exposure must be declared by the issuer in the public offering registration request for the distribution of securities, through a document signed by the DRI containing:
a) a declaration that the issuer meets the requirements indicated above; and b) a memory of the calculation made by the issuer to verify the market value of shares in circulation.
It is worth highlighting that the procedure regarding the analysis of public offering registration requests for the distribution of securities for such issuers, regulated in Articles 6-A and 6-B of CVM Instruction No. 400/03, altered by CVM Instruction No. 482/10, is carried out with greater speed.
5.2. Issuers in Special Situations
5.2.1. Issuers in Extrajudicial Recovery
In addition to the periodic and occasional information provided for in CVM Instruction No. 480/09 for issuers in a "normal" situation, issuers in extrajudicial recovery must send reports on compliance with the payment schedule and other obligations established in the extrajudicial recovery plan to the CVM, with a frequency not exceeding 90 (ninety) days, as provided in Article 35 of the Instruction. These reports must be sent through the IPE System, category "Information on companies in judicial or extrajudicial recovery", type "Report on Compliance with the Plan".
It is alerted that paragraph 3 of Article 44 of CVM Instruction No. 480/09 provides that whenever an issuer in a special situation has its administrators replaced by a liquidator, judicial administrator, judicial manager, intervener, or similar figure, this person will be equated to the DRI for all purposes provided for in the legislation and regulation of the securities market.
It is worth noting that, in addition to sending the aforementioned documents, issuers must update their registration data with the CVM, notably regarding the change in the company's situation and its responsible person, by sending the Registration Form, within 7 (seven) business days counted from the fact that caused the alteration, in accordance with Article 23 of CVM Instruction No. 480/09. It is worth noting that the responsible person's data must also be updated through the IPE System (see items 2.3.1, 8.2, and 8.3).
5.2.2. Issuers in Judicial Recovery
Article 36 of CVM Instruction No. 480/09 only exempts issuers in judicial recovery from submitting the Reference Form, and this exemption remains valid until the submission of the detailed report to the court at the end of the recovery process.
Thus, these issuers must send, through the IPE System, the other periodic and occasional information provided for in the Instruction, including the following information provided for in its Article 37, within the respective specified deadlines:
a) monthly demonstrative accounts accompanied by the judicial administrator's report, in the category "Information on Companies in Judicial or Extrajudicial Recovery", type "Monthly demonstrative accounts"; b) recovery plan (see item 3.7); c) declaration of bankruptcy during the process (see item 3.6); and d) detailed report presented by the judicial administrator at the end of the recovery, in the category "Information on Companies in Judicial or Extrajudicial Recovery", type "Detailed Report".
It is alerted that paragraph 3 of Article 44 of CVM Instruction No. 480/09 provides that whenever an issuer in a special situation has its administrators replaced by a liquidator, judicial administrator, judicial manager, intervener, or similar figure, this person will be equated to the DRI for all purposes provided for in the legislation and regulation of the securities market.
It is worth noting that, in addition to sending the aforementioned documents, issuers must update their registration data with the CVM, notably regarding the change in the company's situation and its responsible person, by sending the Registration Form, within 7 (seven) business days counted from the fact that caused the alteration, in accordance with Article 23 of CVM Instruction No. 480/09. It is worth noting that the responsible person's data must also be updated through the IPE System (see items 2.3.1, 8.2, and 8.3).
5.2.3. Issuers in Bankruptcy
Article 38 of CVM Instruction No. 480/09 only exempts the issuer in bankruptcy from submitting periodic information.
Therefore, these issuers must send to the CVM, through the IPE System, the occasional information provided for in the Instruction, including the following information provided for in Article 39 of CVM Instruction No. 480/09, within the respective specified deadlines:
a) report on the causes and circumstances that led to the situation of bankruptcy, in the category "Information on Companies in Bankruptcy", type "Causes and circumstances of bankruptcy"; b) demonstrative accounts of administration, in the category "Information on Companies in Bankruptcy", type "Demonstrative accounts of administration"; c) any other accounting information presented to the judge in the bankruptcy process, in the category "Information on Companies in Bankruptcy", type "Other accounting information"; d) accounts presented at the end of the bankruptcy process, in the category "Information on Companies in Bankruptcy", type "Accounts presented at the end of the bankruptcy process"; e) final report on the bankruptcy process, in the category "Information on Companies in Bankruptcy", type "Final report"; and f) sentence closing the bankruptcy process, in the category "Information on Companies in Bankruptcy", type "Closing sentence".
It is alerted that paragraph 3 of Article 44 of CVM Instruction No. 480/09 provides that whenever an issuer in a special situation has its administrators replaced by a liquidator, judicial administrator, judicial manager, intervener, or similar figure, this person will be equated to the DRI for all purposes provided for in the legislation and regulation of the securities market.
It is worth noting that, in addition to sending the aforementioned documents, issuers must update their registration data with the CVM, notably regarding the change in the company's situation and its responsible person, by sending the Registration Form, within 7 (seven) business days counted from the fact that caused the alteration, in accordance with Article 23 of CVM Instruction No. 480/09. It is worth noting that the responsible person's data must also be updated through the IPE System (see items 2.3.1, 8.2, and 8.3).
5.2.4. Issuers in Liquidation
Article 40 of CVM Instruction No. 480/09 exempts the issuer in liquidation only from submitting periodic information.
Therefore, these issuers must send to the CVM, through the IPE System, the occasional information provided for in the Instruction, including the following information listed in Article 41 of CVM Instruction No. 480/09, within the respective specified deadlines:
a) act of appointment, dismissal, or substitution of the liquidator, in the category "Information on Companies in Liquidation", types "Appointment of liquidator", "Dismissal of liquidator", or "Substitution of liquidator", as applicable; b) general list of creditors prepared by the liquidator, in the category "Information on Companies in Liquidation", type "General list of creditors"; c) definitive general list of creditors, in the category "Information on Companies in Liquidation", type "Definitive general list of creditors"; d) final report and balance sheet of the liquidation, in the category "Information on Companies in Liquidation", type "Final report and balance sheet of the liquidation"; e) other reports, opinions, and accounting information, in the category "Information on Companies in Liquidation", type "Other reports, opinions, and accounting information"; and f) act of closing the liquidation, in the category "Information on Companies in Liquidation", type "Act of closing the liquidation".
It is alerted that paragraph 3 of Article 44 of CVM Instruction No. 480/09 provides that whenever an issuer in a special situation has its administrators replaced by a liquidator, judicial administrator, judicial manager, intervener, or similar figure, this person will be equated to the DRI for all purposes provided for in the legislation and regulation of the securities market.
It is worth noting that, in addition to sending the aforementioned documents, issuers must update their registration data with the CVM, notably regarding the change in the company's situation and its responsible person, by sending the Registration Form, within 7 (seven) business days counted from the fact that caused the alteration, in accordance with Article 23 of CVM Instruction No. 480/09. It is worth noting that the responsible person's data must also be updated through the IPE System (see items 2.3.1, 8.2, and 8.3).
Chapter 6. Relevant Corporate Events and Other Guidelines
6.1. Guidelines Common to Ordinary and Extraordinary General Meetings
6.1.1. Representation of Shareholders in Meetings
Paragraph 1 of Article 126 of Law No. 6.404/76 establishes that a shareholder may be represented in a meeting by a proxy appointed for less than 1 (one) year, who is a shareholder, administrator of the company, or lawyer, and that, in the open company, the proxy may also be a financial institution, with the fund manager representing the condominium owners.
CVM Instruction No. 481/09 provides, in its Article 5, that the call notice must list the documents required for shareholders to be admitted to the meeting.
The Instruction allows the company to request the prior deposit of the documents mentioned in the call notice, if the bylaws contain a provision on the matter, but determines that the shareholder who attends the meeting equipped with the required documents may participate and vote, even if they failed to deposit them previously.
Thus, the impediment of participation in a meeting by the representative of a shareholder who failed to adopt the procedure of early delivery of the instrument of mandate as established by the company constitutes a violation of Law No. 6.404/76 and Article 5 of CVM Instruction No. 481/09.
It is also worth noting that, in a meeting held on 06/24/2008 (CVM Process RJ/2008/1794), the CVM Collegiate issued an understanding that, although Law No. 6.404/76 conditions the representation of shareholders on the presentation of a proxy, neither the Civil Code nor the S.A. Law require the recognition of signature or consularization of proxies.
Thus, the company may always, at its discretion, dispense with the recognition of signature and consularization of proxy instruments granted by shareholders to their representatives.
The Collegiate also understood that there is no obstacle to proxies being granted electronically, given that Provisional Measure 2200-2/01 expressly recognizes the legal validity of documents signed electronically. According to the decision, any mechanism that ensures the authorship and integrity of electronic proxies and is admitted as valid by the parties involved, notably the company, can be used for this purpose.
6.1.2. Public Proxy Requests
CVM Instruction No. 481/09, which regulated the information and documents that companies must disclose to instruct the exercise of their shareholders' voting rights in meetings, also established norms to discipline public proxy requests for the exercise of voting rights.
For the purposes of CVM Instruction No. 481/09, public proxy requests are considered:
a) requests that employ public communication means, such as television, radio, magazines, newspapers, and pages on the worldwide web; b) requests directed to more than 5 (five) shareholders, when promoted, directly or indirectly, by the administration or by a controlling shareholder; and c) requests directed to more than 10 (ten) shareholders, when promoted by any other person.
Proxy requests that do not fall into any of the above scenarios will be considered private requests, not subject to the procedures provided for in the aforementioned instruction.
It is worth noting that investment funds whose decisions on the exercise of voting rights in meetings are taken discretely by the same manager are considered as a single shareholder, in accordance with CVM Instruction No. 481/09.
15 See http://www.cvm.gov.br/port/descol/resp.asp?File=2008-024D24062008.htm
According to the Instruction, any public proxy request for the exercise of voting rights must be sent to all shareholders with voting rights in the meeting object.
A copy of the draft proxy and the other information required in Article 23 of the Instruction, including the identification of the natural or legal persons who promoted, organized, or funded the proxy request, even partially, must be sent to the CVM, on the date of the start of the request realization, through the IPE System, category "Assembly", type "AGO", "AGO/E", "AGE", or "AGESP", as applicable, species "Material regarding public proxy requests".
For this obligation to be fulfilled, interested shareholders must send the public proxy request, accompanied by all information required in Article 23 of CVM Instruction No. 481/09, to the DRI until the business day prior to the date of the start of the request realization (Article 26, paragraph 1, of the same Instruction).
In line with the provision in Law No. 6.404/76, CVM Instruction No. 481/09 determines that proxies subject to public requests must:
a) indicate a proxy to vote in favor, a proxy to abstain, and another proxy to vote against each of the proposals subject to the request; b) expressly indicate how the proxy must vote regarding each of the proposals or, if applicable, if they should abstain regarding such proposals; and c) be restricted to a single meeting.
When the public proxy request is carried out by the company, the administration must communicate to the market its intention to carry out the request up to 10 (ten) business days before the start of the campaign, indicating the matters for which proxies will be requested.
The objective of this rule is to enable the company's shareholders to have sufficient time to organize before the general meeting.
In this sense, the regulation stipulates that proxies subject to public requests promoted by the administration regarding the election of administrators and members of the fiscal council must allow the shareholder to vote both on the candidates indicated by the administration and on candidates indicated by shareholders representing at least 0.5% (half a percent) of the share capital.
Shareholders representing at least 0.5% (half a percent) of the share capital of the open company may also obtain a list containing the addresses of all other shareholders of the company, free of charge (see item 6.1.3).
Regarding the charges related to the public proxy request, CVM Instruction No. 481/09 establishes, in its Article 32, that requests promoted by the administration may be funded by the company. In the case of requests formulated by shareholders representing at least 0.5% (half a percent) of the share capital, the regulation provides that only expenses resulting from:
a) publication of up to 3 (three) announcements in the same newspaper in which the company publishes its financial statements; and b) printing and sending of proxy requests to the company's shareholders.
If the proposal supported by the shareholders is approved or at least one of the candidates supported by them is elected, the company must bear the total value of the reimbursable expenses incurred. On the other hand, if the shareholders' proposal is not accepted or the candidates supported by them are not elected, the company will be obliged to reimburse only 50% (fifty percent) of the reimbursable expenses.
Reimbursement must be made within 10 (ten) business days counted from the receipt of the request formulated to the company, which must be accompanied by all supporting documents of the reimbursable expenses incurred.
It is worth noting that the company that accepts electronic proxies through a system on the worldwide web will not be obliged to reimburse shareholders for expenses incurred with the realization of public proxy requests for the exercise of voting rights (Article 32 of CVM Instruction No. 481/09).
6.1.3. Request for Shareholder Address List (Article 126, paragraph 3, of Law No. 6.404/76)
The purpose of access to the address list of Article 126, paragraph 3, is to allow the representation of shareholders by proxy in meetings, regardless of prior proxy request by the company itself, increasing the possibilities of organization of non-controlling shareholders, aiming at the exercise of voting rights. If the shareholder wants to obtain the addresses of other shareholders for any other purpose than contacting them to represent them in meetings, using proxies, Article 126 cannot be invoked.
The express reference of paragraph 3 of Article 126 to paragraph 1 of the same article, combined with the fact that the matter is regulated in the article that deals with representation in meetings, leaves no doubt about the need for a convened meeting, or imminent to be convened, for the rule of paragraph 3 to apply.
CVM Instruction No. 481/09, which regulates public proxy requests for the exercise of voting rights, also disciplines the matter.
According to the Instruction, requests for address lists formulated by shareholders holding 0.5% (half a percent) or more of the share capital of the open company, based on Article 126, paragraph 3, of Law No. 6.404/76, must be attended to by the company within, at most, 3 (three) business days, and the company is prohibited from: (a) requiring any other justifications for the request; (b) charging for the provision of the shareholder list; or (c) conditioning the approval of the request to the fulfillment of any formalities or the presentation of any documents not provided for in paragraph 2 of Article 126, namely: (i) contain all the informative elements necessary for the exercise of the requested vote; (ii) allow the shareholder to exercise a vote contrary to the decision with the indication of another proxy for the exercise of this vote; and (iii) be directed to all holders of shares whose addresses are in the company.
According to Instruction CVM No. 481/09, the list of addresses must list all shareholders in descending order according to their respective number of shares, and it is unnecessary to identify the shareholding participation of each one.
6.1.4. Installation of the Fiscal Council and election of its members
Law No. 6,404/76 established, in Article 161, paragraph 4, item "a", that holders of preferred shares without voting rights or with restricted voting rights shall have the right to elect, in a separate vote, one member and respective alternate; the same right shall have minority shareholders, provided that they represent, together, ten percent or more of the shares with voting rights.
Article 240 of Law No. 6,404/76 also ensures that the functioning of the fiscal council will be permanent in mixed-economy companies and that one of its members, and respective alternate, will be elected by the minority ordinary shares and another by the preferred shares, if any.
When interpreting Article 161, paragraph 4, item "a", of Law No. 6,404/76, the CVM explained, through CVM Guidance Opinion No. 19/90, that in order for the right attributed by law to preferred shareholders not to become merely nominal, it must be understood that, in the separate vote of these shareholders for the election of their representative on the Fiscal Council, controlling shareholders cannot participate, even if they also hold preferred shares. Such participation, if admitted, would result in an effective restriction of the essential right to supervise and in non-equitable representation of interests, often contrary, which the law sought to protect.
In this sense, the understanding of the SEP, in consonance with the provisions of Guidance Opinion No. 19/90, is that, in election processes for the fiscal council provided for in Article 161, paragraph 4, item "a", and in Article 240 of Law No. 6,404/76, no shareholders who do not fit the concept of minority that the law sought to protect should participate; that is, in addition to controllers, persons linked to them should also not participate.
It is worth noting that the CVM Collegiate has confirmed, on more than one occasion, in sanctioning processes, that entities over which the company's controller has decisive influence cannot participate in the separate election of members of the fiscal council provided for in Article 161, paragraph 4, of Law No. 6,404/76, whether in the seat of the preferred shareholders or in the seat of the minorities.
CVM precedents have affirmed that to determine whether closed complementary pension entities can participate in the separate election of members of the fiscal council for companies that are subject to dominant influence from their sponsor or from the direct and indirect controllers of their sponsor, an analysis of the governance of the entity itself is necessary.
Thus, as already stated in the vote of President-Relator Marcelo Trindade in PAS CVM No. 07/05 16, the impediment to vote extends to complementary pension entities sponsored by the open company or by its holding companies when, cumulatively:
16 See http://www.cvm.gov.br/port/inqueritos/2007/rordinario/inqueritos/04_24_07-05.asp
a) the indication of the majority of its administrators falls to the sponsor or its controller, including when the tie-breaking vote falls to the representative of the sponsor or its controller; and b) no mechanism has been adopted that ensures that the deliberation for the choice of councilors to be elected by minority shareholders was taken with the majority participation of administrators elected by participants of the pension entity.
In the analysis of the existence of decisive influence of the controller over the other shareholders of the company, the governance structure of each shareholder will be taken into account, mainly.
It is worth noting that, as mentioned in the vote of Director Otávio Yazbek, within the scope of CVM Process No. RJ-2009-13179 17, the impediment to vote is directed at the shareholder. It is then up to the chairperson of the meeting to declare this impediment only in cases where the prohibition is evident. Thus, the chairperson of the general meeting should only impede the vote of shareholders in the separate election if it remains evident, in each case, that there is decisive influence of the controller or sponsor on the voting decision of the complementary private pension entity.
The chairperson of the meeting, after evaluating and concluding that the influence of the controller is not evident, must draw attention in the meeting (leaving, moreover, recorded in the respective minutes) to the understanding issued by the SEP in this Circular Letter, to the effect that it is up to each complementary private pension entity to evaluate whether its vote, to some extent, suffers influence from the controlling shareholder and, if it decides to vote in the separate election, it must be able to present, if questioned after the meeting, elements that allow demonstrating that there was no such influence. As provided in paragraph 2 of Article 161 of Law No. 6,404/76, the fiscal council, when functioning is not permanent, will be installed by the general meeting at the request of shareholders representing, at minimum, 0.1 (one tenth) of the shares with voting rights, or 5% (five percent) of the shares without voting rights, and each period of its functioning will end at the first ordinary general meeting after its installation.
CVM Instruction No. 324/00 fixes a scale reducing, based on social capital, the minimum percentages of share participation necessary for the request to install a Fiscal Council of an open company provided for in paragraph 2 of Article 161 of Law No. 6,404/76.
Thus, the minority shareholder has the right to request, in a general meeting, the installation of the Fiscal Council, observing the special quorum for installation provided in Instruction 324/00.
Once the installation is approved, the election of its members becomes mandatory 18. However, the percentage of share participation for the separate election, referred to in paragraph 4, (a), of Article 161 of Law No. 6,404/76, cannot be reduced by the CVM, since it does not fall under one of the hypotheses provided for in Article 291 of the same law.
For this reason, in cases where (i) there are no minority shareholders holding preferred shares; and (ii) minority shareholders holding ordinary shares do not reach the percentage for the separate election of a member of the fiscal council, the CVM's understanding 19 is that the shareholders present, including the controller, may elect the fiscal councilors by majority vote. The controlling shareholder is not obliged to participate in the election of the members of the fiscal council in the mentioned hypothesis, and if they do not, all councilors will be elected by the vote of the other shareholders, regardless of their participation in capital, since the council will be installed (Article 161, paragraph 2), and the election of its members is mandatory (Article 161, paragraph 4).
Furthermore, it is worth highlighting the understanding issued by the CVM Collegiate in the meetings of 05/06/2008 20 and 09/23/2008 21 (CVM Process RJ/2007/11086), to the effect that the requirement of "10% or more of the shares with voting rights" provided for in Article 161, paragraph 4 does not refer to the number of shares that the minority present at the meeting needs to hold to elect, in a separate vote, one member and respective alternate of the fiscal council, but rather to the number of shares with voting rights held by all minority shareholders of the company.
It is also alerted that CVM Instruction No. 481/09 provides that whenever the general meeting is convened to elect administrators or members of the fiscal council, the company registered in Category A must provide, at minimum, the information indicated in items 12.6 to 12.10 of the Reference Form, regarding the candidates indicated or supported by the administration or by controlling shareholders.
For their part, open companies registered in Category B must, in line with the provisions of Article 133, item V of Law No. 6,404/76 (in the case of OGM) and in Article 21, item VIII and Article 31, item II, both of CVM Instruction No. 480/09, send all documents necessary for the exercise of voting rights in general meetings, providing sufficient information about the candidates, in order to allow shareholders to deliberate on the matter.
In line with the provisions of Art. 6, item II, of CVM Instruction No. 481/09, companies must disclose information about candidates for the Board of Directors and Fiscal Council proposed by non-controlling shareholders, giving these candidates the same transparency and disclosure currently given to candidates proposed by the administration or by controlling shareholders by virtue of Art. 10 of CVM Instruction No. 481/09.
This procedure will also facilitate the exercise of voting rights by holders of Depositary Receipts traded abroad (as is the case with ADRs). In this sense, it is emphasized that, if voting is possible by holders of DRs, it appears necessary that such prerogative be exercised to the maximum degree of equality possible with shareholders.
The suggested form of disclosure is through the IPE System, in the category "Notice to Shareholders", type "Other Notices", including in the Subject that it is an indication of candidates for member of the fiscal council presented by minority shareholders.
Such information must be provided by companies registered in Categories A and B in the manner established in this Circular (see items 2.4 and 3.2), as the case may be.
17 See http://www.cvm.gov.br/port/descol/resp.asp?File=2010-035D09092010.htm 18 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=5489-0.HTM
a. Election of alternate members of the Fiscal Council
Article 161, paragraph 1, of Law No. 6,404/76 provides that the Fiscal Council will be composed of at least 3 (three) and at most 5 (five) members, and alternates in equal number, shareholders or not, elected by the general meeting.
In the understanding of the SEP, the election of alternate members of the Fiscal Council is mandatory, and the Fiscal Council must be composed of principal and alternate members in equal number, insofar as the indication of the alternate member is necessary to prevent the possibility of absence of the principal member, avoiding that shareholders are unable to exercise their fundamental right of supervision, provided for in Article 109, item III, of Law No. 6,404/76, through their elected representative.
6.1.5. Election of members of the Board of Directors
Law No. 6,404/76 provides that non-controlling shareholders may elect members to the board of directors through:
a) the multiple voting process provided for in the caput of Article 141; and b) the mechanism of separate election provided for in paragraph 4 of Article 141, in which they may elect one member and their alternate by a majority of holders, excluding the controlling shareholder:
(i) of shares issued by an open company with voting rights, representing at least 15% (fifteen percent) of the total of shares with voting rights; and (ii) of preferred shares without voting rights or with restricted voting rights issued by an open company, representing at least 10% (ten percent) of the social capital.
Article 239 of Law No. 6,404/76 also ensures the minority the right to elect one of the members of the board of directors, if a larger number does not fall to them through the multiple voting process, in mixed-economy companies.
The objective of introducing the separate voting mechanism for the election of representatives of preferred and minority shareholders in the fiscal and administrative councils is to make the body effectively representative, which contributes to the good governance of open companies.
For this reason, the SEP understands that the interpretation that the CVM has been making in CVM Guidance Opinion No. 19/90 and in sanctioning processes regarding participation in the separate election provided for in Article 161, paragraph 4, of Law No. 6,404/76 (see item 6.1.4), also applies to the separate election of Article 141, paragraphs 4 and 5, of Law No. 6,404/76, as well as to Article 239 of this Law.
The prerogative to elect members of the board of directors established in these devices belongs to minority or preferred shareholders whose will cannot be determined, directly or indirectly, by the controlling shareholder or by entities in which he, directly or indirectly, exercises decisive influence.
The SEP understands that the understanding established in the vote of President-Relator Marcelo Trindade in PAS CVM No. 07/05 22 (see item 6.1.4) also applies to the elections of members for the board of directors referred to in Articles 141, paragraphs 4 and 5, and 239 of Law No. 6,404/76. In the analysis of the existence of decisive influence of the controller over the other shareholders of the company, the governance structure of each shareholder will be taken into account, mainly.
It is worth noting that, as mentioned in the vote of Director Otávio Yazbek, within the scope of CVM Process No. RJ-2009-13179 23, the impediment to vote is directed at the shareholder. It is then up to the chairperson of the meeting to declare this impediment only in cases where the prohibition is evident. Thus, the chairperson of the general meeting should only impede the vote of shareholders in the separate election if it remains evident, in each case, that there is decisive influence of the controller or sponsor on the voting decision of the complementary private pension entity.
The chairperson of the meeting, after evaluating and concluding that the influence of the controller is not evident, must draw attention in the meeting (leaving, moreover, recorded in the respective minutes) to the understanding issued by the SEP in this Circular Letter, to the effect that it is up to each complementary private pension entity to evaluate whether its vote, to some extent, suffers influence from the controlling shareholder and, if it decides to vote in the separate election, it must be able to present, if questioned after the meeting, elements that allow demonstrating that there was no such influence.
Still regarding the election of administrative councilors by non-controlling shareholders, it is worth noting that in the meeting held on 04/11/2006 24, the CVM Collegiate deliberated to maintain the interpretation of Article 141, paragraph 5, of Law No. 6,404/76 given in the meeting of 11/08/2005 (CVM Process RJ/2005/5664), which, in cases where the company has only issued shares with voting rights, those who have the right to elect and remove one member and their alternate from the Board of Directors, in a separate vote in the general meeting, excluding the controlling shareholder, are the majority of holders who hold at least 10% of the total of shares with voting rights.
It is also clarified that Article 239 of Law No. 6,404/76, specifically aimed at mixed-economy companies, is directed at shareholders holding ordinary shares, as indicated by the reference to the device dealing with multiple voting. Article 239 does not require a percentage of share participation for its exercise and replaces, in mixed-economy companies, the mechanism of separate election provided for in Article 141, paragraph 4, item I. Being especially directed at shareholders holding ordinary shares, the use of Article 239 does not prejudice the exercise by preferred shareholders of the right to elect separately a member of the board of directors and their alternate, in the manner of Article 141, paragraph 4, II, of Law No. 6,404/76.
It is worth alerting that CVM Instruction No. 481/09, applicable to open companies registered in Category A, provides for the minimum documents and information that must be made available to shareholders whenever the general meeting is convened to deliberate on certain matters provided for in the Instruction. Such documents and information must be forwarded by the date of publication of the first call announcement, except when Law No. 6,404/76, CVM Instruction No. 481/09, or another norm issued by the CVM establishes a longer deadline.
It is highlighted that CVM Instruction No. 481/09, applicable to open companies registered in Category A, provides that whenever the general meeting is convened to elect administrators or members of the fiscal council, the company must provide, at minimum, the information indicated in items 12.6 to 12.10 of the Reference Form, regarding the candidates indicated or supported by the administration or by controlling shareholders (see items 2.4.2.a and 3.2.2.a).
Regarding open companies registered in Category B, it is worth noting that, in accordance with Article 133, item V of Law No. 6,404/76 (in the case of OGM), paragraph 3 of Article 135 of Law No. 6,404/76 (in the case of OGM) and Article 21, item VIII and Article 31, item II, both of CVM Instruction No. 480/09, it is mandatory to send all documents necessary for the exercise of voting rights in general meetings. Thus, sufficient information about the candidates must be provided, in order to allow shareholders to deliberate on the matter.
In line with the provisions of Art. 6, item II, of CVM Instruction No. 481/09, companies must disclose information about candidates for the Board of Directors and Fiscal Council proposed by non-controlling shareholders, giving these candidates the same transparency and disclosure currently given to candidates proposed by the administration or by controlling shareholders by virtue of Art. 10 of CVM Instruction No. 481/09.
This procedure will also facilitate the exercise of voting rights by holders of Depositary Receipts traded abroad (as is the case with ADRs). In this sense, it is emphasized that, if voting is possible by holders of DRs, it appears necessary that such prerogative be exercised to the maximum degree of equality possible with shareholders.
The suggested form of disclosure is through the IPE System, in the category "Notice to Shareholders", type "Other Notices", including in the Subject that it is an indication of candidates for member of the board of directors/fiscal council presented by minority shareholders.
We draw attention that some companies already adopt this practice and allow in their Bylaws that non-controlling shareholders present candidates for the Board of Directors, provided that these shareholders present information about the candidates until a certain deadline prior to the date scheduled for the meeting.
These practices, however, must be regarded as faculties granted to shareholders to facilitate their articulation and the exercise of rights granted in Law No. 6,404/76. According to the understanding issued by the SEP in the analysis of a concrete case, requirements for the presentation of information about candidates prior to the meeting, even if provided for in the Bylaws, cannot be used as an imposition to obstruct the right of shareholders provided for in Law No. 6,404/76 to indicate and elect members to the Board of Directors and the Fiscal Council at the very moment of the meeting.
Such information must be provided by companies registered in Categories A and B in the manner indicated in this circular (see items 2.4 and 3.2).
22 See http://www.cvm.gov.br/port/inqueritos/2007/rordinario/inqueritos/04_24_07-05.asp 23 See http://www.cvm.gov.br/port/descol/resp.asp?File=2010-035D09092010.htm 24 See http://www.cvm.gov.br/port/descol/resp.asp?File=2006-014D11042006.htm 25 See http://www.cvm.gov.br/port/descol/resp.asp?File=2005-045D08112005.htm
6.2. Incorporation, merger, and spin-off
The administration bodies or partners of the societies involved in incorporation, share incorporation, merger, or spin-off operations must sign a protocol containing the conditions of the operation, with the minimum information listed in the items of Article 224 of Law No. 6,404/76.
Such operations will be submitted to the deliberation of the general meeting of the companies through justification, in which the information contained in the items of Article 225 of the LSA will be exposed.
In the case of incorporation by the holding company of a controlled company, the justification presented to the general meeting of the controlled company must contain, in addition to the information provided for in Articles 224 and 225, the calculation of the substitution ratios of the shares of the non-controlling shareholders of the controlled company based on the value of the net assets of the shares of the holding company and the controlled company, with both assets evaluated according to the same criteria and on the same date, at market prices, or based on another criterion accepted by the Securities and Exchange Commission, in the case of open companies (Article 264 of Law No. 6,404/76).
According to the usual practice of open companies, the protocol and justification may be contained in a single document. The protocol and justification must be disclosed through the IPE System, category "Assembly", type "EGM" or "AGO/E", species "Justification of Incorporation, Spin-off or Merger" and "Protocol of Incorporation, Spin-off or Merger", from the date of publication of the conditions of the operation, in accordance with Articles 2 and 3 of CVM Instruction No. 319/99.
Without prejudice to the provisions of CVM Instruction No. 358/02, the Relevant Fact, which will contain the information set forth in Article 2, paragraph 1, of CVM Instruction No. 319/99, must be disclosed with a minimum advance of 15 days from the date of the general meeting that will deliberate on the protocol and justification.
The substitution ratios must be disclosed by the company both in the relevant fact (Article 2, paragraph 1, item III, of CVM Instruction No. 319/99), as well as in the Protocol (Article 224 of Law No. 6,404/76), highlighting that the criteria used and the values that served as the basis for the calculation of the substitution ratios must also be disclosed. Moreover, it is important to emphasize that the identification, in the relevant fact, of the experts or specialized company to evaluate the net assets of the company and the declaration of the existence or non-existence, regarding them, of any conflict or community of interests, current or potential, with the controller of the company, or with respect to minority shareholders of the company, or regarding the other society involved, its respective partners, or concerning the operation itself (Article 2, paragraph 1, item XIV, of CVM Instruction No. 319/99) does not confuse with the information referred to in Article 5 of CVM Instruction No. 319/99, which must be provided by the companies and professionals themselves who have provided services related to the operation.
The definitive evaluation reports must be made available to shareholders as soon as they are finalized, as determined in Article 4 of CVM Instruction No. 319/99. These documents must be sent, via IPE System, in the category "Economic-Financial Data" and type "Evaluation Report", identifying in the subject, whenever possible, the type of report and the operation to which they refer.
In accordance with paragraph 2 of Article 264 of the LSA, the evaluation of the assets of the societies in incorporation or merger operations involving a holding company and a controlled company or societies under common control will be made by a specialized company, in the case of open companies.
It should be emphasized that not only the protocol, justification, and evaluation reports, but also legal, accounting, financial opinions, evaluations, financial statements, studies, and any other information or documents that have been made available to the controlling shareholder or used by him, for the planning, evaluation, promotion, and execution of merger, incorporation, or spin-off operations involving public companies, must be mandatorily made available to all shareholders from the date of publication of the operation's conditions.
It is worth noting that the recommendations of Orientation Opinion No. 35/08 apply to merger, incorporation, and share incorporation operations involving a controlling company and its controlled companies or companies under common control. Thus, although the procedures described in the aforementioned opinion are not exclusive or exhaustive, the CVM understands that their adoption is an adequate way to comply with the fiduciary duties of administrators provided for in Articles 153, 154, 155, and 245 of Law No. 6,404/76.
In this sense, it is worth remembering that the CVM has already manifested itself, in a Market Communication released by this Autarchy on 05/27/2009, in the sense that the recommendation contained in the aforementioned opinion refers to the constitution of an independent committee for negotiating the conditions of the operation, so that its constitution for mere confirmation of a previously established exchange ratio distorts the purposes of such a body.
Moreover, it is not advisable to disclose any exchange ratio that the administration or controlling shareholder intends to apply to the intended operation before the completion of the independent committees' work, as this disclosure at an earlier stage may, in fact, influence the quotation of the shares issued by the involved companies until the conclusion of the negotiations.
Finally, in cases where the merger, spin-off, or incorporation operation entails a right of withdrawal, public companies that have shares admitted to trading on regulated markets must, as provided in Article 20 of CVM Instruction No. 481/09, disclose the information provided for in Annex 20 to the aforementioned instruction, in the manner described in this Circular (see item 3.2).
6.2.1. Requests for waiver of compliance with requirements (CVM Deliberation No. 559/08)
On 11/18/08, CVM Deliberation No. 559/08 was issued, which attributed competence to the SEP to express the CVM's opinion regarding the recognition of situations where its action to demand compliance with certain requirements is not justified, in cases of operations involving public companies related to the incorporation of a controlled company by a controlling company, incorporation of a controlling company by a controlled company, merger of a controlling company with a controlled company, incorporation of shares of a controlled or controlling company, or incorporation, merger, and share incorporation of companies under common control, provided that the requirements listed in the Deliberation are present.
The SEP's manifestation in these cases may refer only to the non-necessity of observing the following requirements:
a) preparation of a report based on the net asset value of the shares of the controlling and controlled companies, with both assets evaluated according to the same criteria and on the same date, at market prices, in accordance with Art. 264 of Law No. 6,404/76;
b) publication, in the press, of the Relevant Fact referred to in Art. 2 of CVM Instruction No. 319/99; and c) preparation of financial statements audited by an independent auditor registered with the CVM, in accordance with Art. 12 of CVM Instruction No. 319/99.
The SEP does not have competence to waive the publication of the Relevant Fact provided for in Art. 2 of CVM Instruction No. 358, of 2002.
It is up to the Company to assess whether a certain decision, act, or fact constitutes relevant information that should be disclosed in accordance with CVM Instruction No. 358/02.
6.3. Acquisition of a commercial company by a public company
Article 256 of Law No. 6,404/76 determines that the purchase, by a public company, of the control of any commercial company, will depend on the deliberation of the general meeting of the purchaser, specially convened to review the operation, whenever:
a) the purchase price constitutes a relevant investment for the purchaser (Article 247, sole paragraph); or b) the average price of each share or quota exceeds one and a half times the highest of the three values indicated below:
(i) average quotation of shares on the stock exchange or in the organized over-the-counter market, during the 90 (ninety) days prior to the date of contracting; (ii) net asset value (Article 248) of the share or quota, with the asset evaluated at market prices (Article 183, paragraph 1); (iii) net profit value of the share or quota, which may not exceed fifteen times the annual net profit per share (Article 187, VII) in the last two fiscal years, monetarily updated.
In principle, the aforementioned article does not apply to operations in which public companies acquire commercial companies through their controlled, affiliated, or wholly-owned subsidiaries, which are closed companies or present another corporate type.
Nevertheless, in the analysis of concrete situations, controlling shareholders and administrators may be held liable for abuse or deviation of power, respectively, if it is proven that a "vehicle" company was used in the acquisition of control of other societies to the detriment of the legitimate interests of the other shareholders of the public company.
Additionally, in its paragraph 2, Article 256 provides that "if the acquisition price exceeds one and a half times the highest of the three values referred to in item II of the caput [average quotation, net asset value adjusted to market, and 15 times the average of annual net profit per share of the last two exercises], the dissenting shareholder of the deliberation of the assembly that approves it will have the right to withdraw from the company through reimbursement of the value of their shares, in accordance with Article 137, observed the provisions of its item II".
In view of the above, upon the disclosure of the acquisition of a commercial company, the public company must inform whether the acquisition was carried out by the public company itself or through a controlled, affiliated, or wholly-owned subsidiary, as well as whether the operation will be submitted to the deliberation of the general meeting of shareholders and whether it will entail the right of withdrawal for its shareholders, as provided in the aforementioned Article 256.
It should be noted that such disclosure must contain, at a minimum, the information necessary to prove whether or not it is a case of holding a meeting and granting the right of withdrawal.
If the operation is to be subject to assembly deliberation, the period in which the assembly is intended to be held must be informed. Companies registered in Category A must, as provided in Article 19 of CVM Instruction No. 481/09, disclose, at a minimum, the information provided for in Annex 19 to the aforementioned Instruction, in the manner oriented in this Circular (see item 3.2).
Even if CVM Instruction No. 481/09 does not apply to issuers registered in Category B, they must send, on the same date of publication of the first announcement of the assembly convocation, by virtue of the provisions of paragraph 3 of Article 135 of Law No. 6,404/76 and item II of Article 31 of CVM Instruction No. 480/09, the documents and information necessary for the exercise of the right to vote.
It is worth highlighting that the report required by § 1 of Art. 256 of Law No. 6,404/76 is not confused with the evaluation required by § 2 of the same article, since its function is to subsidize the decision of shareholders to approve or not the operation, providing a benchmark or justifying the purchase price, and must be prepared by the criterion that the administrators understand to be the one that best evaluates that investment.
The evaluation report referred to in paragraph 1 of Art. 256, as well as other reports eventually produced for the purposes of items “a”, “b”, and “c” of item II of the caput of the same article, must be sent, via the IPE System, in the category "Economic-Financial Data" and type "Evaluation Report", identifying in the subject, whenever possible, the type of report and the operation to which they refer.
It is recommended that companies only carry out corporate restructurings involving acquired companies after the acquisition has been approved or ratified in a shareholders' meeting.
In the event of an operation subject to ratification by the general meeting of shareholders, it is recommended that such ratification, when possible, take place at the first general meeting held after the completion of the operation.
If the operation entails the exercise of the right of withdrawal, it must also be informed: (a) which shareholders may exercise the right of withdrawal, should they dissent from the deliberation of the Assembly, to be convened for the ratification of this acquisition (see item 6.5); (b) The reimbursement value, in reais (R$) per share; and (c) the deadline and procedures that dissenting shareholders must adopt to manifest themselves.
In these cases, public companies registered in Category A must also, as provided in Article 20 of CVM Instruction No. 481/09, disclose the information provided for in Annex 20 to the aforementioned instruction, in the manner oriented in this Circular (see item 3.2).
6.4. Conversion of shares
In cases of share conversion, without prejudice to the provisions of CVM Instruction No. 358/02, the administration's proposal, to be sent via the IPE System, category "Assembly", type "AGO/E", "AGE" or "AGESP", species "Administration Proposal", subject "Conversion of shares", must contain all relevant information, as well as be accompanied by all documents necessary for shareholders to make a decision, such as the reasons or purposes of the operation; the mandatory or optional nature of the operation and the eligibility for the withdrawal right of dissenting shareholders; the conversion relationship between the classes or species of shares; the criterion for determining the said conversion relationship; and the justification for adopting the said criterion in the conversion operation.
6.5. Right of withdrawal
Law No. 6,404/76 provides for the possibility of exercising the right of withdrawal in specific hypotheses, such as those provided for in Articles 137, 252, 256, and 264. If the matter deliberated in the general meeting gives rise to a right of withdrawal, the company must inform, at a minimum, the shares and classes to which withdrawal applies, the reimbursement value per share and its method of calculation, and the deadlines and procedures that shareholders of this Company, dissenting from the deliberation of the said Assembly, must adopt to exercise the right of withdrawal.
It is worth clarifying that, as provided in paragraph 1 of Article 137 of the LSA, "the dissenting shareholder of the assembly deliberation, including the holder of preferred shares without voting rights, may exercise the right to reimbursement of the shares of which he was proven to be the holder on the date of the first publication of the convocation notice of the assembly, or on the date of communication of the relevant fact object of the deliberation, if earlier".
By "date of communication of the relevant fact" must be understood the date of publication of the Relevant Fact in newspapers of large circulation habitually used by the company, in accordance with Article 157, paragraph 4, of Law No. 6,404/76 and Article 3, paragraph 4, of CVM Instruction No. 358/02.
Thus, the right of withdrawal would only be due to shares acquired before the day of publication of the first convocation notice of an assembly or of the relevant fact, whichever occurred first, including shares acquired between the period of document disclosure via the IPE System and its publication in the press.
Article 137, item II, of Law No. 6,404/76 stipulates that, in the cases mentioned in items IV and V of Article 136 of the same law, the holder of a share of species or class that has liquidity and dispersion in the market will not have the right to withdraw, considering that there is:
a) liquidity, when the species or class of share, or certificate representing it, integrates a general index representative of a portfolio of securities admitted to trading in the securities market, in Brazil or abroad, defined by the Securities and Exchange Commission; b) dispersion, when the controlling shareholder, the controlling company, or other companies under its control hold less than half of the species or class of share.
Considering that, currently, there is no regulation on the matter at the CVM, it is understood that the indices considered for liquidity purposes must be those admitted to trading on futures exchanges, currently Ibovespa and IBrX-50.
It is also worth noting that, in the 10 (ten) days subsequent to the end of the period referred to in items IV and V of the caput of Article 137 of Law No. 6,404/76, it is optional for the administration bodies to convene the general assembly to ratify or reconsider the deliberation, if they understand that the payment of the reimbursement price of the shares to the dissenting shareholders who exercised the withdrawal right will put the financial stability of the company at risk.
For this reason, the administration's decision to reconsider the deliberation of the AGO and/or AGESP, in accordance with Article 137, paragraph 3, of Law No. 6,404/76, must, as a rule, be the object of a Relevant Fact, within the aforementioned deadline. The administration's decision to ratify the said deliberation must, as a rule, be the object of a Market Communication.
Public companies registered in Category A must also, as provided in Article 20 of CVM Instruction No. 481/09, disclose the information provided for in Annex 20 to the aforementioned instruction, in the manner oriented in this Circular (see item 3.2).
6.6. Capital increase by private subscription
In cases of capital increase, by private subscription, it is necessary that the administration's proposal contain all relevant information, as well as be accompanied by all documents necessary for shareholders to make a decision, such as:
a) justification regarding the need to carry out the operation; b) main characteristics of the operation: quantity of shares to be issued by species and potential dilution of shareholding; issue price; criterion adopted for determining the issue price and detailed information on the economic aspects that underpinned the choice of this criterion; deadlines and procedures to be observed by shareholders in exercising the right of preference and in the subscription and payment of the issued shares; and treatment regarding surpluses of unsubscribed securities (in accordance with paragraph 7 of Article 171 of Law No. 6,404/76); c) Evaluation Report and other documents that subsidized the fixing of the issue price; d) copy of the opinion of the fiscal council, if it is functioning, with divergent votes, if applicable; e) inform (a) whether shareholders who do not wish to exercise their preference rights to subscription may negotiate them on the stock exchange or request the assignment of their rights; and (b) the deadlines for negotiation or assignment of such rights; and f) inform whether the shares to be issued as a result of the increase in share capital will participate on equal terms in all benefits, including dividends and eventual capital remunerations that may be approved in the exercise. If they participate pro rata tempore, inform from which moment they will fully participate in all benefits.
Public companies registered in Category A must also, as provided in Article 14 of CVM Instruction No. 481/09, disclose the information provided for in Annex 14 to the aforementioned instruction, in the manner oriented in this Circular (see item 3.2), when the capital increase is deliberated in assembly.
Even if the capital increase operation is to be deliberated in a meeting of the Board of Directors, it is recommended to send the information provided for in the aforementioned Annex 14 of CVM Instruction No. 481/09, notably items 1, 2, 3, 5.a to 5.k, 5.n to 5.s, and 7, in order to better inform the market and, especially, the shareholders, since they will have to decide on their participation in the capital increase.
It is suggested to include such information in the Notice to Shareholders that deals with the capital increase, which must be disclosed through the IPE System (Category: "Notice to Shareholders"; Type: "Other Matters") making mention in the Subject about the disclosed information.
It is worth remembering that, in the understanding of the SEP, in line with the provisions of CVM Instruction No. 400/03 and CVM Orientation Opinion No. 08/81, in the case of capital increases with partial homologation, shareholders must be granted the right to review their investment.
It is worth highlighting, finally, that the Collegiate Board reached an understanding in the meeting held on 01/07/2014 that it is possible to effectuate homologation of a partially subscribed private capital increase, regardless of the realization of public distribution efforts for surpluses. In the decision, the Collegiate Board manifested in summary that the implementation of a capital increase by private subscription of shares that has been partially subscribed requires:
a) that the deliberation of the increase (as well as the material disclosed to shareholders in the form of CVM Instruction No. 481/09, in cases where the general assembly is the competent body to deliberate on the matter), expressly:
(i) provides for such possibility of partial subscription; (ii) specifies the minimum quantity of securities that must be subscribed (or the minimum amount of resources that must be ensured) for the increase to be effected; and (iii) specifies the maximum quantity of securities that may be subscribed (or the maximum amount of resources that must be ensured) within the scope of the capital increase; and b) that all relevant information necessary for shareholders to evaluate the capital increase and its multiple outcomes be provided to shareholders, including, among others, information on (i) destination of resources; (ii) dilution; and (iii) subscription commitments; c) that shareholders be granted the right to conditional subscription of the increase; and d) that at the end of the preference period, it be verified that at least the minimum amount indicated in the deliberation approving the increase has been subscribed; and e) By virtue of Article 80, item I, of Law No. 6,404/76 combined with Article 170, item VI, of the same statute, the capital increase that admits partial subscription cannot be effected if the amount subscribed does not reach, at least, the minimum value indicated in the deliberation that approved the operation. In this hypothesis (and only in this hypothesis), there will be surpluses, whose treatment must follow the provisions of Article 171, paragraph 7 (sale on the stock exchange).
6.6.1. Surplus of shares in capital increase with credits
As provided in Article 171, paragraph 2, of Law No. 6,404/76, in the capital increase by capitalization of credits or subscription in goods, the right of preference will always be ensured to shareholders, and, if applicable, the amounts paid by them will be delivered to the holder of the credit to be capitalized or of the good to be incorporated.
According to the understanding of the SEP, capitalization with credits, however, does not exempt compliance with paragraph 7 of the same Article 171, observed the decision rendered by the CVM Collegiate Board on 01/07/2014 (see item 6.6) which establishes that the body that deliberates on the increase must dispose of the surpluses, being able to (i) order their sale on the stock exchange, for the benefit of the company, or (ii) allocate them, in proportion to the values subscribed, among the shareholders who have requested, in the bulletin or subscription list, reservation of surpluses.
Thus, in capitalization with credits, it must be given to shareholders who exercise their right of preference and manifest the intention, in the bulletin or subscription list, to subscribe to the surpluses, the right to compete with the surpluses resulting from the non-exercise of the right of preference by potential shareholders.
In this sense, such surpluses must be allocated among shareholders, in proportion to the values subscribed, in accordance with paragraph 7 of Article 171 of Law No. 6,404/76.
In the opinion of the SEP, the understanding that, since the holder of the credit uses it in the subscription of shares and the right of preference is exercised with the delivery of the amounts paid to the holder of the credit, there is no talk of surpluses, does not prosper.
Surpluses occur due to the non-exercise of the right of preference by potential shareholders, and it would be irregular for the holder of the credit to take such surpluses for himself, without granting the right to subscribe to these surpluses to other shareholders who exercised their right of preference and manifested interest in subscribing to them, in proportion to the values subscribed.
6.7. Capital reduction
Law No. 6,404/76 regulates capital reduction in its Articles 173 and 174 and stipulates that the general assembly may deliberate the reduction of share capital in two hypotheses: if there is a loss, up to the amount of accumulated losses, or if it is judged excessive.
It is worth noting that capital reduction operations must observe the provisions of Article 174 of Law No. 6,404/76, which determines that the reduction of share capital with restitution to shareholders of part of the value of the shares, or by the decrease in their value, when not fully paid, to the amount of the contributions, only becomes effective 60 (sixty) days after the publication of the minutes of the general assembly that deliberated it.
Whenever the general assembly is convened to deliberate on capital reduction, issuers registered in Category A must disclose, via the IPE System (see item 3.2.2), at a minimum, the following information required by CVM Instruction No. 481/09: (a) value of the reduction and new share capital; (b) detailed explanation of the reasons, form, and consequences of the capital reduction; (c) copy of the opinion of the fiscal council, if it is functioning, when the proposal for capital reduction is initiated by the administrators; (d) as applicable: (i) the restitution value per share; (ii) the value of the decrease in the value of the shares to the amount of contributions, in the case of unpaid capital; or (iii) the quantity of shares subject to reduction.
It is worth noting that, even if CVM Instruction No. 481/09 does not apply to issuers registered in Category B, they must send, on the same date of publication of the first announcement of convocation
from the assembly, by virtue of the provisions of paragraph 3 of article 135 of Law No. 6.404/76 and item II of article 31 of CVM Instruction No. 480/09, the documents and information necessary for the exercise of voting rights at General Shareholders' Meetings.
6.8. Stock Grouping
In the case of stock grouping, in the Relevant Fact disclosing the operation, the procedures to be adopted must be detailed in order to ensure shareholders the option to remain part of the shareholder body with at least one new unit of capital, should those shareholders manifest such intention within the period established in the general assembly that approved the grouping.
6.9. Trading Ban Period
Article 13 of CVM Instruction No. 358/02 establishes that, prior to the disclosure to the market of a relevant act or fact, trading with securities issued by the company, or referenced to them, is prohibited:
a) by the open company itself, by controlling shareholders, direct or indirect, directors, members of the board of directors, the fiscal council, and any bodies with technical or consultative functions, created by statutory provision, or by anyone who, by virtue of their position, function, or role in the open company, its parent company, its subsidiaries, or affiliates, has knowledge of the information regarding the relevant act or fact; b) by anyone who has knowledge of information regarding a relevant act or fact, knowing that it is information not yet disclosed to the market, especially those who have commercial, professional, or trust relationships with the company, such as independent auditors, securities analysts, consultants, and institutions part of the distribution system, who are responsible for verifying the disclosure of the information before trading with securities issued by the company or referenced to them; c) by administrators who leave the administration of the company before the public disclosure of a business or fact initiated during their management period, with the prohibition extending for a period of six months after their departure. The trading ban will also prevail when there is an intention to promote merger, total or partial spin-off, consolidation, transformation, or corporate reorganization. The aforementioned prohibitions will cease to be in effect as soon as the company discloses the relevant fact to the market, unless the trading with the shares could interfere with the conditions of the aforementioned businesses, to the detriment of the company's shareholders or the company itself. Furthermore, it is worth noting that the prohibition cited in letter "a" above does not apply to the acquisition of shares held in treasury, through private negotiation, resulting from the exercise of a purchase option according to the stock option grant plan approved in a general assembly. CVM Instruction No. 358/02, in its article 13, paragraph 3, item II, also prohibits trading with securities issued by the company, or referenced to them, by controlling shareholders, direct or indirect, directors, and members of the board of directors, whenever the acquisition or alienation of shares issued by the company, its subsidiaries, affiliates, or another society under common control is underway, or if an option or mandate has been granted for the same purpose. In this case, the trading ban must be observed during the periods in which the society is carrying out the acquisitions or alienations, and not necessarily throughout the entire validity period of the program. It is worth noting that in the case of a share repurchase program, as well as in the other prohibitions mentioned above, the prohibition on trading will not extend to transactions carried out in accordance with the trading policy approved by the company, in accordance with article 15 of CVM Instruction No. 358/02. Regarding the trading ban in the 15-day period preceding the
disclosure of quarterly and annual information, the rule establishes that such ban will not apply to the acquisition of shares issued by the company that are carried out in accordance with an investment plan previously approved by the company, in the manner provided in paragraph 3 of article 15 of the aforementioned instruction. To determine the ban period, the count of the 15 calendar days must be made excluding the day of disclosure (for example, for an ITR with a disclosure date set for 05/10, the ban period will be between 04/25 and 05/09). It is worth noting that trading on the day of disclosure itself is prohibited, before the information becomes public. It is also worth remembering that, regardless of the objective ban period on trading established in paragraph 4 of article 13 of CVM Instruction No. 358/02 (15 days prior to the date of disclosure of quarterly and annual information), trading with privileged information is prohibited once the administrator becomes aware of the financial statements. Attention is drawn to the fact that share lending is an operation that is also covered by the prohibition in article 13, including in cases where the person acts as the lender of the loan. This is not only because this operation consists, legally, of a transfer of ownership (even if temporary), but also because the loan contract allows the lender to opt for the incidence of the remuneration rate on the quote in effect on the date of closing or maturity of the contract. Finally, it is worth remembering that, in the event of advance disclosure of financial information, the trading ban period provided for in article 13, paragraph 4, of Instruction No. 358/02 is also advanced.
6.10. Transactions with Related Parties
In accordance with articles 153 to 156 of Law No. 6.404/76, administrators must conduct corporate business with diligence and loyalty, abstaining from interfering in operations in which they have a conflict of interest. Article 245 further provides that administrators must ensure that transactions between the company and its affiliates, subsidiaries, and parent companies observe commutative conditions or with adequate compensatory payment. To ensure compliance with such provisions, it is recommended that the approval of transactions between related parties be preceded by effective negotiation, in which persons without personal interests in the matter participate on behalf of the company. Furthermore, such transactions and the entire decision-making process preceding them must be documented in a manner that allows for subsequent verification, when necessary. In this sense, it is worth reiterating that CVM Advisory Opinion No. 35/08 enumerates guidelines that may be applicable to various transactions between related parties, and not only those that take the form of mergers, incorporations, and share incorporations. It is up to administrators to evaluate, by virtue of the nature and relevance of the transaction, whether and to what extent the measures listed in the aforementioned opinion must be observed.
6.11. Trading with Own-Emission Shares
The legal principle instituted through article 30 of Law No. 6.404/76 is that the company cannot trade with its own-issued shares, with the exceptions enumerated in its paragraph 1. Furthermore, in paragraph 2 of the cited article, the Law provided for the regulation of the acquisition of shares by the issuing company itself by CVM, which issued CVM Instruction No. 10/80, amended by CVM Instructions No. 268/97 and No. 390/03. Through CVM Instruction No. 10/80, CVM sought to establish the conditions under which companies could deliberate on the acquisition of shares of their own issuance, for cancellation or retention in treasury, and respective alienation, among which: (a) the statutory provision for deliberation by the board of directors; (b) the equity accounts originating the resources for acquisition and those that would be prohibited from being used as collateral; (c) the validity periods of the acquisition programs; (d) the percentage limits for acquisition relative to the volume of shares in circulation, by species and class; and (e) the political and equity rights attributable to treasury shares, among other points. It is worth noting that article 23 of the Instruction provides that, respecting the prohibition of article 2, CVM may authorize, in special and fully circumscribed cases and upon prior request, the carrying out of operations by the company with its own shares that do not fit within the other existing norms in the Instruction. Regarding the equity accounts originating the resources for share repurchase programs, article 7 of CVM Instruction No. 10/80 considers as available all profit reserve and capital accounts, except the following: legal, profits to be realized, revaluation, special for mandatory dividends not distributed. Regarding the use of balances from the reserve and current year profit accounts as collateral for transactions to acquire own-issued shares, ascertained through intermediate financial information, it is recalled that the CVM Collegiate, in the meeting held on 11/25/2008 (CVM Process RJ/2008/2535) 26, understood the employment of its use to be appropriate, supported by Law No. 6.404/76. For this purpose, it is necessary for the company's administration to observe the following prudential rules, which aim to ensure that repurchase operations carried out throughout a fiscal year and the payment of mandatory, fixed, or minimum dividends, at the end of the same, do not exceed the balance of profits or reserves, constituted in accordance with current legislation:
26 See http://www.cvm.gov.br/port/descol/resp.asp?File=2008-045D25112008.htm
a) segregation of values that, if it were the end of the fiscal year, would have to be set aside to cover reserves necessarily constituted and dividends mandatorily exigible, such as legal, statutory, and profits to be realized reserves, as well as the amount that would be destined for fixed or minimum (including cumulative) dividends and mandatory dividends; b) any other necessary retentions must be considered so that the value to be used for the payment of dividends and shares to be repurchased is fully backed by realized profits (financially available or very proximally available); c) the company's past regarding the typical behavior of the result in the remaining phase of the fiscal year and a projection for the result of the current fiscal year must be considered, in order to demonstrate all the prudence expected from the administration of an open company in this situation. If this projection is not to be disclosed by the Company, the Board of Directors must declare that it has received all this data and declare itself comfortable regarding the use of the values intended for the acquisition of own shares; and d) in any case, the use of the result of the current fiscal year for projected result values is prohibited. It is worth noting that article 2 of CVM Instruction No. 10/80 prohibits operations to acquire own-issued shares when, among other reasons, they require the use of resources exceeding the balances of available reserves. It is also highlighted that, in the meeting held on 11/11/2008 (CVM Process RJ/2008/9839) 27, the Collegiate also manifested itself in the sense that Instruction No. 10/80 allows the Board of Directors itself to deliberate on the cancellation of shares held in treasury, provided there is statutory authorization for the board of directors to deliberate on the acquisition of the company's shares (for purposes of cancellation or subsequent alienation) and that an extraordinary general assembly is subsequently convened to deliberate on the alteration of the statutory clause regarding the social capital of the respective company. It is worth noting that CVM Instruction No. 10/80 provides, in its article 24, that disobedience to its provisions implies the nullity of the operation, without prejudice to the responsibility of administrators and controlling shareholders. We draw attention to the fact that the guidelines contained in this item may be altered due to the proposal for the issuance of a new Instruction to regulate the trading by open companies of shares of their own issuance and derivatives referenced therein, object of Public Hearing Notice SDM No. 11/2013 28. Finally, article 25 of the norm establishes that the transgression of its articles 1, 2, 3, 6, 9, 12, and 16 constitutes a serious offense, for the purposes of paragraph 3 of article 11 of Law No. 6.385/76.
6.12. Bonus Issue of Treasury Shares
27 See http://www.cvm.gov.br/port/descol/resp.asp?File=2008-043D11112008.htm 28 See http://www.cvm.gov.br/port/audi/ed1113sdm.pdf
In a meeting held on 11/25/2008 (CVM Process RJ/2008/6446) 29, the CVM Collegiate understood that it is appropriate to alter the number of treasury shares, whenever the company approves any bonus issue of its shares, thereby correcting the numerical expression of the volume of own-issued shares held by the company, without this having as a consequence the modification of the balance of that equity account. The basis for this position is that the bonus issue constitutes a mere accounting procedure in which, by increasing the figure of social capital, in exchange for the reduction of profit reserve, the resulting delivery of shares does not represent a transfer of value from the company to its shareholders via profit distribution.
6.13. Dividends of Preferred Shares (article 203 of Law No. 6.404/76)
Article 203 of Law No. 6.404/76 determines that the provisions in articles 194 to 197 and 202 will not prejudice the right of preferred shareholders to receive the fixed or minimum dividends to which they have priority, including arrears, if cumulative.
Consequently, the reserves mentioned in articles 194 to 197, and that of which article 202, paragraph 5, of Law No. 6.404/76 speaks, cannot be constituted to the detriment of fixed or minimum dividends. Thus, if there is profit, even if unrealized, the fixed or minimum dividends must be distributed.
6.14. Communication on the Non-Payment of Mandatory Dividend Due to the Company's Financial Situation
Article 202, paragraph 4, of Law No. 6.404/76 establishes that the mandatory dividend may cease to be distributed in the fiscal year in which the administration bodies inform the Ordinary General Assembly that it is incompatible with the company's financial situation. The fiscal council, if in operation, must give an opinion on this information, and the administrators must send to CVM, within 5 (five) days of the holding of the general assembly, a justified exposition of the information transmitted to the assembly.
The justified exposition required in article 202, paragraph 4, of Law No. 6.404/76 must be sent via the IPE System (Category "Notice to Shareholders"; Type "Other notices"), mentioning in the Subject the information disclosed.
6.15. Late, Corrective, or Complementary Declarations of Dividends
In the case of late, corrective, or complementary declarations of dividends (or other benefits) due by open companies, the payment must be made to the persons holding the shares on the date of the late, corrective, or complementary declaration, or on another subsequent date, made public concomitantly with the declaration, and not to the holders of shares at the time of the original declarations. It is worth highlighting that this orientation is in line with the decision of the Collegiate in a meeting of 05/03/2006 (CVM Process SP/2004/0381) 30, in response to the consultation from SEP regarding the shareholder base to be used in the cited cases.
29 See http://www.cvm.gov.br/port/descol/resp.asp?File=2008-045D25112008.htm 30 See http://www.cvm.gov.br/port/descol/resp.asp?File=2006-017d03052006.htm
6.16. Competence of the Board of Directors to Deliberate on the Issuance of Debentures
Law No. 12.431/11 gave a new wording to article 59, paragraph 1, of Law No. 6.404/76, so that this provision now establishes that, in the open company, the board of directors may deliberate on the issuance of debentures not convertible into shares, unless there is a contrary statutory provision.
Regarding this, according to the Collegiate decision of 12/13/2011 (CVM Process RJ/2011/8312) , this new wording has immediate and unconditional applicability. That is, in the absence of a statutory provision that prevents deliberation by the board, the new legal text is in force and is capable of producing all its effects, so that the boards of directors of open companies can already, immediately, deliberate on the issuance of debentures not convertible into shares.
6.17. Composition of the Board of Directors
When consolidating the corporate bylaws, companies must pay attention to the provisions of article 143 of Law No. 6.404/76, regarding the composition of the board of directors of a corporation.
According to this legal command, the corporate bylaws must establish: (a) the number of directors, or the maximum and minimum allowed; (b) the duties and powers of each director; (c) term of office, not exceeding three years, re-election permitted; and (d) the method of replacement.
Therefore, it is recommended that those companies whose bylaws are out of compliance with the Law adopt the necessary measures (including timely convening of a general assembly, including in its notice the alteration of the bylaws in question) to correct any gaps that may exist in their respective corporate bylaws.
6.18. Request for Certificates of Entries in Corporate Books (article 100 of Law No. 6.404/76)
Article 100, paragraph 1, of Law No. 6.404/76 regulates the option to obtain a certificate of the entries in the Register of Registered Shares, the Register of "Transfer of Registered Shares", the Register of "Registered Beneficiary Parts", and the Register of "Transfer of Registered Beneficiary Parts".
Such certificate may be provided to any person provided that the purpose is the "defense of rights and clarification of situations of personal interest or of shareholders or of the securities market".
In this sense, it must be observed that, according to Collegiate decisions on the matter (see, for example, CVM Processes RJ/2003/13119 and RJ/2003/7260) 32, the company exercises, regarding certain records, a public function equivalent to that of agents delegated with state power (such as real estate registry offices), in view of the fact that the transfer of ownership of shares, and the constitution of real liens on them, is only completed with the transcription in the corporate books, or in the records that serve as their substitute.
31 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=7916-0.HTM 32 See http://www.cvm.gov.br/port/descol/resp.asp?File=2004-044D23112004.htm
However, conditioning access to the shareholder list to the purpose described in paragraph 1 of article 100 implies a judgment, by the company's administration, regarding the presence of a right to defend, or a situation to clarify, with recourse to CVM in case of denial of the request by the company's administration.
In a decision of 12/08/2009 (CVM Process RJ/2009/5356) 33, the CVM Collegiate manifested its understanding, in response to a consultation formulated by a market agent, regarding the main conditions for the granting of the certificate of entries in the corporate books in question, as well as regarding its content, highlighting the main aspects:
a) the provision in article 100, paragraph 1, does not oblige the open company to provide a certificate of the entries in the corporate books when the request is justified to facilitate the mobilization of shareholders to discuss topics related to the company and to participate in general assemblies; b) the request formulated based on this provision must present specific justification, even if brief, to legitimize its approval, and such justification must identify (i) the right to be defended or the situation of personal interest to be clarified, and (ii) to what extent the disclosure of the entries in the corporate books is necessary for the clarification of the situation of personal interest or defense of the right in question; c) the company is obliged to provide a certificate of the entries that are necessary and sufficient for the clarification of the situation of personal interest or the defense of the right identified in the request; d) the provision of the complete list of shareholders, based on the provision in paragraph 1 of article 100 of the LSA, only applies in cases where it is duly justified that the violated or about to be violated right is inherent to the quality of shareholder, and its defense is of interest to all shareholders; e) in this way, the provision of the complete list of shareholders is imposed, based on this provision, in the hypotheses where shareholders must act jointly to defend some right, due to the law or bylaws establishing a minimum quorum for petitioning before the Judiciary, Public Administration, or the company's bodies. Examples of this would be the liability action to be proposed by shareholders (article 159, paragraph 4, of the LSA), the action for full exhibition of the company's books (article 105, paragraph 4, of the LSA), and, furthermore, the request for a list aimed at facilitating the formation of the quorum necessary to convene the general assembly, provided that, in the latter example, it is demonstrated that the deliberation on some matter to be included in the agenda has the clear character of defense of rights. f) for the same reason, the granting of the complete list is also justified, in light of the provision in article 100, paragraph 1, in cases where the shareholder has legitimacy to act individually to defend a right, which belongs, however, to every and any shareholder. g) outside the hypotheses of defense of a collective or homogeneous individual right, the request for the provision of a certificate of the entries in the corporate books formulated with the purpose of facilitating the mobilization of shareholders to defend their interests does not meet the requirements established in article 100, paragraph 1, of the LSA.
33 See http://www.cvm.gov.br/port/descol/resp.asp?File=2009-047D08122009.htm
In light of this, it should be emphasized that it is not up to the applicant to invoke Article 100, paragraph 1, to gather non-controlling shareholders in order to complete the legal quorum for: (a) adoption of multiple voting rights, in accordance with Article 141; (b) separate election of members of the Board of Directors, in accordance with Article 141, paragraph 4; (c) separate election of the Fiscal Council, according to Article 161, since, as it is a matter to be submitted to the shareholders' meeting, the appropriate channel for this is Article 126, paragraph 3.
Furthermore, the mere commercial interest in obtaining the certificate, such as the offering of services, finds no support in paragraph 1 of Article 100 of Law No. 6.404/76.
It is worth citing that the CVM Collegiate Body, in meetings held on 02/23/2010 and 07/20/2010 (CVM Processes RJ/2010/2689 and RJ/2010/0620) 34 reiterated the understanding described above, established in the meeting of 12/08/2009.
Chapter 7. Appeals, Queries, Hearings, and Requests for Process Review
7.1. Appeals against decisions or understanding manifestations of the SEP
In accordance with CVM Deliberation No. 463/03, the deadline to appeal to the Collegiate Body decisions issued by the CVM Superintendents is 15 (fifteen) days counted from the interested party's knowledge thereof.
The Superintendent must, within 10 (ten) business days from receipt of the appeal, reform or maintain the appealed decision and, in the latter case, forward the process to the Collegiate Body even if they understood the appeal as untimely or inadmissible.
CVM Deliberation No. 510/06, which amended CVM Deliberation No. 463/03, provides that the appeal will be received with devolutive effect and, in case of justified fear of difficult or uncertain repair damage resulting from the execution of the decision, the Superintendent may, ex officio or upon request, grant suspensive effect to the appeal.
In case of denial (total or partial) of the suspensive effect request, the Superintendent must, immediately, notify the appellant and send a copy of the appeal and the decision to the CVM President, who will be responsible for re-examining the decision denying the suspensive effect, in accordance with item VI of CVM Deliberation No. 463/03.
It is worth noting that the CVM Collegiate Body, in a decision of 11/23/2010 (Process CVM RJ/2010/16497) , expressed itself in the sense that such provision does not apply to cases involving coercive fines.
The Superintendent will notify the appellant about the Collegiate Body's decision within 5 (five) business days.
Finally, it is highlighted that, upon request by a member of the Collegiate Body, the Superintendent who issued the appealed decision, or the appellant themselves, the Collegiate Body will appreciate the allegation of existence of error, omission, obscurity, or material inaccuracies in the decision, contradiction between the decision and its
34 See http://www.cvm.gov.br/port/descol/resp.asp?File=2010-028D20072010.htm and http://www.cvm.gov.br/port/descol/resp.asp?File=2010-007D23022010.htm 35 See http://www.cvm.gov.br/port/descol/decis.asp?File=7352-0.HTM
foundations, or doubt in its conclusion, correcting them if necessary, with the request forwarded to the Director who drafted the winning vote in the review of the appeal, within 15 (fifteen) days, and submitted by him to the Collegiate Body for deliberation.
7.2. Queries from public and foreign companies
Queries regarding the application of norms and regulations issued by the CVM and understanding of provisions of Laws No. 6.385/76 and 6.404/76 and subsequent amendments, must be submitted in writing, via protocol, by the DRI or equivalent person to the SEP, with the sender's identification.
If the query is made by legal representatives of the issuers, it must be accompanied by their respective powers of representation.
The formulation of the query must be clear regarding its object, avoiding generic form and theoretical queries, guiding towards the presentation of all elements and arguments deemed important for the CVM's conclusive manifestation.
Queries on accounting matters must be accompanied by a manifestation from the independent auditor on the subject.
It is worth highlighting that the presentation of a query by the issuer does not exempt it from compliance, within the due deadlines, with legal and regulatory obligations, even if object of the formulated query.
7.3. Communications with the SEP
In the case of forwarding questions, answers, appeals to decisions or understandings of the SEP, or petitions/representations, companies must use direct correspondence, with submission via the IPE System not being admitted, except when expressly requested by the SEP.
In this sense, it is worth highlighting that the submission of such correspondence via the IPE System, when not expressly requested by the SEP, has been used by some companies, causing, at times, embarrassment to their own administration or difficulty in tracking responses to requests or manifestations from this Superintendency.
It is emphasized that the deadlines for attending to requests contained in letters sent by the SEP must be counted as specified in the dispatch itself. When not specified, the deadline must be counted from the date of receipt of the Letter (date of signature of the AR).
The activities of direct service to public and foreign companies are divided in the SEP between the Company Monitoring Manageries 1 and 2 (GEA-1 and GEA-2), according to the activity sectors, according to the table below. Thus, for attendance to queries formulated by telephone contact, it is necessary to identify the company and/or its activity sector.
Activity Sector Management
Agriculture (sugar, alcohol, and cane) GEA-2
Food GEA-2
Leasing GEA-1
Banks GEA-1
Beverages and tobacco GEA-2
Stock exchanges/commodities and futures GEA-1
Toys and leisure GEA-1
Commerce (wholesale and retail) GEA-2
Foreign trade GEA-2
Communication and IT GEA-2
Civil Construction, construction materials, Decoration GEA-1 Real estate credit GEA-1 Packaging GEA-2 Electric energy GEA-1 Mineral extraction GEA-2 Factoring GEA-1 Pharmaceuticals and hygiene GEA-2 Printing and publishing GEA-1 Accommodation and tourism GEA-1 Financial intermediation GEA-1 Machinery, equipment, vehicles, and parts GEA-1 Metallurgy and steelmaking GEA-2 Paper and pulp GEA-2 Fishing GEA-2 Oil and gas GEA-1 Chemical, petrochemical, fuels, and rubber GEA-1 Reforestation GEA-2 Water and gas sanitation and services GEA-2 Securitization of receivables GEA-1 Insurance companies and brokers GEA-1 Transport and logistics services GEA-2 Medical services GEA-2 Telecommunications GEA-2 Textile and clothing GEA-2 Holding Companies - Agriculture (sugar, alcohol, and cane) GEA-2 Holding Companies - Food GEA-2 Holding Companies - Leasing GEA-1 Holding Companies - Banks GEA-1 Holding Companies - Beverages and tobacco GEA-2 Holding Companies - Toys and leisure GEA-1 Holding Companies - Commerce (wholesale and retail) GEA-2 Holding Companies - Communication and IT GEA-2 Holding Companies - Civil Construction, construction materials, and decoration GEA-1 Holding Companies - Real estate credit GEA-1 Holding Companies - Education GEA-2 Holding Companies - Packaging GEA-2 Holding Companies - Electric energy GEA-1 Holding Companies - Mineral extraction GEA-2 Holding Companies - Printing and publishing GEA-1 Holding Companies - Accommodation and tourism GEA-1 Holding Companies - Financial intermediation GEA-1 Holding Companies - Machinery, equipment, vehicles, and parts GEA-1 Holding Companies - Metallurgy and steelmaking GEA-2 Holding Companies - Paper and pulp GEA-2 Holding Companies - Oil and gas GEA-1 Holding Companies - Chemical, petrochemical, fuels, and rubber GEA-1 Holding Companies - Reforestation GEA-2 Holding Companies - Water and gas sanitation and services GEA-2 Holding Companies - Securitization of receivables GEA-1 Holding Companies - Insurance companies and brokers GEA-1 Holding Companies - No main sector GEA-1 Holding Companies - Medical services GEA-2 Holding Companies - Transport and logistics services GEA-2 Holding Companies - Telecommunications GEA-2 Holding Companies - Textile and clothing GEA-2
Pointed doubts regarding the application of legislation and corporate regulation can also be sent to the SEP, via email address: sep-consultas@cvm.gov.br.
7.4. Requests for hearings with private individuals
In line with Decree No. 4.334/02, requests for scheduling meetings with organizational components of the CVM must be forwarded electronically, through the CVM page, selecting, for this purpose, the option AUDIENCE WITH PRIVATE INDIVIDUALS.
In this request, clear specification of the subject to be treated must be included, having as a necessary condition, in the case of issuer queries, their prior forwarding, as described in this Letter (see item 7.2).
7.5. Request for process review
In accordance with paragraph 2 of Article 8 of Law No. 6.385/76, all documents and records of administrative processes that are pending or archived at the CVM are public, except those whose confidentiality is indispensable for the defense of intimacy or social interest, or whose confidentiality is assured by express legal provision.
One must also keep in mind Article 46 of Law No. 9.784/99 – which regulates the administrative process within the Federal Public Administration – which guarantees interested parties the right to review the process and to obtain certificates or reprographic copies of the data and documents that integrate it, except for data and documents of third parties protected by confidentiality or by the right to privacy, honor, and image.
In the case of an administrative process to investigate illegal acts and unfair practices that is preceded by an investigative stage, the confidentiality necessary for the elucidation of facts or required by public interest will be assured, as provided in paragraph 2 of Article 9 of Law No. 6.385/76.
In 2005, the Autarchy regulated, through CVM Deliberation No. 481/05, the granting of review of records of administrative processes of any nature initiated within the scope of the CVM.
Requests for process review that are pending in this Autarchy must be forwarded through the presentation of a signed request, specifying that it is a request for review and/or copies, with the qualification of the signatories and, in the case of company representatives, accompanied by their respective powers of attorney.
In accordance with paragraph 1 of Article 3 of CVM Deliberation No. 481/05, the request must specify the applicant's interest in obtaining access to the records, except if it is an accused in a sanctioning administrative process, in which case the granting of review will always be assured.
The granting depends on authorization from the head of the Superintendency responsible for conducting the administrative process or the Relator, in case there is a pending appeal or decision from the Collegiate Body, with the postponement of the granting of review being optional in the interest of the service when such measure would hinder the realization of an act or the adoption of measures necessary for the conduct of the process.
In administrative processes initiated due to requests for postponement of general meetings of public companies or interruption of the flow of their convocation, in accordance with CVM Instruction No. 372/02, the granting of review will not be admitted while the process is pending decision, except for the right of access to the records by the company within the deadline for its manifestation, as provided in Article 4 of CVM Deliberation No. 481/05.
Furthermore, processes initiated with the purpose of verifying the possible occurrence of infractions to legal or regulatory norms whose supervision is incumbent upon the CVM will be conducted under confidentiality, except in cases where the applicant has been publicly indicted by the CVM as a possible author of the infraction under investigation, in which case the granting of review will be considered mandatory.
It is worth noting that the confidentiality of the process may be lifted by decision of the Superintendent, when he considers it unnecessary for the elucidation of facts and there are no data or information protected by cases of confidentiality assured by express legal provision or for the defense of intimacy or social interest.
As stated in paragraph 2 of Article 5 of CVM Deliberation No. 481/05, the provisions in the two paragraphs above, regarding irregularity investigation processes, apply to complaints formulated by investors and any other market participants, including regarding review requests formulated by them.
In sanctioning administrative processes, the accused will be admitted to granting of review via request directed: (i) to the Process Control Coordination, in processes governed by CMN Resolution No. 454/77; or (ii) to the Superintendency that initiated the process, until the eventual filing of an appeal to the Collegiate Body, in processes governed by CMN Resolution No. 1.657/89, or to the CCP, after the eventual filing of appeals to the Collegiate Body.
Review requests will be analyzed on a case-by-case basis, with the applicants, in the event of denial of the request, having the right to appeal to the CVM Collegiate Body, in accordance with CVM Deliberation No. 463/03.
According to Article 3, paragraph 3, of CVM Deliberation No. 481/05, if the denial decision is issued by the Relator, an appeal of their decision to the Collegiate Body will be available, within 5 (five) days, counted from the date of the interested party's knowledge.
For approved requests, the processes will be made available at the Consultation Center – SOI/GOI of this Autarchy, with the indication of the availability period through a letter responding to the request.
7.6. Commitment Term
The Commitment Term may be signed between the investigated or accused and the Securities and Exchange Commission (CVM), at the CVM's discretion, observing the public interest, in accordance with paragraphs 5 to 8 of Article 11 of Law No. 6.385/76 and CVM Deliberation No. 390/01.
It is worth initially highlighting that, according to paragraph 3 of Article 7 of CVM Deliberation No. 390/01, the presentation of a commitment term proposal will be admitted even in the preliminary investigation phase.
In the case of a sanctioning administrative process, Article 7 of CVM Deliberation No. 390/01 provides that the interested party in the celebration of a Commitment Term must manifest this intention until the end of the deadline for presenting a defense, without prejudice to the burden of presenting this defense. They must also present the Complete Commitment Term Proposal to the Administrative Process Control Coordination – CCP, within 30 days after the presentation of the defense.
In exceptional cases, in which it is understood that public interest determines the analysis of a commitment term celebration proposal presented outside the aforementioned deadline, such as those involving substantial indemnity offers to those harmed by the conduct object of the process and modification of the factual situation existing at the end of the said deadline, the Collegiate Body will examine the request.
The Commitment Term suspends the ongoing administrative process, for the period stipulated for its compliance, and may be celebrated at any time, however, it is recommended to present the intention as soon as possible, given the speed and procedural economy.
Finally, it is worth highlighting that, according to Article 4 of the aforementioned Deliberation, the celebration of a commitment does not imply confession regarding the matter of fact, nor recognition of the illicit nature of the conduct analyzed in the process that gave rise to it.
7.7. Calculation of Deadlines
In the calculation of deadlines, the rule established by Article 66 of Law No. 9.784/99, which regulates the administrative process within the scope of federal public administration, must be observed. In this sense, the calculation of deadlines in said processes occurs similarly to that established by Article 184, caput, of Law No. 5.869/73.
Thus, in the calculation of the deadline, the day of commencement must be excluded and the day of maturity included. Deadlines begin to run from the moment of their official notification, which can be carried out, as provided in Article 11 of CVM Instruction No. 452/07 and Article 61 of CVM Instruction No. 480/09, through the sending of a letter with Acknowledgment of Receipt, fax, or electronic message, with the deadline starting to count from the first one that occurs.
In the event that the maturity occurs on a day when there is no business at the CVM headquarters, such as Sundays and national or municipal holidays, the term is extended to the next following business day.
Additionally, as determined by Article 23 of Law No. 9.784/99, process acts must be carried out on business days, during the normal working hours of the agency where the process is pending.
Thus, on dates when the business at the CVM headquarters is partial, with closure before the normal hour, deadlines will be extended until the next business day. On the other hand, when there is partial business at the CVM headquarters and the business ends at the normal hour, in accordance with Article 66, paragraph 1, of Law No. 9.784/99, this day will be considered in the pending deadline.
It is worth noting that the protocol of documentation directed to the SEP or its respective Manageries in a city different from its location, although admissible, does not influence the calculation of the deadline, which will continue to be governed by the location of the CVM headquarters.
Chapter 8. Systems made available for the preparation and delivery of information
8.1. Empresas.Net System
Through the Empresas.Net System, the Registration Forms, Reference Forms, DFP, ITR, and the Quarterly Report of Securitization Companies must be forwarded to the CVM.
The program download can be done through the CVM's electronic page on the worldwide web (http://www.cvm.gov.br, section MARKET PARTICIPANTS, item DOCUMENT SUBMISSION, subitem EMPRESAS.NET), as well as on the BM&FBOVESPA page (http://www.bmfbovespa.com.br, section SHARES, item COMPANIES, subitem FOR COMPANIES, subitem For Listed Cos, subitem EMPRESAS.NET).
Doubts regarding the installation and use of the Empresas.Net System can be clarified with the BM&FBOVESPA Service Center (CAB) by phone (11) 2565-5000 or email address: cab@bvmf.com.br. Doubts regarding the content of the Registration Forms, Reference Forms, DFP, ITR, and the Quarterly Report of Securitization Companies can be forwarded to the CVM, via email address: sep-consultas@cvm.gov.br.
8.2. CVMWEB System
With the entry into force of CVM Instruction No. 480/09 and the availability of the Empresas.Net System, the obligation to update the registration data of public and foreign companies must be done through the update of the Registration Form.
Notwithstanding, the update of registration data through the CVMWEB System remains available.
It is worth remembering that any of these changes must be made by the company and, depending on the case, subsequently to the forwarding via the IPE System of the act of alteration (minutes of the meeting or council meeting), as the system will only accept alterations if the IPE protocol number is indicated.
It is emphasized that the update of the responsible person's data (DRI, trustee, etc.) continues to be done through the IPE System.
Finally, it is worth highlighting that the CVMWEB System is also used to access the fine appeal functionality on the CVM website.
8.3. Periodic and occasional information system (IPE)
The information sent via the IPE System will be the responsibility of the DRI or equivalent person, who must, for this purpose, keep their data updated in the DRI Registration module.
Since 2007, BM&FBOVESPA S.A. - Stock Exchange, Commodities and Futures – BM&FBOVESPA has made available on its website access to the IPE System so that public companies have an additional address for document submission.
The login/password procedures and document submission do not depend on whether the public company is registered in that exchange or not.
To send a document through this option, simply access the BM&FBOVESPA website (www.bmfbovespa.com.br), select the profile Companies and Issuers, then For Listed Cos, link IPE – Document Submission.
The link for this address is https://seguro.bmfbovespa.com.br/ipe/index.asp.
Attention must be paid to ensure that files in PDF format present a legible formatting, which facilitates reading, manipulation, and printing of documents by interested parties.
The documents and information sent are simultaneously available on the CVM and BM&FBOVESPA pages, in the case of companies registered there, except for the form of the communication provided in Article 11 (individual) of CVM Instruction No. 358/02 (see item 3.8).
With the purpose of fostering the adequate dissemination of corporate information, the following new "Subjects" have recently been created for the Category "Market Communication", type "Clarifications on CVM/Bovespa queries" in the IPE System:
f) "News disclosed in the media"; g) "Atypical negotiations of securities"; h) "Approval of dividends"; i) "Applicability of the withdrawal right"; j) "Applicability of the preemptive right"; and k) "Share repurchase".
It is absolutely indispensable to read the document "IPE Manual", available on the CVM page, which presents a listing of the categories, types, and species of documents provided for in the system, classified by the obligation or not of submission, by the periodicity of its disclosure and by the need or not of publication by the press, as well as bringing guidelines regarding the procedure to access the system (submission and cancellation of data and DRI registration).
The limitation on the size of files to be included in the IPE System is imposed by the system itself and aims to facilitate investors' access to information archived in the IPE, since, in turn, it is dependent on file download processes, which are unfeasible in many cases, for sizes above 5Mb. The imposed limitation aims for better performance of the system itself and the website, thereby generating better access for users, especially for the shareholder, the final recipient of the information.
Before requesting the expansion of the IPE system limit, the company must make efforts to reduce the size of the file to be made available, given that it is an imposition existing for all companies. The issuer must try solutions with its IT area, in order to reduce the size of the
file. It is suggested to use compression algorithms to try to reduce the space occupied by images and texts to be placed in PDF files.
If no solution is found, a request can be sent to GEA-1 or GEA-2 (see item 7.3) to expand the file size limit, which will be evaluated at that time. The current system limitations are imposed in an isonomic manner on all companies.
Finally, it is worth noting that, regardless of the submission of the Registration Form, the DRI data must also be updated via the IPE System, in the “DRI Registration” module.
Chapter 9. Guidelines for preparing the Reference Form
9.1. Guidelines applicable to the entire Reference Form
9.1.1. General rules on the preparation and disclosure of information
Instruction CVM No. 480/09 incorporates certain general rules on the preparation and disclosure of information that must be observed by issuers in the preparation and updating of the Reference Form. They are as follows:
a) the issuer must disclose information that is true, complete, consistent, and does not mislead the investor (Article 14); b) all information disclosed by the issuer must be written in simple, clear, objective, and concise language (Article 15); c) the information provided by the issuer must be useful for the evaluation of the securities issued by it (Article 17); d) whenever the information disclosed by the issuer is valid for a determinable period, such period must be indicated (Article 18); e) factual information must be differentiated from interpretations, opinions, projections, and estimates (caput of Article 19); f) whenever possible and appropriate, factual information must be accompanied by the indication of its sources (sole paragraph of Article 19).
The Empresas.Net system incorporates both structured fields and free-text fields for the presentation of the information required in the Reference Form.
In order to ensure better understanding and comparability by investors, it is alerted that whenever the required information is provided in free-text fields, the issuer must, nevertheless, organize and present the information according to the structure and organization provided in Annex 24 of Instruction CVM No. 480/09.
Whenever the presentation of a table is required, the information must be provided in this manner (as, for example, in items 4.3, 13.3, 13.6, and 13.7 of the Form).
9.1.2. Field “other information deemed relevant”
Annex 24 provides in several sections of the Form open fields for the presentation of “other information deemed relevant”. The objective of these fields is to allow the issuer to provide other information not requested in the Reference Form, deemed important to support the investment decision or to ensure the correct understanding, by investors, of the information provided in the Form regarding its economic-financial situation, its businesses, and the risks inherent to its activities and the securities issued by it.
9.1.3. Scope and content of information provided
Annex 24 includes notes that specify the scope or content of the information to be provided in some of the items that must be carefully observed by issuers when preparing, updating, and resubmitting the Form.
In this sense, we alert that, in the annual presentation of the Reference Form, the information provided regarding items 3.1, 7.2, 10.1, and 10.2 must refer to the last three financial statements closing the fiscal year. When presenting the Reference Form due to a request for registration of public distribution of securities, the information requested in these items must refer to the last three financial statements closing the fiscal year and to the latest accounting information disclosed by the issuer, such as, for example, information regarding the last quarterly information form – ITR disclosed by the issuer. We also alert that, in the annual presentation of the Reference Form, the information provided regarding items 3.7, 3.8, 7.4, 7.6, 9.1, and 10.8 must refer to the last financial statements closing the fiscal year. When presenting the Reference Form due to a request for registration of public distribution of securities, the information requested in these items must refer to the last financial statements closing the fiscal year and to the latest accounting information disclosed by the issuer, such as, for example, information regarding the last quarterly information form – ITR disclosed by the issuer. It is also highlighted that, in the annual presentation of the Reference Form, the information provided regarding items 2.1, 6.5, 8.3, 10.4, 10.7, 11.1“d”, 12.3, 14.1, 15.6, 17.2, 17.3, 17.4, 18.8, 18.9, 19.1, 19.2, 22.1, 22.2, and 22.3 must refer to the last three fiscal years. When presenting the Reference Form due to a request for registration of public distribution of securities, the information requested in these items must refer to the last three fiscal years and to the current fiscal year. Item 10.6.b (deficiencies and recommendations on internal control present in the independent auditor’s report provided for in Article 25 of Instruction CVM No. 308/99) must be filled out based on the communication of internal control deficiencies sent by the independent auditors to the Company’s administration. It is up to the administrators to follow up with the independent auditors so that the communication regarding the last fiscal year is made available in a timely manner, considering the provisions of item II of Article 25 of Instruction CVM No. 308/99 and the professional auditing standard that deals with the matter, including with regard to the adequate time limit for the conclusion of the timely assembly of the final audit file. In any case, this item 10.6.b must be in compliance with the last written communication of internal control deficiencies sent by the independent auditors to the Company’s administration. Finally, we guide issuers that it is unnecessary to include in the Reference Form information that is not important to ensure that the document is a true, accurate, and complete portrait of its economic-financial situation and the risks inherent to its activities and the securities issued, such as repetitions of legal texts,
explanatory notes, and parts of other documents.
9.1.4. Information not applicable
If information requested in the Reference Form is not applicable to the issuer due to its characteristics, the same must expressly state this fact in the Form and include a justification, explaining the reason why the requested information is not applicable to it.
Regarding the free-text fields of the Empresas.Net system, if the information is not applicable, the issuer must indicate in the field itself the reasons justifying the non-presentation of the required information.
For example, if the issuer has not carried out a public distribution offer of securities in the last 3 fiscal years, it must inform in items 10.7.a, 10.7.b, and 10.7.c that these are not applicable, given that the issuer has not carried out a public distribution offer of securities in the last 3 fiscal years. It is worth noting that the mere declaration that the information is “not applicable” does not meet this purpose. In the case of the structured fields of the Empresas.Net system 3.5, 3.7, 3.8, 8.3, 9.1.a, 9.1.b, 9.1.c, 12.3, 12.7, 12.9, 12.10, 13.2, 13.11, 16.2, 17.2, 17.3, 17.4, 18.4, 18.5, 19.1, 19.2, 19.3, and 20.1, if the information is not applicable, the issuer must, instead of filling them out, disclose the reasons for the non-presentation of the required information, through the “Justify” icon.
9.2. Guidelines for filling out the Reference Form
9.2.1. Identification of persons responsible for the content of the Form (section 1)
In this item, the issuer must identify and present the declaration of its President and its DRI attesting that:
a) they have reviewed the Reference Form; b) all information contained in the document complies with the provisions of Instruction CVM No. 480, especially Articles 14 to 19; c) the set of information contained therein is a true, accurate, and complete portrait of the issuer’s economic-financial situation and the risks inherent to its activities and the securities issued by it.
It is highlighted that said declaration must be provided by the two persons indicated in the norm (President, or equivalent position, and DRI), except in the case where the same person holds both positions listed in the Instruction.
9.2.2. Auditors (section 2)
a. Information about independent auditors (item 2.1) In this item, historical information must be presented to identify the auditors who have acted with the company in the last 3 fiscal years, as well as the services provided by them to the issuer.
In line with the provisions of Article 2 of Instruction CVM No. 381/03 and item 2.2 of the Reference Form, which requires the separate disclosure of expenses incurred with audit services and with any other services provided by the independent auditor, in the description of contracted services (letter “d”), it must be informed not only the services related to independent audit, but also any other services that are not external audit provided to the issuer by the independent auditor or by related parties with the independent auditor, as defined in CVM Deliberation No. 642/10, which approved Technical Pronouncement CPC 05(R1). The eventual replacement of the auditor (letter “e”) must be informed even when the change occurred due to auditor rotation provided for in Article 31 of Instruction CVM No. 308/99. In this case, as in other cases of change, the issuer’s justification for the replacement of the auditor (item “i” of letter “e”) must contain the same content as the communication required in the caput of Article 28 of Instruction CVM No. 308/99. If the auditor did not agree with the justification for its replacement, the information provided in response to item “ii” of letter “e” must reproduce any reasons presented by the auditor, in accordance with the communication provided for in paragraph 2 of Article 28 of Instruction CVM No. 308/99. It is highlighted that the information regarding “End of service contract”, required in table 2.1 of the Empresas.Net System, should not be included when the service provision is still in progress. This information should only be included upon the termination of the relationship between the issuer and the independent auditor. The issuer that has not had an auditor in the period covered by table 2.1/2 must present, in table 2.3, the justification for the non-presentation of the information required in items 2.1 and 2.2 of the Reference Form.
b. Remuneration of independent auditors (item 2.2) The information about the total amount of remuneration of independent auditors must be provided only with regard to the last fiscal year.
In addition to the total remuneration amount, it must be informed how this amount is segregated between:
a) fees related to external audit services; and b) fees related to any other services provided, regardless of whether these services represented less than 5% (five percent) of the remuneration for external audit services, given that, unlike Instruction CVM No. 381/03, item 2.2 of Annex 24 of Instruction CVM No. 480/09 does not make any reservation regarding the amount of the fee from which the information must be provided. In both cases of external audit services and other services provided, the issuer must indicate, in a segregated manner, the amounts paid as title of each of the services that have been informed in letter “d” of item 2.1. The information about the remuneration of independent auditors must be presented in Reais (R$). Even when there is the provision of services by the auditor abroad, the issuer must perform the conversion to the national currency as provided in CPC 2 (R2) approved by CVM Deliberation No. 640/2010. The issuer that has not had an auditor in the period covered by table 2.1/2 must present, in table 2.3, the justification for the non-presentation of the information required in items 2.1 and 2.2 of the Reference Form.
c. Other information deemed relevant (item 2.3)
This item must be used for the presentation of other information not requested in section 2 of the Reference Form, which the issuer deems important for the complete understanding, by investors, of its relationship with the independent auditor, such as, for example: the policy or procedures adopted by the issuer to avoid the existence of conflict of interest, loss of independence or objectivity of its independent auditors (item III of Article 2 of Instruction CVM No. 381/03) and existence of relevant transfers of services or resources between the auditors and related parties with the issuer, as defined in CVM Deliberation No. 642/10, which approved Technical Pronouncement CPC 05(R1).
9.2.3. Selected financial information (section 3)
a. Selected financial information (item 3.1)
In this field, the issuer must present, in addition to other accounting information it may have selected, the values of the following items indicated in letters “a” to “h”:
shareholders’ equity; total assets; net revenue; gross result; net result; number of shares, ex-treasury; book value per share and net result per share.
When presenting the annual Reference Form, the information must refer to the last three financial statements closing the fiscal year. When presenting the reference form due to the request for registration of public distribution of securities, the information must refer to the last three financial statements closing the fiscal year and to the latest accounting information disclosed by the issuer. The requirement to disclose information regarding the last three financial statements aims to allow the comparison of the issuer’s performance during the period. The information must be provided taking as a basis the information contained in the issuer’s financial statements or, when this is obliged to disclose consolidated financial information, based on its consolidated financial statements. For the calculation of the book value per share (letter “g”), it is recommended that the value of the shareholders’ equity informed in the issuer’s last financial statements be used, in order to allow the investor to reconcile such numbers. In the case of the presentation of the Reference Form due to a request for registration of public distribution of securities, when the values presented refer to the latest accounting information disclosed by the issuer, the accumulated balances in the result accounts must be disclosed. In the preparation and review of the information presented in this field, the issuer must ensure that the values disclosed are consistent with those that have been disclosed in its financial statements.
b. Non-accounting measurements (item 3.2)
In the disclosure of non-accounting measurements, the issuer must pay attention so that the values presented are reconcilable with the data contained in the financial statements and quarterly information disclosed by it, which have been used for the preparation of the measurements.
c. Events subsequent to the last financial statements closing the fiscal year (item 3.3)
In this field, subsequent events that, in compliance with the rules provided in Technical Pronouncement CPC 24, approved by CVM Deliberation No. 593/09, appeared in the last financial statements closing the fiscal year or, in the case of presentation of the Reference Form due to the request for registration of distribution, in the latest accounting information disclosed by the issuer, must be identified and commented on. Such comments must contain the information provided in said accounting standard, such as: (a) the nature of the event; and (b) the estimate of its financial effect or a declaration that such estimate cannot be made, in the case of significant subsequent events, but that did not originate adjustments. It is important to also include the information regarding the date of authorization of the issuance of the accounting statements, as they do not reflect events subsequent to that date. The issuer must make clear whether the information provided in this item refers to the individual or consolidated financial statements.
d. Description of the policy for the destination of results (item 3.4) This item aims to consolidate the history of the destination of the issuer’s results, including what was approved in the last Ordinary General Assembly.
In it, the issuer must describe the policy for the destination of results adopted by it in the last 3 fiscal years, with the indication of the information required in letters “a” to “d”.
To assist the user’s understanding, it is recommended that the information be provided in the form of a table, according to the following format:
| Year 1 | Year 2 | Year 3 |
|---|---|---|
| a. Rules on profit retention | ||
| b. Values of Profit Retentions | ||
| c. Rules on dividend distribution | ||
| d. Periodicity of dividend distributions | ||
| e. Any restrictions on dividend distribution imposed by legislation or special regulation applicable to the issuer, as well as contracts, judicial, administrative, or arbitral decisions |
The description of the policy must be prepared taking as a basis the practices adopted by the issuer and the provisions on the subject existing in its Bylaws, and should not, thus, be limited to the mere transcription of the provisions of Law No. 6.404/76 regarding the subject.
In the description of the rules regarding profit retention (letter “a”), the issuer must inform if, in addition to the mandatory reserves provided for in legislation, it has other reserves regulated in the bylaws, informing their percentages, if it carried out retentions based on a capital budget in the period covered by this item of the Form, etc. In addition to this information, the issuer must indicate, in a segregated manner, the values of all retentions that have been carried out in each of the years informed in this item of the Form.
e. Dividend distributions and profit retentions occurred in the last 3 fiscal years (item 3.5) The information presented in this item must be consistent with the corporate resolutions and with the individual accounting information disclosed by the issuer.
As adjusted net profit (letter “a”), the value of the net profit that served as the basis for the calculation of distributed dividends must be informed.
Note that the distributed dividend to be informed in letter “d” must be restricted to that calculated based on the profit ascertained in the last fiscal year. Payments of dividends from profits ascertained in previous years will be informed in item 3.6.
The return rate regarding shareholders’ equity (letter “f”) must be calculated based on the division of the value of net profit, before the adjustments referred to in letter “a”, by the value of shareholders’ equity in each fiscal year.
As retained net profit (letter “g”) must be considered the portion of net profit not distributed as dividends or interest on equity, that is, the sum of the destinations to reserves and profit retention.
It is worth clarifying that the dividends or interest on equity attributed as dividends that have been distributed from retained profits or reserves constituted in previous fiscal years must be informed in item 3.6 of the Form.
f. Issuer’s indebtedness level (item 3.7)
With regard to what is demanded in letter “a”, the total amount of debt must be understood as the sum of current liabilities and non-current liabilities.
The information disclosed in this item must be provided based on the consolidated financial information, if the issuer is obliged to prepare them.
It is highlighted that the total amount of debt, of any nature, informed in item 3.7.a must coincide with the value disclosed in item 3.8 as the sum of debts with real guarantee, floating guarantee, and unsecured debts.
It is also fundamental, in the event that the issuer uses another indebtedness index, the indication of the respective methodology and the reason why it understands that this index is appropriate for the correct understanding of the financial situation and the level of indebtedness of the issuer.
g. Issuer’s obligations according to the nature and maturity date (item 3.8) In this item, the issuer must disclose, in the form of a table, the amount of its obligations, segregated according to the type of debt guarantee – real guarantee, floating guarantee, and unsecured debts – and with the maturity periods stipulated in letters “a” to “d” of this item. Although there may be various subdivisions due to the characteristics of the debts, the information about the issuer’s indebtedness must be consolidated within the 3 categories mentioned in this item. The basic information to be disclosed in the table provided for in this item, regarding the issuer’s indebtedness profile, aims to provide, to the investor, a classification of the debts that allows verifying which portion of these is guaranteed by the issuer’s assets and which is not, in order to allow a perception of the order of preference of the debts, in an eventual creditors’ contest of the issuer. Thus, for the categorization of debts in the form required, the costliness of the guarantee vis-à-vis the issuer must be taken into account, and not vis-à-vis third parties. Debts with guarantee of suretyship must be classified in one of the 3 categories provided for in item 3.8. Debts without real or floating guarantee, regardless of the fact that they possess suretyship guarantee, must be classified as unsecured debts. Debts guaranteed with third-party assets, as they do not encumber the issuer’s assets, must be considered as unsecured debts and classified as such in the table provided for in this item.
To facilitate understanding by investors, the issuer must include information in item 3.8 itself regarding the criteria used to segregate its debts according to the categories provided in the standard.
The issuer must also make clear, in the "Observation" field, whether the information provided in this item refers to the individual or consolidated financial statements.
It is emphasized that the total amount of debt, of any nature, reported in item 3.7.a must coincide with the value disclosed in item 3.8 as the sum of debts with real guarantee, floating guarantee, and unsecured debts.
h. Other relevant information (item 3.9)
In this item, the issuer must disclose other relevant information regarding financial aspects, such as the existence of cross-default provisions in contracts and securities representing the issuer's debt, including between the issuer and companies in its economic group.
9.2.4. Risk factors (section 4)
a. Description of risk factors (item 4.1)
In this item, any risk factors that may influence the investment decision must be disclosed, in order of relevance, especially those related to the issuer and its controller, directly or indirectly, or control group, its shareholders, its subsidiaries and affiliates, its suppliers, its customers, the economic sectors in which the issuer operates and their respective regulation, and the foreign countries where the issuer operates.
It should be clarified that the matters listed in letters "a" to "i" consist of an exemplary list. Thus, when filling out this field of the Form, the issuer must discuss the risk factors applicable to it that may influence the investment decision.
The issuer may omit matters related to letters "a" to "i" of this item that are not applicable to it, but must add other matters not provided in the exemplary list if they are relevant to its activities and capable of influencing the investment decision.
Given that risk factors must be disclosed in order of relevance, in the presentation of comments, the issuer may modify the order of presentation of the matters cited in letters "a" to "i" of item 4.1. If there is more than one risk factor related to the same matter, its presentation must also be made in descending order of relevance.
All risk factors applicable to the issuer must be described without mitigation or omission of relevant information. The issuer's expectations regarding the increase or reduction of its exposure to risk factors, as well as the actions implemented to reduce its exposure, must be reported in item 4.2 of the Form.
Risk factors must be clearly identified and described in clear and objective language, so as to allow their understanding by the investor, and their possible impacts on the issuer or on the securities issued by it must also be commented on.
b. Comments on the expectation of reduction or increase in exposure to relevant risks (item 4.2)
In this item, the issuer may comment, if they exist, on its expectations regarding the reduction or increase in its exposure to the risk factors described in the previous item. In the comments, the internal or external factors to the issuer that support the opinion issued must be specified, and any measures adopted by the issuer to reduce exposure to risk factors may also be commented on.
c. Judicial, administrative, or arbitral proceedings in which the issuer or its subsidiaries are parties (item 4.3)
In this item, the issuer must describe, with the presentation of the information required in letters "a" to "i", the judicial, administrative, or arbitral proceedings in which it or its subsidiaries are parties, which are not under seal and are individually relevant to the issuer or its subsidiaries.
For better understanding by investors, the information must be organized by nature (administrative, civil, labor, tax, and others). The description of each of the proceedings must be presented in table format, according to the model below.
Case No. [●] a. court b. instance
c. date of initiation
d. parties to the process e. values, assets, or rights involved f. main facts g. chance of loss (probable, possible, or remote) h. analysis of the impact in case of loss of the process
i. value provided (if there is a provision)
It is alerted that only judicial proceedings that run under secrecy of justice, administrative procedures that are conducted under seal by determination of the administrative authority, and arbitral procedures that, by the will of the parties, are confidential are understood as confidential.
Relevance must be assessed by the issuer taking into account the capacity the information would have to influence the investment decision.
In the assessment of relevance, the issuer must not only focus on the ability of the process to significantly impact its assets, its financial capacity, or its business, or those of its subsidiaries, but must also consider other factors that could influence the decision of the investing public, such as, for example, the image risks inherent to a certain practice of the issuer or legal risks related to the discussion of the validity of bylaw clauses.
In this sense, in the description of the process, the issuer must clarify the reasons why it understands that the process is relevant.
Regarding the case number, the number registered for monitoring in the judicial, administrative, or arbitral spheres must be informed.
Proceedings that run simultaneously in the administrative and judicial spheres must be reported in separate tables. However, in both tables, there must be a reference in the "main facts" (letter "f") to the existence of the other administrative or judicial process.
As "parties to the process" (letter "d"), the parties comprising the passive and active poles of the process must be identified, except with regard to judicial proceedings subject to the appreciation of the Labor Justice, where only the initials of the names of the parties must be indicated. In this sense, it is emphasized that Resolution of the National Council of Justice No. 121, of 05.10.2010, established restrictions to the public consultation of labor processes through the worldwide computer network.
Regarding the "main facts" (letter "f"), all information necessary for investors to understand the cause discussed by the parties, its relevance to the issuer or its subsidiaries, and the situation in which the process is located must be offered, in clear and objective language. Accordingly, the main procedural or administrative acts that occurred must be informed, with their respective dates and synthesis of the decisions, containing their motivations, so that the user of the information can form their own judgment of value.
With regard to the chance of loss (letter "g"), the following concepts must be considered:
a) probable: when the chance of one or more future events occurring is greater than the chance of not occurring; b) possible: when the chance of one or more future events occurring is less than probable, but greater than remote; c) remote: when the chance of one or more future events occurring is small.
The analysis of the impact in case of loss of the process, required in letter "h", must be done without omission of relevant information, demonstrating the amount of losses related to relevant processes and their possible impacts on the financial and asset situation of the issuer or its subsidiaries or on their business. Even if the chance of loss of the process is remote, if it is relevant in terms of materiality, it must be reported.
When informing the "value provided" (letter "i"), it must maintain coherence with the chance of loss informed in letter "g". For example, if the chance of loss informed in letter "g" is probable, the value provided must be presented in letter "i".
When resubmitting the Form, if there is a change in the "value provided" (letter "i") disclosed in the previous version, the issuer must inform the reason for the alteration.
It is emphasized that in the presentation of the Reference Form due to a request for registration of public distribution of securities, the information must be presented in an updated manner, as required in paragraph 2 of article 24 of CVM Instruction No. 480/09.
d. Judicial, administrative, or arbitral proceedings in which the issuer or its subsidiaries are parties and whose opposing parties are administrators or former administrators, controllers or former controllers, or investors of the Company or its subsidiaries (item 4.4)
In this item, the issuer must describe, with the presentation of the information required in letters "a" to "i", the judicial, administrative, or arbitral proceedings, which are not under seal, in which it or its subsidiaries are parties and whose opposing parties are administrators or former administrators, controllers or former controllers, or investors of the Company or its subsidiaries.
All proceedings that fit this definition must be described, since Annex 24 of CVM Instruction No. 480/09 does not mention the issue of relevance in item 4.4.
The description of each of the proceedings must be presented in table format, according to the model below.
Case No. [●] a. court b. instance
c. date of initiation
d. parties to the process e. values, assets, or rights involved f. main facts g. chance of loss (probable, possible, or remote) h. analysis of the impact in case of loss of the process
i. value provided (if there is a provision)
It is alerted that only judicial proceedings that run under secrecy of justice, administrative procedures that are conducted under seal by determination of the administrative authority, and arbitral procedures that, by the will of the parties, are confidential are understood as confidential.
Regarding the case number, the number registered for monitoring in the judicial, administrative, or arbitral spheres must be informed.
Proceedings that run simultaneously in the administrative and judicial spheres must be reported in separate tables. However, in both tables, there must be a reference in the "main facts" (letter "f") to the existence of the other administrative or judicial process.
As "parties to the process" (letter "d"), the parties comprising the passive and active poles of the process must be identified, except with regard to judicial proceedings subject to the appreciation of the Labor Justice, where only the initials of the names of the parties must be indicated. In this sense, it is emphasized that Resolution of the National Council of Justice No. 121, of 05.10.2010, established restrictions to the public consultation of labor processes through the worldwide computer network.
Regarding the "main facts" (letter "f"), all information necessary for investors to understand the cause discussed by the parties, its relevance to the issuer or its subsidiaries, and the situation in which the process is located must be offered, in clear and objective language. Accordingly, the main procedural or administrative acts that occurred must be informed, with their respective dates and synthesis of the decisions, containing their motivations, so that the user of the information can form their own judgment of value.
With regard to the chance of loss (letter "g"), the following concepts must be considered:
a) probable: when the chance of one or more future events occurring is greater than the chance of not occurring; b) possible: when the chance of one or more future events occurring is less than probable, but greater than remote; c) remote: when the chance of one or more future events occurring is small.
The analysis of the impact in case of loss of the process, required in letter "h", must be done without omission of relevant information or mitigation, demonstrating the amount of losses related to relevant processes and their possible impacts on the financial and asset situation of the issuer or its subsidiaries or on their business.
When informing the "value provided" (letter "i"), it must maintain coherence with the chance of loss informed in letter "g". For example, if the chance of loss informed in letter "g" is probable, the value provided must be presented in letter "i".
When resubmitting the Form, if there is a change in the "value provided" (letter "i") disclosed in the previous version, the issuer must inform the reason for the alteration.
Proceedings already described in item 4.3, which also fit the information required in this item, may be cited here by reference.
e. Information on relevant confidential proceedings in which the issuer or its subsidiaries are parties that have not been disclosed in items 4.3 and 4.4 (item 4.5)
Regarding relevant confidential proceedings in which the issuer or its subsidiaries are parties, only the presentation of the following information is required, without the need for detailing the cause: (a) analysis of the possible impact for the issuer or its subsidiaries, in case of loss, without mitigation or omission of relevant information on the subject; and (b) disclosure of the values involved in these processes.
It is alerted that only judicial proceedings that run under secrecy of justice, administrative procedures that are conducted under seal by determination of the administrative authority, and arbitral procedures that, by the will of the parties, are confidential are understood as confidential.
f. Repetitive or connected judicial, administrative, or arbitral proceedings, which are not under seal and that are relevant collectively, in which the issuer or its subsidiaries are parties (item 4.6)
In this item, the issuer must describe the judicial, administrative, or arbitral proceedings that are repetitive or connected, based on similar facts and legal causes, which are not under seal and that, when considered collectively, are relevant, in which the issuer or its subsidiaries are parties.
It is alerted that only judicial proceedings that run under secrecy of justice, administrative procedures that are conducted under seal by determination of the administrative authority, and arbitral procedures that, by the will of the parties, are confidential are understood as confidential.
Relevance must be assessed by the issuer taking into account the capacity the information would have to influence the investment decision of investors.
In the assessment of relevance, the issuer must not only focus on the ability of the process to significantly impact its assets, its financial capacity, or its business, or those of its subsidiaries, but must also consider other factors that could influence the decision of the investing public, such as, for example, the image risks inherent to a certain practice of the issuer or legal risks related to the discussion of the validity of bylaw clauses.
For better understanding by investors, the information must be organized by nature (administrative, civil, labor, tax, and others) and subdivided by similar causes.
With regard to what is required in letter "c" of this item, all information necessary for investors to understand the practice of the issuer or its subsidiary that originated the contingency described must be offered, in clear and objective language.
g. Other relevant contingencies not covered by the previous items (item 4.7)
CVM Instruction No. 480/09 provides that the set of information contained in the Reference Form must be a true, accurate, and complete portrait of the issuer's economic-financial situation and the risks inherent to its activities and the securities issued by it.
This item must be used to present information on other relevant contingencies not covered by the previous items, which the issuer considers important to support the investment decision by investors. Commitment Terms and Conduct Adjustment Terms celebrated by the issuer must be described in this item.
9.2.5. Market risks (section 5)
a. Description of the main market risks (item 5.1)
In this item, all relevant market risks to which the issuer is subject in the normal course of its activities, including with regard to exchange rate risks and interest rates, capable of influencing its operational results, its financial situation, its future perspective, and the decision of investors, must be described, quantitatively and qualitatively, in order of relevance and without mitigation or omission of relevant information.
The issuer must disclose relevant details of the market risks to which it is subjected and the respective policies for their management. The issuer may disclose, for example, the parties with whom it contracts over-the-counter derivative instruments and the details of the participation of each of these parties in the total notional value contracted by the issuer, highlighting the treatment of counterparty risk.
The issuer must describe how the indicated market risks can affect it. Thus, a simple mention of generic factors, such as the possibility of alteration of government policies and actions, political instability, and volatility of the financial market, must be avoided.
b. Description of the market risk management policy adopted by the issuer (item 5.2)
Risk management policy is understood as the set of rules and objectives that form an action program, established by its administrators, in order to mitigate risks.
In the description of the parameters used for risk management (letter "d"), the issuer must indicate the objective criteria that are monitored to verify the fit or misfit of its exposure, and therefore must inform the parameters/indices used in the management of the risks informed in item 5.1.
The issuer must also indicate whether it uses financial instruments with objectives other than asset protection (hedge) (letter "e"), including with regard to operations associated with derivative instruments such as "Total Equity Return Swap". The information provided must include the objectives of the operations and the risks associated for the issuer or its shareholders.
If it has implemented an organizational structure for risk management control (letter "f"), the issuer must describe it: (a) indicating the administration bodies, committees, or other similar structures involved; and (b) discriminating the specific responsibilities of each of these bodies, committees, or similar structures, and their members, in risk management control. Note that the committees or similar structures mentioned here must be informed in item 12.1"a" of the Form.
If the issuer does not adopt an organizational structure or internal control systems aimed at verifying the effectiveness of the adopted policy (letter "g"), it must expressly state this fact. In this case, the issuer must also inform the reason why it does not adopt these procedures. Possible projects for the implementation of new practices, stage of development, and estimated time for adoption may also be commented on.
c. Information on bankruptcy petitions, provided they are based on a relevant amount, or on judicial or extrajudicial recovery of the issuer, and on the current status of such petitions (item 6.6)
In this item, the existence of bankruptcy petitions against the issuer based on a relevant amount and of judicial or extrajudicial recovery petitions against the issuer must be reported, presenting all necessary information so that investors can know and understand the effects of these events on the issuer, such as: amounts involved, petitioner, court in which the petition is proceeding and its current status, measures eventually adopted by the issuer.
It is emphasized that the declaration of bankruptcy, judicial recovery, extrajudicial liquidation, or judicial homologation of extrajudicial recovery is one of the hypotheses that determines the update of the Reference Form by issuers registered in Categories A and B, as provided for in item XI of paragraph 3 and item VI of paragraph 4 of article 24 of CVM Instruction No. 480/09.
Thus, the occurrence of these events will result, without prejudice to the provisions of CVM Instruction No. 358/02, in the need to update the Reference Form in the manner provided for in the legislation, with issuers in judicial recovery, bankruptcy, and liquidation subsequently being exempted from delivering the annual Reference Form in the manner provided for in articles 36, 38, and 40 of CVM Instruction No. 480/09.
9.2.7. Issuer's Activities (Section 7)
a. Main activities developed by the issuer and its controlled companies (item 7.1)
In this item, useful and necessary information must be provided to the market so that the investor can know the activities developed by the issuer and its controlled companies, such as the issuer's corporate purpose, market of operation, geographic diversification, among others.
b. Information on the issuer's operational segments (item 7.2)
The information requested in letters “a” to “c” of this item must be provided relative to each of the operational segments that have been disclosed, in the manner of CVM Deliberation No. 582/09, which approved Technical Pronouncement CPC 22, in the financial statements of the end of the fiscal year or, if applicable, in the consolidated financial statements.
In the annual presentation of the Form, the information must refer to the last 3 financial statements of the end of the fiscal year. In the presentation of the reference form due to the request for registration of public distribution of securities, the information must refer to the last 3 financial statements of the end of the fiscal year and to the last accounting information disclosed by the issuer.
c. Information on products and services related to the operational segments disclosed in item 7.2 (item 7.3)
The information provided in this item must be prepared considering, as provided for in item 7.2, the financial statements of the end of the fiscal year or, if applicable, the consolidated financial statements.
Regarding the characteristics of the production process (letter “a”), objective information necessary for the understanding of the issuer's production process must be provided, including, for example, information related to: origin and holders of the technology used, comparison between annual production and installed capacity, comparison with productivity indicators characteristic of the activity sector, existence of insurance for machinery, equipment, products, etc., risks inherent to the production process that may generate paralysis of activities, including time allocated for maintenance and other relevant aspects for a better understanding of the productive process.
Regarding the characteristics of the distribution process (letter “b”), the methods of physical distribution of products and services must be informed, including information on the number of agencies, stores, dealers, fleet, etc., and also, if controlled, affiliated, direct or indirect parent companies, or companies owned by the controlling shareholder are used in the process.
The types of sales channels used must also be informed, such as intermediaries, representatives, own salespeople, etc.
With regard to what is requested in letter “c”, factors that influence the behavior of the markets in which the company operates must be presented in an objective manner, such as: tax benefits, monopoly or oligopoly situations, subsidies, level of competition, costs of raw materials and other expenses, dependence on technology and labor, use of concessions and franchises, special legislation.
If there is seasonality (letter “d”), the period of the fiscal year in which it concentrates must be informed, as well as information on the impact, in percentage, of seasonality on the income statement accounts.
d. Information on the issuer's relevant long-term relationships (item 7.8)
This item must be used to describe long-term relationships not expressly mentioned in other items of the Reference Form that the issuer considers important for the understanding of other activities developed by it, such as: agreements maintained with national and foreign government instances or with communities, social and environmental responsibility policies, information on sustainability practices (such as indicators related to work accidents, use of energy and water, emission of greenhouse gases and waste disposal), sponsorship and cultural incentive adopted by the issuer, main projects developed in these areas or in which it participates, among others.
In this item of the Form, the issuer may also inform if it prepares and discloses a sustainability report or similar document (integrated report, annual report with social and environmental information, social balance sheet, social responsibility report, etc.) and indicate the electronic address on the worldwide web where it can be consulted.
Possible projects for the implementation of the practice of preparing and disclosing a sustainability report or similar document, stage of development, and estimated time for its adoption may also be commented on.
The issuer may inform if it is a party to long-term contracts, especially relational contracts (such as those characterized by open terms, subject to constant negotiation, which regulate continuous and lasting relationships). In this item, for each contract indicated, it is recommended that the issuer inform how long the contractual relationship has existed, what the previously defined terms are, and the costs incurred by the company, especially those not recoverable due to the specificity of the relationship (for example, investments associated with the supply of specific products that meet the needs of few customers).
9.2.8. Economic Group (Section 8)
a. Description of the Economic Group in which the issuer is inserted (item 8.1)
For the purposes of this item, the Economic Group is understood as the set of companies in which the issuer is inserted and which present common control. It includes the direct and indirect controllers of the issuer, as well as the issuer's controlled and affiliated companies and companies under common control.
Thus, the information requested in letters “a” to “e” must be provided in relation to the companies mentioned above, accompanied by the respective participations existing along the corporate chain, regardless of whether the companies involved constitute a group of companies, by convention, in accordance with article 265 of Law No. 6.404/76.
For the identification of the issuer's controlled and affiliated companies (letter “b”), the direct and indirect participations of the issuer in the companies involved must be considered.
The issuer's participations in group companies (letter “c”) must be indicated in percentage.
It is emphasized that item “d” requires the participations held by other group companies, which are not direct or indirect controllers, in the issuer. Item “e”, in turn, refers to companies that have the same controllers as the issuer, without being its controlled companies, since these are already requested in item “b”.
It is emphasized that the change of the issuer's controlling shareholders, direct or indirect, as well as the carrying out of incorporation, share incorporation, merger, or spin-off operations involving the issuer are two of the hypotheses that determine the update of the Reference Form by issuers registered in Categories A and B, as provided for in items V and VIII of paragraph 3 and items III and IV of paragraph 4 of article 24 of CVM Instruction No. 480/09.
Thus, the existence of a change in the issuer's controlling shareholders, direct or indirect, as well as the carrying out of the aforementioned restructuring operations that come to alter the information contained in this item, will result, without prejudice to the provisions of CVM Instruction No. 358/02, in the need to update the Reference Form within 7 (seven) business days counted from the date of occurrence of the event, with the update of the information provided due to item 8.1, as well as any other information provided in the Form that is affected by this event.
b. Organizational chart of the economic group (item 8.2)
Although the presentation of the organizational chart of the economic group in which the issuer is inserted is optional information, its disclosure in the Reference Form is recommended, as it facilitates the visualization and understanding by investors of the corporate relationships maintained by the issuer with other companies in the group and about the form of organization with which its businesses are structured.
CVM Instruction No. 480/09 determines that the information inserted in the organizational chart must be compatible with those presented in item 8.1 of the Reference Form. In the organizational chart, the percentage of shares held by each of the issuer's controllers and by “other shareholders” relative to the total of ordinary and preferred shares and to the total capital of the company must be indicated. The issuer's participations in controlled and affiliated companies and in group companies must be indicated as a percentage of the total capital of the companies involved.
It is emphasized that, if the organizational chart of the economic group is presented, it must be updated whenever the information in item 8.1 is updated.
c. Description of restructuring operations that occurred in the Economic Group (item 8.3)
In this item, any corporate restructuring operations that have occurred in the economic group, with relevant effects for the issuer, must be described, such as incorporations, mergers, spin-offs, share incorporations, alienations and acquisitions of corporate control, acquisitions and alienations of important assets.
The importance of the alienated or acquired asset must be assessed by the issuer taking into account not only the value of alienation or acquisition, but also the relevance of the asset in the competitive, commercial, or operational strategy of the economic group.
In view of the provisions in item 8.1, the aforementioned operations that have occurred involving the following must be described in this item:
a) the issuer; b) direct and indirect controllers of the issuer; c) controlled and affiliated companies of the issuer; d) economic group companies that hold participations in the issuer; e) companies under common control.
Given that in item 6.5 the relevant corporate events involving the issuer or any of its controlled or affiliated companies must already be described, the operations involving these companies that have already been described in item 6.5 may be cited in item 8.3 by reference.
If the issuer does not opt for this procedure, it is worth remembering that the occurrence of incorporation, share incorporation, merger, or spin-off involving the issuer is one of the hypotheses that determines the update of the Reference Form by issuers registered in Categories A and B, as provided for in item VIII of paragraph 3 and item IV of paragraph 4 of article 24 of CVM Instruction No. 480/09.
Thus, the occurrence of these events will result, without prejudice to the provisions of CVM Instruction No. 358/02, in the need to update the Reference Form within 7 (seven) business days counted from the date of the holding of the assembly in which the operation was approved, with the update of the information provided due to item 8.3, as well as any other information provided in the Form that is affected by these events. If the event depends on the homologation of a specific regulatory body, the issuer must expressly state this information in item 8.3 itself.
9.2.9. Relevant Assets (Section 9)
a. Description of non-current asset assets relevant for the development of the issuer's activities (item 9.1)
The information regarding companies in which the issuer has participation (letter “c”) must be provided only in relation to companies understood by the issuer as relevant for the development of its activities, especially the data related to direct and indirect controlled entities, when relevant. For the purposes of items “vii” and “ix” of letter “c”, the book value of the participations to be reported corresponds to the value recorded in non-current assets, that is, the value resulting from the application of the equity method, in the case of controlled and affiliated companies, or by acquisition cost, reduced by provision for probable losses in the realization of their value, when this loss is proven to be permanent, in the case of other participations.
With regard to items “viii” and “x” of letter “c”, for the purpose of calculating the market value of the participation, the closing quote of the last business day of the fiscal year in which there was a transaction must be considered. The information must be provided considering the species and class of the shares subject to the participation.
The information regarding the appreciation or depreciation of the participations required in items “ix” and “x” of letter “c” must be provided in percentages.
9.2.10. Directors' Comments (Section 10)
This section of the Form aims for directors to provide investors with comments (their overall view) of the issuer's business and the factors underlying the result of its operations and its financial situation during the period covered by the financial statements, including with regard to the main trends and factors that may affect the future development of the entity.
In this section of the Form, directors have the opportunity to highlight and explain the factors that most affected the financial, economic, and patrimonial situation of the issuer, in order to allow a more precise interpretation of these facts by investors, enabling them to see the company through the eyes of the board.
Thus, the information provided in response to the requirements of the items in this section of the Form, and especially in items 10.1 and 10.2, must not be a mere description or repetition of information already presented in other sections of the Reference Form or in the issuer's financial statements. It is the responsibility of the directors to provide additional data and the necessary comments so that the investor can understand and evaluate the context in which the information present in their financial statements is inserted.
In this sense, it is recommended to avoid mere citation of situations that can be directly verified by the investing public, such as references to percentages of growth or decline of accounts or lines of the result. It is intended that the reasons that led to their occurrence be clarified, and what measures will be observed to maintain, potentiate, or correct this situation.
Directors must ensure that the information provided in this section of the Form presents the same quality, breadth, and depth as those that would be disclosed by them in a public distribution prospectus of securities.
If the issuer prepares consolidated financial statements, the information in this section of the Form, when applicable, must be provided based on these statements, and the issuer must clearly identify this fact in the corresponding item of this section of the Form. It is emphasized that this guidance is applicable especially to companies that act as holding companies.
a. Financial and patrimonial conditions and Result of operations (items 10.1 and 10.2)
In the annual presentation of the reference form, the information required in items 10.1 and 10.2 must refer to the last 3 financial statements of the end of the fiscal year. In the presentation of the reference form due to the request for registration of public distribution of securities, the information required in these items must refer to the last 3 financial statements of the end of the fiscal year and to the last accounting information disclosed by the issuer.
We draw attention to the fact that Annex 24 of CVM Instruction No. 480/09 requires in a note that, whenever possible, directors comment in these fields on the main known trends, uncertainties, commitments, or events that may have a relevant effect on the financial and patrimonial conditions of the issuer and, in particular, on its result, its revenue, its profitability, and on the conditions and availability of sources of financing.
It is emphasized that the information above requested regarding the disclosure of trends must not be confused with the disclosure of projections or estimates, object of section 11 of the Form, or with the disclosure of the sensitivity analysis table provided for in CVM Instruction No. 475/08. In this point, it is important to differentiate the concepts of projection, whose disclosure is optional, and is informed in section 11 of the reference form, from that of trend. The trend does not confuse with projection by not being quantified.
While projection refers to an estimate of achieving a possible value or range of values for a variable of interest (prices, sales, profits, etc.), conditioned by the occurrence of some premises, the trend is associated with the continuity (or not) of a past and present movement, already known by the market, since it is reflected in the information regularly disclosed by the issuer, such as history of sales growth, price drops, etc., and therefore, they can be commented on to allow investors to see the company's situation from the perspective of management. In effect, the causes of the detected movement must be commented on, and its perspective of continuity (or not), based on facts already occurred, not to occur, as in the case of projections.
It is also worth noting that administrators must make their comments in the most objective way possible, specifically addressing the theme provided for by the statement. Care must be taken with excess of generality in comments, as this can lead to misinformation.
In comments regarding financial conditions (letter “a” of item 10.1), the issuer must present a reasoned analysis based on indicators (liquidity, indebtedness, etc.).
In comments on the capital structure (letter “b” of item 10.1), the issuer must also provide information on the financing pattern of its operations, by own capital and third-party capital, as well as information related to the redemption of shares or quotas.
Note that the information on sources of financing for working capital and for investments in non-current assets to be provided in letter “d” of item 10.1 has a past nature, while the information provided in letter “e” of item 10.1 has a prospective nature. Therefore, the information provided in letter “d” of item 10.1 must maintain comparability with those contained in the issuer's financial statements.
The information on the issuer's indebtedness levels and characteristics of its debts (letter “f”) must take into account the information on the subject disclosed in item 3.7 of the Reference Form. Even if there is no degree of contractual subordination between debts, directors must include, in compliance with item 10.1.f.iii, comments on the subordination between the obligations registered in the current liabilities of the balance sheets that integrate the financial statements corresponding to the last 3 fiscal years, in view of the order of precedence in any universal creditors' contest.
In addition, restrictive clauses (covenants) existing in financing contracts entered into by the issuer must be informed, accompanied by the respective indices.
The issuer must inform, in letter “g” of item 10.1, the percentages used of the already contracted financings, a situation applicable, for example, to long-term project financings.
In compliance with the provision in letter “h” of item 10.1, the issuer must include, preferably in the form of a table, horizontal and vertical analysis of significant variations in relevant accounts. The mere transcription of patrimonial and income accounts does not fulfill such purpose.
b. Events with relevant effects, occurred and expected, in the financial statements (items 10.3)
In this item, directors must comment on the relevant effects that the introduction or alienation of an operational segment, constitution, acquisition or alienation of corporate participation and of events or the carrying out of non-routine operations have caused or that are expected to cause on the issuer.
It should be noted that the requested comments should be made regarding events already disclosed by the issuer in accordance with CVM Instruction No. 358/02.
Regarding the expected effect, it is worth indicating that the information requested here should not be confused with the disclosure of projections or estimates, which is the subject of section 11 of the Form. What the Form requires in item 10.3 is the board's analysis of the potential impact that the indicated events, already disclosed by the issuer, may have on the financial statements and the issuer's results.
For the purpose of the information provided in item 10.3, the concept of operating segment should be understood as equivalent to the accounting concept of "cash-generating unit."
c. Significant changes in accounting practices and Auditors' qualifications and emphasis paragraphs in the auditor's report (item 10.4)
Directors must comment in this item on all issues cited in letters "a", "b", and "c".
In comments on significant changes in accounting practices (letters "a" and "b"), directors must not limit themselves to merely transcribing the information provided on the subject in the financial statements or simply listing the CPCs adopted in each fiscal year.
In this item, directors must include comments that allow investors to understand the reason for the change, the differences between the new practices adopted and the previous model, and the significant effects caused on the results of the financial statements.
Comments on the independent auditor's qualifications and emphasis paragraphs (letter "c") must be made regardless of the directors' judgment regarding their relevance. They must also not be limited to merely transcribing the information present in the auditor's report; directors must include comments on all aspects present in the report.
d. Critical accounting policies (item 10.5)
In this item, directors must indicate and comment on the critical accounting policies adopted by the issuer, understood here as any accounting practice that, in the issuer's assessment, if altered, would result in a relevant accounting change 36.
Merely transcribing the information provided on the subject in the explanatory notes of the financial statements does not fulfill the purpose of the rule and should be avoided. In this item, directors must comment on the reasons that led them to adopt certain accounting policies and to make the estimates contained in the accounting information.
36 Critical accounting policy can be defined in the following terms: "A critical accounting policy is one that is both very important to the portrayal of the company's financial condition and results, and requires management's most difficult, subjective or complex judgments. Typically, the circumstances that make these judgments difficult, subjective and/or complex have to do with the need to make estimates about the effect of matters that are inherently uncertain." (Source: http://www.sec.gov/news/speech/spch537.htm). In free translation, this definition could correspond to: "A critical accounting policy is one that is at the same time very important to demonstrate the financial condition and results of the company, and that requires difficult, subjective and/or complex judgments by management. Normally, the circumstances that make these judgments difficult, subjective and/or complex have to do with the need to make estimates about the effect of issues that are inherently uncertain".
e. Internal controls relative to the preparation of financial statements: degree of efficiency and deficiency and recommendations present in the auditor's report (item 10.6)
The information requested in item 10.6 regarding the deficiencies and recommendations indicated by the independent auditor relative to the internal controls adopted by the issuer to ensure the preparation of financial statements must be provided in line with the auditor's report provided for in item II of article 25 of CVM Instruction No. 308/99.
It should be observed that this field should not be filled with the mere transcription of the auditor's report. Directors must insert their comments, at minimum, on: (a) the deficiencies reported by the auditor and their classification (significant or other deficiencies); (b) the respective recommendations of the auditors; and (c) the measures adopted to correct such deficiencies.
As a rule, item 10.6.b of the Reference Form must contain, at minimum, comments regarding significant deficiencies. However, it is important to emphasize that it is up to the directors, by making their own judgment regarding the probability and possible magnitude of distortions that may arise in the accounting statements as a result of the deficiencies pointed out by the auditor, to evaluate the relevance and need to disclose comments regarding other deficiencies identified by the auditors.
This item must adequately reflect discussions with independent auditors, due to internal control deficiencies that have been identified in the audit of the financial statements. In any case, it must be in conformity with the last written communication of internal control deficiencies, plus the respective updated comments of the company's management.
9.2.11. Projections (section 11)
a. Disclosure of Projection (item 11.1)
The disclosure of projections and estimates by the issuer is optional in accordance with article 20 of CVM Instruction No. 480/09.
In line with the provisions of items II, III, and IV of paragraph 1 of article 20 of CVM Instruction No. 480/09, it is emphasized that the projections disclosed by the issuer in this item of the Reference Form, and in the form of CVM Instruction No. 358/02, must be:
a) identified as hypothetical data that do not constitute a promise of performance; b) reasonable; and c) accompanied by the relevant premises, parameters, and methodology adopted, and whenever projections and estimates are provided by third parties, the sources must be indicated.
As provided for in paragraph 2 of article 20 of CVM Instruction No. 480/09, the projections or estimates disclosed in this item of the Reference Form, and in the form of CVM Instruction No. 358/02, must be revised at an interval of time appropriate to the object of the projection, which in no case may exceed 1 (one) year.
It is worth remembering that the alteration in projections or estimates or the disclosure of new projections or estimates is one of the hypotheses that determines the update of the Reference Form by issuers registered in Categories A and B, as provided for in item IX of paragraph 3 and item V of paragraph 4 of article 24 of CVM Instruction No. 480/09.
Thus, the occurrence of any of these events will entail, without prejudice to the provisions of CVM Instruction No. 358/02, the need to update the Reference Form within 7 (seven) business days counted from the date of the alteration or the disclosure of new projections or estimates, with the update of the information provided in this item, as well as any other information provided in the Form that is affected by these events, including with regard to item 11.2 below.
b. Monitoring and alteration of projections disclosed during the last 3 fiscal years (item 11.2)
This item requires that the issuer who has disclosed projections in the last 3 fiscal years inform:
a) which are being replaced by new projections included in the Form and which of them are being repeated; b) regarding projections relating to periods already elapsed, the comparison of projected data with the actual performance of the indicators, clearly indicating the reasons that led to deviations in the projections; c) regarding projections relating to periods still in progress, whether the projections remain valid on the date of delivery of the Form and, if applicable, explain why they were abandoned or replaced.
Thus, the issuer must use this item to provide information relating to: (a) the revision of projections or estimates disclosed in item 11.1, provided for in paragraph 2 of article 20 of CVM Instruction No. 480/09; (b) the monitoring of projections and estimates disclosed in item 11.1; and (c) the alteration or disclosure of new projections and estimates informed in item 11.1.
With regard to the monitoring of projections or estimates disclosed, it is alerted that CVM Instruction No. 480/09 determines that the issuer must also confront, quarterly, in the appropriate field of the ITR and DFP Forms, the projections disclosed in the Reference Form with the results actually obtained in the quarter, indicating the reasons for any differences (paragraph 4 of article 20).
9.2.12. General meeting and administration (section 12)
a. Description of the issuer's administrative structure (item 12.1)
In this item, the issuer must describe its administrative structure, based on what its corporate bylaws and internal regulations provide.
In preparing the description of the attributes of the statutory bodies and committees, the issuer must ensure that the information provided is consistent with what is provided for in its corporate bylaws.
The description of the attributes and individual powers of the members of the board of directors (letter "d") must be presented by the issuer, even if the individual attributes and powers are provided only in the company's internal regulations.
With regard to what is requested in letters "c" and "e", any types of performance evaluation mechanisms for the bodies or committees that make up the issuer's administrative structure must be informed, as well as any types of performance evaluation mechanisms for the members of the board of directors, the committees, and the board of directors, even if these evaluation mechanisms do not directly influence the determination of remuneration of the components.
The information on evaluation mechanisms that are provided by the issuer in letters "c" and "e" of this item must be reconciled with the information provided in section 13 of the Form, when the evaluation mechanisms described here are taken into consideration for the determination of remuneration.
The committees or similar structures that participate in the issuer's risk management policy informed in item 5.2"f" must also be described in item 12.1"a" of the Form.
b. Description of the rules, policies, and practices relative to general meetings (item 12.2)
In this item, the issuer must inform the practices and policies adopted by it regarding general meetings.
Issuers that have adopted differentiated practices regarding calling deadlines (letter "a"), competencies of the assembly (letter "b"), and mechanisms intended to allow the inclusion, in the agenda, of proposals formulated by shareholders (letter "i") or that have developed a structured policy for the identification and administration of conflicts of interest (letter "d") must describe, in a clear and objective manner, the practice adopted or the policy developed.
Issuers that do not adopt a differentiated practice relative to the procedures mentioned in letters "a", "b", and "i" must only: (a) inform that they do not adopt a differentiated practice relative to what is provided for in corporate legislation; and (b) include information on the minimum requirements provided for in legislation regarding the subject, avoiding, however, the mere reproduction of the legal text. Issuers that have not developed a structured policy for the identification and administration of conflicts of interest (letter "d") must only inform this fact, without including, in this case, information on the legal treatment given to the subject.
With regard to letter "f", all issuers must describe the rules provided for in the corporate bylaws and the practices adopted by the issuer in meetings held in the last fiscal year regarding the formalities necessary for the acceptance of instruments of proxy granted by shareholders, indicating whether the issuer admits proxies granted electronically. The information provided must include the indication of the prior deadline for deposit of the instrument, if existing.
It must also be informed the eventual statutory rules and the practices adopted by the issuer in the previous fiscal year regarding the documents and formalities required to prove the quality of shareholder and participation in the assembly. The information provided must include the indication of the advance deadline for deposit of the document usually applied by the issuer in the last assemblies.
In order to guarantee investors access to other important information about the issuer's practices regarding general meetings, it is also suggested that it be informed in item 12.12 (below), regarding meetings held in the last 3 (three) years: (i) the date of realization; (ii) cases of installation in second calling; and (iii) the exact quorum of installation of each assembly.
c. Dates and newspapers of publication of information required by Law No. 6.404/76 (item 12.3)
In this item, the issuer must inform, in the form of a table:
a) the name of the official body of the Union, State, or Federal District, according to the place where the issuer's headquarters is located, and of the newspaper of large circulation edited in the place where the issuer's headquarters is situated, that have been used by the company, in the form of article 289 of Law No. 6.404/76, for the publication of the information cited in letters "a" to "d" of this item; and b) date of publication of the information cited in letters "a" to "d" of this item.
The information must refer to the financial statements of the last 3 fiscal years, even if the publications occur in the current fiscal year.
The issuer must ensure that the publication dates cited in letters "a" to "d" of this item are compatible with the information already disclosed in the IPE System.
d. Description of the issuer's rules, policies, and practices relative to the board of directors (item 12.4)
In this item, the issuer must describe the rules, policies, or practice adopted by it regarding the functioning of the board of directors, indicating: (a) frequency of meetings; (b) provisions existing in a shareholders' agreement that establish restriction or linkage to the exercise of voting rights of board members; and (c) rules for the identification and administration of conflicts of interest.
If the issuer does not adopt rules for the identification and administration of conflicts of interest, it must only indicate this fact. In this case, the issuer must include information on the reason why it does not adopt this procedure. Possible projects for the implementation of new practices, stage of development, and estimated time for adoption can also be commented on.
It is emphasized that the celebration, alteration, or rescission of a shareholders' agreement filed at the issuer's headquarters or of which the controller is a party regarding the exercise of voting rights or control power of the issuer is a hypothesis that determines the update of the Reference Form by Category A issuers, as provided for in item X of paragraph 3 of article 24 of CVM Instruction No. 480/09.
Thus, the celebration, alteration, or rescission of shareholders' agreements that establish restriction or linkage to the exercise of voting rights of board members will entail, without prejudice to the provisions of CVM Instruction No. 358/02, the need to update the Reference Form within 7 (seven) business days of its filing at the issuer's headquarters, with the update of the information provided due to letter "b" of this item, as well as any other information provided in the Form that is affected by these events.
e. Identification of administrators and members of the fiscal council (item 12.6)
In this item, the issuer must identify, in the form of a table, the members of the board of directors, the statutory board of directors, and the fiscal council, with the presentation of the data required in letters "a" to "j".
The issuer must pay attention to the correct identification of the administration members who participate in more than one body, such as the board of directors and the board of administration. The same administration member should not be identified twice in cases of accumulation of positions in the issuer's bodies.
It is worth remembering that CVM Instruction No. 480/09 included, in item I of paragraph 3 and item I of paragraph 4 of article 24, as a hypothesis that determines the update of the Reference Form, the alteration of:
a) administrator or member of the issuer's fiscal council, for issuers registered in Category A; and b) administrator, for issuers registered in Category B.
Thus, the occurrence of these events will entail the need to update the Reference Form within 7 (seven) business days of the date of election, with the update of the information about the administrators or members of the fiscal council provided by Category A issuers in attention to items 12.6, 12.8, 12.9, and 12.10 and by Category B issuers in attention to items 12.6 and 12.8, as well as any other information provided in the Form that is affected by these events.
It is emphasized that the above-mentioned update must be carried out even in cases of reelection.
If, by the deadline for the mandatory update of information, the alteration of the administrator is pending homologation by a specific regulatory body or has not occurred its swearing-in, the issuer must proceed to update the Form by providing in item 12.12, regarding the administrator, the information required in items 12.6, 12.8, 12.9, and 12.10 (as exigible for its registration category), as well as informing that the alteration or swearing-in is pending. Upon homologation or swearing-in, the issuer must update, according to its registration category, items 12.6, 12.8, 12.9, and 12.10 to reflect the new composition of its administration and remove from item 12.12 the information previously provided regarding the administrator.
f. Identification of members of statutory committees and of audit, risk, financial, and remuneration committees (item 12.7)
In this item, the issuer must indicate, in the form of a table, the same information required in letters "a" to "j" of item 12.6, regarding:
a) members of audit, risk, financial, and remuneration committees or similar organizational structures, created by statutory provision; b) members of audit, risk, financial, and remuneration committees or organizational structures, in cases where these, even if not statutory, participate in the decision-making process of the issuer's administration or management bodies as consultants or auditors; c) members of the other committees provided for in the Issuer's Bylaws.
g. Information about administrators and members of the fiscal council (item 12.8)
The information relating to the curriculum of administrators and members of the fiscal council must contain the information required in items "a.i" and "a.ii". The information must be provided in an objective manner, without the inclusion of information or statements that denote judgment of value regarding the quality of the administrator.
In attention to letter "b" of this item, the following information must be provided about the administrators and members of the issuer's fiscal council, regarding the following events that have occurred during the last 5 years:
a) any criminal conviction, even if not final, with indication of the stage in which the process is; b) any conviction in a CVM administrative process and the penalties applied, even if not final, indicating whether the corresponding process is under appeal in the Council of Resources of the National Financial System; c) any final conviction, in the judicial or administrative sphere, that has suspended or disqualified him from practicing any professional or commercial activity.
h. Relations of subordination, service provision, or control (item 12.10)
In this item, the issuer must indicate the relations of subordination, service provision, or control maintained by the administrators in the last 3 years with the controllers, controlled companies, and creditors, among others.
It is emphasized that the information requested in this item must be provided relative to the current administrators of the issuer indicated in item 12.6 and not about the people who acted as administrators in the last 3 years.
i. Agreements, including insurance policies, for payment or reimbursement of expenses borne by administrators (item 12.11)
In the case of the existence of an insurance policy, which provides for the payment or reimbursement of expenses borne by administrators, resulting from reparation of damages caused to third parties or to the company, the issuer must include, in addition to the description of the insurance provisions, information on the value of the civil liability insurance premium for the administrators.
j. Other information deemed relevant (item 12.12)
In order to guarantee investors access to other important information about the issuer's practices regarding general meetings, it is suggested that it be informed in this item, with regard to meetings held in the last 3 (three) years: (i) the date of realization; (ii) cases of installation in second calling; and (iii) the exact quorum of installation of each assembly.
9.2.13. Remuneration of administrators (section 13)
a. Description of the remuneration policy or practice of the board of directors, the statutory and non-statutory board of directors, the fiscal council, the statutory committees, and the audit, risk, financial, and remuneration committees (item 13.1)
In this item, the issuer must describe, in a clear and objective manner, the remuneration policy or practice adopted by it for the members:
a) of the board of directors, the statutory and non-statutory board of directors, and the fiscal council; b) of the audit, risk, financial, and remuneration committees or similar organizational structures, created by statutory provision; c) of the audit, risk, financial, and remuneration committees or similar organizational structures, even if not statutory, if such committees or structure participate in the decision-making process of the issuer's administration or management bodies as consultants or auditors; and c) of the other committees provided for in the Issuer's Bylaws.
The qualitative description of the remuneration policy or practice must comprise, at minimum, the information required in letters "a" to "g" of this item, and the issuer may provide additional information deemed pertinent for its better understanding by investors, such as alterations implemented relative to the policies or practices adopted in previous fiscal years.
To facilitate understanding by investors, it is recommended that, whenever there are significant variations between the remuneration practices and policies among the different bodies, the information requested in this item be presented by body.
The issuer must describe the elements that make up the total remuneration it practices and the objectives of each (item 13.1.b.i). "Remuneration elements" are understood as the remuneration shares described in letter "c" of item 13.2. Thus, the remuneration elements described in item 13.1.b.i must be consistent with the information provided in item 13.2 and vice versa.
The issuer must also describe direct and indirect benefits, disclosing their components. Direct or indirect benefits are understood as the right to medical, dental, life insurance, car, fuel, housing, educational assistance, etc. Post-employment benefits were defined in Technical Pronouncement CPC 33(R1), approved by CVM Deliberation No. 695/12. In the information regarding this subject, values related to private pension plans must be included.
In response to item 13.1.b.ii, the issuer must inform the share held by each element of the remuneration described in item 13.1.b.i in the total remuneration. Such information must be provided for each body, committee, or similar structure that has been cited in item 13.1, and the issuer may present them in the form of a chart or table.
The issuer must also present all information necessary to understand the methodology used to establish the value and form of remuneration adjustment (item 13.1.b.iii), describing the organizational structures involved, the responsibility of each of the bodies and members involved, as well as the criteria used by them. For example, if the issuer takes into account, for the fixing and adjustment of remuneration, market practices, it must explain how the company monitors and verifies these practices, as well as include detailed information about the comparison criteria it uses (for example, if based on companies of the same size or different size, same sector or different sectors, etc.).
Regarding the performance indicators taken into consideration for the determination of each element of remuneration (item 13.1.c), the issuer must, without the need to explicitly state internal targets established, disclose the indicators it uses to measure individual or company performance, mainly with regard to the variable shares of remuneration, indicating if these are based, for example, on the result of the sale of products and services, on the company's operating result, on net revenue, EBITDA, market value of shares, etc.
In response to item 13.1.f, the issuer must inform if there are shares of remuneration received by administrators and other persons cited in the caput of item 13.1, due to the exercise of the position at the issuer, that are supported by subsidiaries, controlled companies, or direct and indirect controllers. Such information must also include the identification of the type of remuneration received (considering the remuneration shares described in letter "c" of item 13.2) and the company or controller that supported them. Furthermore, the values must be segregated by administrative body. Where applicable, the information must be reconciled with that required in item 13.15.
b. Remuneration of the board of directors, statutory management, and fiscal council (item 13.2)
In this item, the issuer must provide, in table form, by body, quantitative data on the annual remuneration attributed to the board of directors, statutory management, and fiscal council, segregated between their different fixed and variable components, according to the content specified in letters "a" to "e" of this item.
The information must refer not only to the remuneration recognized in the issuer's result for the last three fiscal years, but also to that forecast for the current fiscal year, discriminating the remuneration shares described in letter "c". Direct or indirect benefits (item 13.2.c.i) are understood as the right to medical, dental, life insurance, car, fuel, housing, educational assistance, etc.
Post-employment benefits (item 13.2.c.iii) were defined in Technical Pronouncement CPC 33(R1), approved by CVM Deliberation No. 695/12. In the information regarding this subject, values related to private pension plans must be included.
Benefits motivated by the cessation of the exercise of the position (item 13.2.c.iv) include contractual arrangements and other instruments that structure remuneration or indemnification mechanisms for the company's administrators, in case of dismissal/resignation from their respective positions. It is emphasized that the value of benefits motivated by the cessation of the exercise of the position (item 13.2.c.iv) must integrate the global amount of remuneration submitted for approval by the general assembly, as provided in article 152 of Law No. 6.404/76.
The values of share-based remuneration (item 13.2.c.v) must be informed in line with the definition of share-based remuneration, paid in shares or money, contained in CVM Deliberation No. 650/10, which approved Technical Pronouncement CPC 10(R1), regardless of whether the entity's equity instruments were granted by the issuer itself or by its shareholder. The same applies to the information required in items 13.4, 13.6, 13.7, and 13.8.
The reported remuneration values must be net of social charges that are the employer's burden. The issuer must clearly highlight, in a segregated manner, the value corresponding to contributions to INSS, which are the employer's burden, recognized in its result. Where applicable, the values of charges incident on fixed and variable remuneration must be reported, respectively, in letters "c.i" and "c.ii" ("others").
The number of members of each body (letter "b") must correspond to the annual average of the number of members of each body calculated monthly, with two decimal places. For example: in a company whose monthly distribution of the number of members of a certain body is that described in the table below, the number of members must be calculated as specified below:
Month | No. members
January | 7
February | 7
March | 7
April | 7
May | 6
June | 6
July | 7
August | 7
September | 5
October | 5
November | 5
December | 5
Total | 74
No. of members (item 13.2 "b") = 74/12 months = 6.17 members
The issuer must make it clear in the "Observation" field of item 13.2 itself that the number of members of each body (letter "b") was calculated in the manner specified above.
To avoid duplication, remuneration values must be calculated by body. In cases where the same administrator holds a position in the statutory management and in the board of directors, the remuneration received by him as a member of the board of directors shall not be computed for the purpose of calculating the remuneration of the management, and vice versa.
The value, per body, of the remuneration (letter "d") corresponds to the total annual remuneration of each of the bodies, that is, the sum of all shares included in letter "c" that have been attributed to the members of the body in the fiscal year.
The total value of the remuneration of the board of directors, statutory management, and fiscal council (letter "e") corresponds to the sum of the total remunerations of the three bodies indicated in letter "d".
Information about the current fiscal year must be presented considering the number of members and the annual remuneration forecast by the issuer.
c. Variable remuneration of the board of directors, statutory management, and fiscal council (item 13.3)
In this item, the issuer must provide, in table form, by body, additional information about the values reported in the table provided for in item 13.2 regarding bonuses and profit sharing attributed by it to the members of the board of directors, statutory management, and fiscal council.
The information required in letters "a" to "d" must be provided not only regarding the variable remuneration of the last 3 fiscal years, but also that forecast for the current fiscal year.
Information about the current fiscal year must be presented considering the number of members and the annual variable remuneration forecast by the issuer.
To avoid duplication, annual remuneration values must be calculated by body. In cases where the same administrator holds a position in the statutory management and in the board of directors, the remuneration received by him as a member of the board of directors shall not be computed for the purpose of calculating the remuneration of the management, and vice versa.
and councilors to whom variable remuneration recognized in the issuer's result in the fiscal year was attributed.
The information required in letters "c" and "d" must be provided in current currency, even when the remuneration attributed as bonus or profit sharing is fixed based on another criterion, such as, for example, number of salaries. In this case, the issuer may include in a note to the table provided for in item 13.3 information about the criterion actually used to calculate these remunerations.
The minimum value provided for in the variable remuneration plan, whether in the form of bonus or profit sharing (letters "c.i" and "d.i"), is understood as the amount to be paid if the administrator reaches the minimum expected performance level.
The table required in this item must be presented according to the model below and must be consistent with the values reported in table 13.2, comprising all shares referring to bonuses and profit sharing recognized in the issuer's result.
Variable remuneration forecast for the current fiscal year (20XX)
| Board of Directors | Statutory Management | Fiscal Council | Total | |
|---|---|---|---|---|
| No. of members | ||||
| Bonus | ||||
| Minimum value provided for in the variable remuneration plan | ||||
| Maximum value provided for in the variable remuneration plan | ||||
| Value provided for in the remuneration plan, if targets are met | ||||
| Profit sharing | ||||
| Minimum value provided for in the variable remuneration plan | ||||
| Maximum value provided for in the variable remuneration plan | ||||
| Value provided for in the remuneration plan, if targets are met |
Variable remuneration - fiscal year ended xx/xx/xxxx
| Board of Directors | Statutory Management | Fiscal Council | Total | |
|---|---|---|---|---|
| No. of members | ||||
| Bonus | ||||
| Minimum value provided for in the variable remuneration plan | ||||
| Maximum value provided for in the variable remuneration plan | ||||
| Value provided for in the remuneration plan, if targets were met | ||||
| Value actually recognized in the result of the fiscal year | ||||
| Profit sharing | ||||
| Minimum value provided for in the variable remuneration plan | ||||
| Maximum value provided for in the variable remuneration plan | ||||
| Value provided for in the remuneration plan, if targets were met | ||||
| Value actually recognized in the result of the fiscal year |
d. Information, by body, about the shares held by members of the board of directors, statutory management, and fiscal council (item 13.5)
In this item, the issuer must inform, in consolidated form, by body, without the need for individualization of the administrator, the total quantity of the following securities held by members of the board of directors, statutory management, or fiscal council on the date of closing of the last fiscal year:
a) shares or quotas directly or indirectly held, in Brazil or abroad, issued by the issuer, its direct or indirect controllers, controlled companies, or companies under common control; and b) other securities convertible into shares or quotas, issued by the issuer, its direct or indirect controllers, controlled companies, or companies under common control.
It is emphasized that item 13.5 does not restrict the disclosure of shares, quotas, or other securities held by administrators and members of the fiscal council, to those whose possession or acquisition is linked to the position they perform at the issuer. Therefore, all securities referred to in this item must be listed by the issuer.
In presenting the information, the issuer must identify the issuing company of the reported securities.
The information regarding securities issued by the company held by members of the board of directors, statutory management, or fiscal council must be consistent with the consolidated information provided by the issuer in the "Securities Traded and Held (art. 11 of CVM Instruction No. 358)" form relative to the month of closing of the last fiscal year.
Regarding any indirect participations held through investment funds or similar vehicles, the understanding expressed in the sole paragraph of article 20 of CVM Instruction No. 358/02 must be applied, which excluded from the concept of indirect negotiation the negotiations carried out through investment funds, provided that such funds are not exclusive, nor can the fund's negotiation decisions be influenced by the quota holders.
e. Share-based remuneration of the board of directors and statutory management (item 13.6)
In this item, the issuer must present, in table form, quantitative information regarding share-based remuneration recognized in the issuer's result for the last 3 fiscal years and that forecast for the current fiscal year, of the board of directors and statutory management, according to the content specified in letters "a" to "e" of this item.
To avoid duplication, annual remuneration values must be calculated by body. In cases where the same administrator holds a position in the statutory management and in the board of directors, the remuneration received by him as a member of the board of directors shall not be computed for the purpose of calculating the remuneration of the management, and vice versa.
and councilors to whom share-based remuneration recognized in the issuer's result in the fiscal year was attributed.
Regarding all data that result from evaluations or calculations made by the administration, such as in the case of the information requested in items "c.vi", "d", and "e", the issuer must inform in item 13.9 the data, models, and assumptions used.
The table required in this item must be presented according to the model below.
Share-based remuneration forecast for the current fiscal year (20XX)
| Board of Directors | Statutory Management | |
|---|---|---|
| No. of members | ||
| Grant of stock purchase options | ||
| Grant date | ||
| Quantity of options granted | ||
| Time for options to become exercisable | ||
| Maximum time for exercise of options | ||
| Time restriction on transfer of shares | ||
| Weighted average exercise price: | ||
| (a) Of options outstanding at the beginning of the fiscal year | ||
| (b) Of options lost during the fiscal year | ||
| (c) Of options exercised during the fiscal year | ||
| (d) Of options expired during the fiscal year | ||
| Fair value of options on the grant date | ||
| Potential dilution in case of exercise of all granted options |
Share-based remuneration - fiscal year ended xx/xx/xxxx
| Board of Directors | Statutory Management | |
|---|---|---|
| No. of members | ||
| Grant of stock purchase options | ||
| Grant date | ||
| Quantity of options granted | ||
| Time for options to become exercisable | ||
| Maximum time for exercise of options | ||
| Time restriction on transfer of shares | ||
| Weighted average exercise price: | ||
| (a) Of options outstanding at the beginning of the fiscal year | ||
| (b) Of options lost during the fiscal year | ||
| (c) Of options exercised during the fiscal year | ||
| (d) Of options expired during the fiscal year | ||
| Fair value of options on the grant date | ||
| Potential dilution in case of exercise of all granted options |
f. Open options of the board of directors and statutory management at the end of the last fiscal year (item 13.7)
In this item, the issuer must present, in table form, information regarding open options of the board of directors and statutory management, at the end of the last fiscal year, according to the content specified in letters "a" to "d" of this item.
To avoid duplication, annual remuneration values must be calculated by body. In cases where the same administrator holds a position in the statutory management and in the board of directors, the remuneration received by him as a member of the board of directors shall not be computed for the purpose of calculating the remuneration of the management, and vice versa.
and councilors linked to the options plan.
Regarding all data that result from evaluations or calculations made by the administration, such as in the case of the information requested in items "c.vi", "d", and "e", the issuer must inform in item 13.9 the data, models, and assumptions used.
The table required in this item must be presented according to the model below.
Open options at the end of the fiscal year ended xx/xx/xxxx
| Board of Directors | Statutory Management | |
|---|---|---|
| No. of members | ||
| Options not yet exercisable | ||
| Quantity | ||
| Date on which they will become exercisable | ||
| Maximum time for exercise of options | ||
| Time restriction on transfer of shares | ||
| Weighted average exercise price | ||
| Fair value of options on the last day of the fiscal year | ||
| Exercisable options | ||
| Quantity | ||
| Maximum time for exercise of options | ||
| Time restriction on transfer of shares | ||
| Weighted average exercise price | ||
| Fair value of options on the last day of the fiscal year | ||
| Fair value of total options on the last day of the fiscal year |
g. Exercised options and delivered shares relating to share-based remuneration of the board of directors and statutory management (item 13.8)
In this item, the issuer must present, in table form, information regarding exercised options and delivered shares relating to share-based remuneration of the board of directors and statutory management, in the last 3 fiscal years, according to the content specified in letters "a" to "d" of this item.
and councilors linked to the options plan.
Regarding all data that result from evaluations or calculations made by the administration, such as in the case of the information requested in items "c.vi", "d", and "e", the issuer must inform in item 13.9 the data, models, and assumptions used.
The table required in this item must be presented according to the model below.
Exercised options - fiscal year ended xx/xx/xxxx
| Board of Directors | Statutory Management | |
|---|---|---|
| No. of members | ||
| Exercised options | ||
| Number of shares | ||
| Weighted average exercise price | ||
| Difference between exercise value and market value of shares relating to exercised options | ||
| Delivered shares | ||
| Number of delivered shares | ||
| Weighted average acquisition price | ||
| Difference between acquisition value and market value of acquired shares |
h. Information necessary to understand the data disclosed in items 13.6 to 13.8 (item 13.9)
In this item, the issuer must ensure that the information provided is sufficient to allow moderately informed investors to understand the information provided in items 13.6 to 13.8.
It is emphasized that, in the description of the data and assumptions used in the pricing model (letter "b"), the issuer must include quantified information, including with regard to the weighted average price of shares, exercise price, expected volatility, option life, expected dividends, and risk-free interest rate.
i. Pension plans in force granted to members of the board of directors and statutory directors (item 13.10)
In this item, the issuer must present, in table form, information about the pension plans in force granted to members of the board of directors and statutory directors, according to the content specified in letters "a" to "h" of this item.
and councilors linked to the pension plan.
The table required in this item must be presented according to the model below. If there is more than one pension plan in force, the information must be presented by plan.
| Board of Directors | Statutory Management | |
|---|---|---|
| No. of members | ||
| Name of the plan | ||
| Quantity of administrators who meet conditions to retire | ||
| Conditions for early retirement | ||
| Current updated accumulated value of accumulated contributions until the end of the last fiscal year, discounted by the portion relating to contributions made directly by administrators | ||
| Total accumulated value of contributions made during the last fiscal year, discounted by the portion relating to contributions made directly by administrators | ||
| Possibility of early withdrawal and conditions |
j. Value of the highest, lowest, and average value of individual remuneration of the board of directors, statutory management, and fiscal council (item 13.11)
In this item, the issuer must inform, in table form, by body, the value of the highest, lowest, and average value of individual annual remuneration of the board of directors, statutory management, and fiscal council, relative to the last three fiscal years.
The information provided must be consistent with the values indicated in the table provided for in item 13.2, and must comprise all shares of remuneration included therein.
To avoid duplication, reported values must be calculated by body. In cases where the same administrator holds a position in the statutory management and in the board of directors, the remuneration received by him as a member of the board of directors shall not be computed for the purpose of calculating the remuneration of the management, and vice versa.
The number of members of each body must correspond to the number of members of the respective body reported in letter "b" of item 13.2.
Except in the case where an administrator renounces remuneration, the average value of the annual remuneration of each body must correspond to the division of the total annual remuneration value of each body (letter "d" of item 13.2) by the number of members reported for the respective body (letter "b" of item 13.2).
If any administrator renounces remuneration, he shall not be considered for the calculation of the average value of annual remuneration, although he remains to be computed for the indication of the number of members (letter "a"). In this case, the issuer must disclose in the observation field the number of members effectively used for the calculation of average remuneration.
The value of the lowest individual annual remuneration of each body must be calculated with the exclusion of all members of the respective body who have held the position for less than 12 months. If it is necessary to adopt this procedure, the issuer must make it clear in the "Observation" field of item 13.11 itself that the value was calculated with the exclusion of body members. If all members have held the position for less than 12 months, the value of the lowest individual annual remuneration must be calculated considering the remunerations actually recognized in the result of the fiscal year.
The value of the highest individual annual remuneration of each body must be calculated without any exclusion, considering all remunerations recognized in the result. The issuer
shall also inform, in a note in item 13.11 itself, the number of months in which the respective member exercised their functions in the entity.
Only companies that do not provide the information required due to a judicial decision shall leave the field blank and, through the icon “Justification for non-filling”, mention said judicial decision, identifying the case number and the court in which it is proceeding.
k. Contractual arrangements, insurance policies, or other instruments that structure remuneration or indemnification mechanisms for administrators (item 13.12) The information provided in this item must allow the investor a complete understanding of the logic of the remuneration and indemnification mechanisms for administrators, if dismissed from their positions or retired.
Furthermore, if there is an insurance policy, the amount paid as an insurance premium must be informed.
l. Percentage of the total remuneration of each body attributed to members of the board of directors, statutory management board, or audit committee who are related parties to the issuer’s controllers (item 13.13)
In this item, the issuer must inform the percentage participation in the total annual remuneration of each body (reported in letter “d” of item 13.2) held by members of the board of directors, statutory management board, and audit committee who are related parties to the direct and indirect controllers of the issuer.
The information shall be provided for the last 3 fiscal years and shall be calculated considering the concept of related party contained in CVM Deliberation No. 642/10, which approved Technical Pronouncement CPC 05(R1).
m. Remuneration of members of the board of directors, statutory management board, or audit committee received for any reason other than the function they hold (item 13.14)
In this item, the issuer must inform, in a consolidated manner, by body, the annual values recognized in its results as remuneration of members of the board of directors, statutory management board, and audit committee that were received for any reason other than the function held, such as commissions and consulting or advisory services provided.
The information shall be provided for the last 3 fiscal years.
n. Remuneration of members of the board of directors, statutory management board, or audit committee recognized in the results of the issuer’s controllers, companies under common control, and subsidiaries of the issuer (item 13.15)
Item 13.15 does not restrict the disclosure of the required information to remunerations borne by subsidiaries of the issuer, its direct or indirect controllers, and companies under common control, which have been attributed to administrators and members of the audit committee due to the exercise of their position in the issuer.
In this item, the following must be informed, in a consolidated manner, by body:
a) the portions of remuneration borne by subsidiaries of the issuer, its direct or indirect controllers, and companies under common control, which have been attributed to members of the board of directors, statutory management board, and audit committee due to the exercise of their position in the issuer (whose existence must be reported in item 13.1.f); b) other remunerations received by administrators and members of the audit committee of the issuer, which have been recognized in the results of subsidiaries of the issuer, the direct or indirect controllers of the issuer, or companies under common control, even if not related to the exercise of a position in the issuer.
In the calculation, remunerations received for any reason, in Brazil or abroad, shall be included. In the case of the remunerations cited in letter “b” above, the issuer must specify under what title the values were attributed to the individuals.
The information shall be provided on an annual basis, for the last 3 fiscal years, and shall be disclosed in a consolidated manner, by type of body and company (subsidiaries of the issuer, direct or indirect controllers of the issuer, and companies under common control), without the need to identify the corporate name of these companies.
The values shall be informed in table form, according to the revised model below:
Fiscal Year 20XX – remuneration received due to the exercise of position in the issuer Board of Directors | Statutory Management Board | Audit Committee | Total Direct and Indirect Controllers Subsidiaries of the Issuer Companies under Common Control
Fiscal Year 20XX – other remunerations received, specifying under what title they were attributed Board of Directors | Statutory Management Board | Audit Committee | Total Direct and Indirect Controllers Subsidiaries of the Issuer Companies under Common Control
o. Other information deemed relevant (item 13.16)
CVM Instruction No. 480/09 does not provide for the mandatory presentation, in section 13 of the Reference Form, of the values regarding the remuneration of administrators recognized in the issuer’s consolidated results.
However, the disclosure of this information, additionally in this item, by issuers is considered desirable, as it is useful to allow a better understanding and evaluation by investors of the company’s business and results.
9.2.14. Human resources (section 14)
a. Information on the issuer’s human resources (item 14.1)
The information provided in item 14 shall be considered regarding the issuer’s human resources; there is, as a rule, no obligation to disclose information from subsidiaries. However, the disclosure of the information required in this item in a consolidated manner is considered desirable, as it allows a better understanding and evaluation by investors of the company’s business and results. In this case, the issuer must expressly state that the information provided covers other companies linked to the issuer.
Information regarding the turnover rate (letter “c”) shall refer only to the issuer’s employees, or, in the case above, to the issuer’s employees and its subsidiaries.
Regarding the issuer’s exposure to labor liabilities and contingencies (letter “d”), the issuer may refer to information that has been eventually provided on the subject in items 4.3 to 4.7 of the Form.
The company shall provide the information required in item 14.1.b of the Reference Form considering the total number of natural persons who provide services as third-party contractors, whether through a direct contract with the company or through a legal entity.
b. Description of the remuneration policy for the issuer’s employees (item 14.3)
In the description of the characteristics of remuneration plans based on shares for non-administrator employees, the issuer may refer to information eventually provided on the subject in item 13.4 of the Form, provided that all information required in letters “a” to “c” of this item is provided there, in a clearly identifiable manner.
9.2.15. Control (section 15)
a. Identification of the controlling shareholder or group of controlling shareholders (item 15.1)
In this item, the issuer must provide updated information on the identification and participation held by the controlling shareholder or group of controlling shareholders of the issuer, up to the natural person, in line with the information required in letters “a” to “i”.
All participations held, directly or indirectly, by the controlling shareholder or group of controlling shareholders in the issuer’s share capital shall be informed.
If the shareholder or participant of the group of controlling shareholders is a legal entity, a list containing the information referred to in letters “a” to “d” of this item shall be prepared, identifying its direct and indirect controllers, up to the controllers who are natural persons, regardless of any confidential treatment given to the information due to legal transaction or the legislation of the country in which the partner or controller is constituted or domiciled.
It is emphasized that, unlike the system adopted in the Annual Information Form (IAN), the information required in letter “h” shall be provided even if the legal entity shareholder is a publicly held company.
In line with the decision issued by the CVM Collegiate Body on 18.03.2008 (CVM Process RJ/2007/9346) 37, during the reform of CVM Deliberation No. 525/07, we remind you that:
a) there are cases where shareholders do not have shareholders to be identified, such as mixed-economy companies (whose controller is the Union, State, or Municipality, which in turn do not have shareholders), multilateral organizations (their controllers would be the respective sponsoring countries), and pension funds and endowments (which have participants and not shareholders); and b) the investment fund or similar vehicle must identify, when it is required to inform up to the level of natural person, the unit holder that controls it, if any, using the same criterion that, if it were a publicly held company, would be sufficient to consider the participation as that of a controlling shareholder.
The participations reported in letters “e” and “f” shall be calculated considering the total number of shares issued, including any treasury shares.
As the date of the last change (letter “i”), the base date of the last information provided in this item shall be informed.
It is emphasized that the change of the issuer’s controlling shareholders, direct or indirect, or variations in their share positions equal to or greater than 5% (five percent) of the same species or class of shares of the issuer is one of the hypotheses that determines the update of the Reference Form by issuers registered in Categories A and B, as provided in item V of paragraph 3 and item III of paragraph 4 of article 24 of CVM Instruction No. 480/09.
Thus, the occurrence of any of these events will result in the need to update the Reference Form within 7 (seven) business days counted from the date the issuer becomes aware of it, with the update of the information provided due to item 15.1, as well as any other information provided in the Form that is affected by these events.
It is also emphasized that whenever item 15.1 is updated, items 15.3 “d” and 19.2 shall also be updated.
b. Identification of shareholders, or groups of shareholders acting in concert or representing the same interest, with participation equal to or greater than 5% of the same class or species of shares (item 15.2)
In this item, the issuer must provide information on the identification of shareholders, or groups of shareholders acting in concert or representing the same interest, whose total participation, direct or indirect, is equal to or greater than 5% of the same class or species of shares,
37 See http://www.cvm.gov.br/port/descol/resp.asp?File=2008-010D18032008.htm
that are not listed in item 15.1, in line with the information required in letters “a” to “g”.
All participations held in species or classes of shares must be informed in compliance with letter “d”, even if the percentage held in the species or class distinct from that in which the shareholder holds a relevant participation is less than 5% of the shares.
In line with the decision issued by the CVM Collegiate Body on 11/03/2011 (CVM Process RJ2011/2324) 38, if the relevant participation is held jointly by different investment funds or portfolios under the same discretionary management, the identification of the funds or portfolios may be replaced by the indication of the manager’s name, with the presentation of the total participation held by the funds or portfolios managed by him. In this case, the issuer must make it clear that the indicated participation is held by different investment funds or portfolios.
Also in line with this decision, it is emphasized that the above guidance is not applicable to relevant participations held by exclusive funds or by funds in which trading decisions may be influenced by unit holders, in which case the identification of the funds is required.
In case of doubt regarding the disclosure rules for relevant participations in the form of article 12 of CVM Instruction No. 358/02, issuers must consult item 12.8 of Circular Letter/CVM/SEP No. 04/2011, of 15/03/2011.
As the date of the last change (letter “g”), the base date of the last information provided in this item shall be informed.
It is worth noting that the Reference Form is a periodic obligation provided for in article 24 of CVM Instruction No. 480/09 and must be presented updated annually within 5 (five) months counted from the date of closing of the fiscal year.
Thus, in the annual presentation of the Reference Form, the issuer must consult its list of shareholders and insert into the Form the data on shareholders who hold 5% or more of the same class or species of shares, regardless of the receipt of the communications provided for in article 12 of CVM Instruction No. 358/02.
It is emphasized that CVM Instruction No. 480/09 provides, in items VI and VII of paragraph 3 of article 24, that the Reference Form shall be updated by issuers registered in Category A:
a) when any natural or legal person, or group of people representing the same interest, reaches participation, direct or indirect, equal to or greater than 5% (five percent) of the same species or class of shares of the issuer, provided that the issuer has knowledge of such change; b) when there is a variation in the share position of the above-mentioned persons greater than 5% (five percent) of the same species or class of shares of the issuer, provided that the issuer has knowledge of such change.
38 See http://www.cvm.gov.br/port/descol/resp.asp?File=2011-009ED11032011.htm
Thus, the receipt by the issuer of the communication provided for in article 12 of CVM Instruction No. 358/02 will result in the need to update the Reference Form within 7 (seven) business days counted from the receipt of the communication, with the update of the information provided due to item 15.2, as well as any other information provided in the Form that is affected by this event.
It is also emphasized that whenever item 15.2 is updated, items 15.3 “d” and 19.2 shall also be updated.
c. Capital distribution (item 15.3)
In this item, the issuer must describe, in table form, the distribution of its share capital, as calculated in the last general shareholders’ meeting.
The quantities of natural and legal entity shareholders of the issuer (letters “a” and “b”) shall be calculated without excluding shareholders who have been reported in items 15.1 and 15.2 as controlling shareholders or holders of 5% or more of the ordinary or preferred shares. For the purposes of this item, investment funds and clubs must be classified as legal entities.
In addition to the quantity of legal entity shareholders, the issuer must also inform the approximate quantity of institutional investors included in this category of investors (letter “c”).
Institutional investors are market participants who act in the management of third-party resources. Included in this category, among others, are insurance, pension, and capitalization companies, mutual investment funds in shares, real estate investment funds, private pension funds, benefit plan funds, and insurance companies and institutions of a philanthropic nature.
The number of shares in circulation, by class and species (letter “d”), shall be calculated in accordance with the provisions of article 62 of CVM Instruction No. 480/09, which defines, as shares in circulation, all shares of the issuer, excluding those owned by the controller, persons linked to him, the issuer’s administrators, and shares held in treasury.
As provided in paragraph 1 of the same article of the Instruction, a linked person is understood to be a natural or legal person, fund, or universality of rights, that acts representing the same interest of the person or entity to which it is linked.
The number of shares in circulation, by class and species, and the quantities of natural and legal persons and institutional investors shall be calculated based on the information contained in the company’s corporate books and the information provided by the custodial service provider institution.
It is also emphasized that:
a) the sum of the number of natural person shareholders and legal entity shareholders cannot be equal to zero;
b) the number of shares in circulation cannot be indicated as equal to or greater than the total number of shares issued; c) the sum of the number of natural person shareholders and legal entity shareholders cannot be equal to the total number of shares issued when there are shareholders with relevant participation indicated in item 15.2 or shares held in treasury; d) in any case, the sum of the number of natural and legal person shareholders cannot be greater than the total number of shares issued by the company.
It is worth remembering that whenever items 15.1 or 15.2 of the Form are updated, item 15.3 “d” shall also be updated.
Additionally, it is recommended that item 15.3 “d” also be updated when there is a change in the share participation of the issuer’s administrators at the end of each month, as reported in accordance with article 11 of CVM Instruction No. 358/02.
d. Shareholder organizational chart of the issuer (item 15.4)
The organizational chart requested in item 15.4 is optional information. Its objective is to facilitate the visualization of the information presented in items 15.1 and 15.2 regarding the control structure and share distribution of the issuer.
For this reason, it must be compatible with the information provided in those items, but does not need to be at the same level of detail. All direct and indirect controllers of the issuer, as well as shareholders with participation equal to or greater than 5% of a species or class of shares, shall be identified in the organizational chart in any manner.
It is noted that, if the issuer chooses to present the organizational chart, there will be a need to update it whenever the information related to items 15.1 and 15.2 is updated.
e. Information on shareholders’ agreements that regulate the exercise of voting rights or the transfer of shares issued by the issuer (item 15.5)
In this item, the issuer must describe, with the presentation of the information required in letters “a” to “g” of this item, any shareholders’ agreement that regulates the exercise of voting rights or the transfer of shares issued by the issuer, that:
a) is archived at its headquarters; or b) of which the controller is a party, regardless of its archiving at the issuer’s headquarters.
In this sense, it is worth remembering that article 43 of CVM Instruction No. 480/09 provides that the controller must timely provide the issuer with all information necessary for compliance with the legislation and regulation of the securities market.
It is also worth remembering that the celebration, alteration, or rescission of a shareholders’ agreement archived at the issuer’s headquarters or of which the controller is a party regarding the exercise of voting rights or control power of the issuer is a hypothesis that determines the update of the Reference Form by Category A issuers, as provided in item X of paragraph 3 of article 24 of CVM Instruction No. 480/09.
Thus, the occurrence of any of these events, which affects the information provided in item 15.5, will result, without prejudice to the provisions of CVM Instruction No. 358/02, in the need to update the Reference Form within 7 (seven) business days counted from the date of its archiving at the issuer’s headquarters, with the update of the information provided in item 15.5, as well as any other information provided in the Form that is affected by these events.
f. Information on relevant changes in the participations of members of the control group and administrators of the issuer (item 15.6)
In this item, relevant changes (acquisitions or alienations), as defined in article 12 of CVM Instruction No. 358/02, occurring in the last 3 fiscal years in the participations of members of the control group and administrators must be informed.
9.2.16. Transactions with related parties (section 16)
For the provision of the information requested in the items of this section of the Form, the concept of related party contained in CVM Deliberation No. 642/10, which approved Technical Pronouncement CPC 05(R1), must be considered.
If the issuer does not adopt rules, policies, or practices regarding the conduct of transactions with related parties (item 16.1), it must expressly state this fact. In this case, the issuer must also inform the reason why it does not adopt these procedures. Possible projects for the implementation of new practices, stage of development, and estimated time for adoption may also be commented on.
The information requested in item 16.2 regarding transactions with related parties that, according to accounting standards, are disclosed in the individual or consolidated financial statements, shall be provided regarding transactions that:
a) are in force in the current fiscal year; or b) were celebrated in the last 3 fiscal years, even if these transactions are no longer in force in the current fiscal year.
If the value of the transaction is variable, depending, for example, on the volume of services provided or quantity of products sold, among other conditions, the issuer must:
(a) describe, together with the object of the contract, the conditions of the transaction (letter “d”); and (b) inform, as the amount involved in the business (letter “e”), the historical values involved.
The company must inform in item 16.2.k.ii the interest rate charged on loans or other types of debt. The interest rates charged shall be informed on an annual basis.
Regarding the provisions of item 16.3, the issuer must clearly and objectively identify the measures adopted to avoid conflicts of interest, as well as provide all necessary information to demonstrate that the operations were carried out under strictly commutative conditions or with adequate compensatory payment, similar to those that could be established in transactions with unrelated parties, informing, among other things, terms and conditions applied in the operation and the existence of any eventual guarantees.
The information regarding the commutative nature of transactions with related parties must be consistent with the information provided in item 16.2, particularly with respect to item 16.2.k.i (nature and reasons for the transaction) and 16.2.k.ii (interest rate charged), for loan transactions.
9.2.17. Share capital (section 17)
The information requested in the items of this section of the Form must be provided even if approval by a specific regulatory body is pending, and the issuer must expressly state this information in item 17.5.
With respect to item 17.1, the following must be informed in the Empresas.Net system regarding the "Date of authorization or approval":
a) in the case of information on authorized capital, the date of the last deliberation on the subject; and b) in the case of information on issued, subscribed, and paid-up capital, the date of the last change to the information.
It should be noted that CVM Instruction No. 480/09 provides, in items II and III of paragraph 3 and in item II of paragraph 4 of article 24, that the Reference Form must be updated:
a) when there is a change in share capital or the issuance of new securities, even if privately subscribed, in the case of issuers registered in Category A; b) when there is the issuance of new securities, even if privately subscribed, in the case of issuers registered in Category B.
Thus, the occurrence of any of these events will necessitate the update of the Reference Form within 7 (seven) business days counted from the date of the respective change or issuance, with the update of the information affected by these events provided by issuers registered in Category A in items 17.1, 17.2, 17.3, and 17.4 and by Category B issuers in item 17.1, as well as any other information provided in the Form that is affected by this event.
9.2.18. Securities (section 18)
a. Description of the rights of each class and species of issued shares (item 18.1) In this item, the issuer must describe the rights of each class or species of shares it has issued, presenting the information required in letters “a” to “i” of this item.
The information requested in this item must be described considering the rights and rules provided for in the issuer's Bylaws.
It should be recalled that the alteration of rights and advantages of issued securities is a circumstance that determines the update of the Reference Form by Category A issuers, as provided for in item IV of paragraph 3 of article 24 of CVM Instruction No. 480/09.
Thus, the occurrence of this event will necessitate the update of the Reference Form within 7 (seven) business days counted from the date the alteration becomes effective, with the update of the information provided in accordance with items 18.1, 18.2, and 18.3, as well as any other information provided in the Form that is affected by these events.
b. Description of statutory rules that limit the voting rights of significant shareholders or that require the realization of a public offer (item 18.2) In this item, the issuer must describe the main conditions of rules provided for in the Bylaws that represent limitations to the exercise of voting rights, such as clauses that:
a) limit the number of votes of each shareholder, generally or with respect to any specific matter provided for in the bylaws; or b) impose a burden on the exercise of voting with respect to any specific matter provided for in the bylaws, such as, for example, "entrenched clauses".
In this item, the issuer must also describe, clearly and objectively, if they exist, statutory rules that oblige its shareholders to make a public offer for the acquisition of shares in certain situations (such as, for example, reaching a certain shareholding participation). In the description, the issuer must inform the main conditions imposed in the bylaws, including, but not limited to, what refers to: (a) situations in which the public offer for the acquisition of shares is due or waived; and (b) the value to be offered or its method of calculation.
It is emphasized that the rules regarding public offers for the acquisition of shares provided for by law, regulation, or listing rule in a trading segment must be indicated in item 18.1.
c. Description of other securities (item 18.5)
In this item, the issuer must describe other securities it has issued that are not shares, presenting the information required in letters “a” to “j” of this item.
The information requested in this item must be described considering the conditions provided for in the respective legal documents for each security commented on.
In the Empresas.Net system, the information required regarding debt securities in letter “h” must be provided in the field "Characteristics of the Security", which may also be used to provide additional information about other securities disclosed, deemed pertinent by the issuer.
It should be recalled that the issuance of new securities, even if privately subscribed, is a circumstance that determines the update of the Reference Form by issuers registered in Categories A and B, as provided for in item III of paragraph 3 and in item II of paragraph 4 of article 24 of CVM Instruction No. 480/09.
Thus, the occurrence of this event will necessitate the update of the Reference Form within 7 (seven) business days counted from the date of issuance, with the update of the information provided in item 18.5, as well as any other information provided in the Form that is affected by this event.
d. Other information deemed relevant (item 18.10) CVM Instruction No. 480/09 provides that the set of information contained in the Reference Form must be a true, accurate, and complete portrait of the issuer's economic-financial situation and the risks inherent to its activities and the securities it has issued.
For this reason, it is recommended that issuers also disclose in the Reference Form, including through its update, information about titles issued abroad not characterized as securities, whenever the issuance has been relevant or contains provisions that impose restrictions on the issuer or that may affect holders of securities issued by the company.
To this end, the issuer must describe, in item 18.10, the characteristics of the issuance and the titles issued, providing, with respect to these, the information required in item 18.5. If the titles are admitted to trading, issuers must also provide in item 18.10, with respect to these, the information required in item 18.7, to the extent applicable.
9.2.19. Buyback plans and treasury securities (section 19)
a. Information on the issuer's share buyback plans (item 19.1) In this item, the issuer must provide information on its share buyback plans.
The percentage provided for in item “ii” of letter “b” must be calculated by dividing the quantity informed in item “i” of letter “b” by the total number of shares in circulation after the purchase of the number of shares provided for in the buyback plan.
With respect to the reserves and profits available for the buyback operation (item “iv” of letter “b”), the issuer must also indicate the base date to which the information refers.
With respect to what was requested in item “v” of letter “b”, other important information must be disclosed, such as the objective of the program and the name and address of the financial institutions that acted as intermediaries.
Regarding the quantity of shares acquired (item “vi” of letter “b”), updated information must be presented up to the date of delivery of the Reference Form.
The percentage of shares acquired in relation to the total approved (item “viii” of letter “b”) must correspond to the division between the value informed in items “vi” and “i” of letter “b”.
b. Movement of securities held in treasury (item 19.2) In this item, the issuer must inform, in the form of a table, about the movement of securities held in treasury, segregating by type, class, and species and presenting information regarding quantity, total value, and weighted average price.
It should be clarified that the initial balance of securities held in treasury (letter “a”) must correspond to the final balance verified on the last day of the previous fiscal year.
It should be recalled that whenever items 15.1 or 15.2 are updated, item 19.2 must also be updated. If it is not possible to update the information in table 19.2 of the Empresas.Net System, the issuer must provide the updated information in table 19.4.
c. Securities held in treasury on the date of closing of the last fiscal year (item 19.3)
In this item, the issuer must provide, in the form of a table, with respect to securities held in treasury on the date of closing of the last fiscal year, the information requested in letters “a” to “d”.
Given the provision in letter “c”, the required information must be provided by acquisition date. Exceptionally, in cases where the acquisitions were made in a quantity that makes it difficult to fill out this table in the Empresas.Net System, the initial date of the period informed in item 19.1.b.iii may be indicated as the acquisition date.
d. Provide other information that the issuer deems relevant (item 19.4) This item must be used to present other information not requested in section 19 of the Reference Form, which the issuer deems important to support the investment decision. For example, it must be informed whether the issuer uses financial instruments with objectives other than asset protection (hedge), involving the evolution of the quotes of the shares it has issued, including with respect to operations associated with instruments such as “Total Equity Return Swap”, or similar operations.
The information provided must include the objectives of the operations and the associated risks for the issuer or its shareholders.
9.2.20. Securities trading policy (section 20)
The securities trading policy, provided for in article 15 of CVM Instruction No. 358/02 (as amended by CVM Instruction No. 449/07), is optional in formulation.
Thus, if the issuer has approved, by board of directors' deliberation, a trading policy, in accordance with article 15 of CVM Instruction No. 358/02, the information required in letters “a” to “d” of item 20.1 must be provided.
The above information must also include the rules applicable to transactions carried out by the issuer with its own issued shares.
If the issuer has not adopted a trading policy, it must expressly state this fact.
In this case, the issuer must also inform the reason why it does not adopt this procedure.
Possible projects for the implementation of new practices, stage of development, and estimated time for adoption may also be commented on.
It is emphasized that the information provided in this item does not exempt the issuer from sending the Trading Policy to CVM, as provided for in item XI of article 30 of CVM Instruction No. 480/09.
9.2.21. Information disclosure policy (section 21)
The policy for the disclosure of material acts or facts is a mandatory document, provided for in article 16 of CVM Instruction No. 358/02.
The Form must inform not only the main characteristics of the disclosure policy adopted by the issuer, indicating the channel or channels of communication used to disseminate information about material acts and facts and the procedures provided for therein regarding the maintenance of confidentiality about undisclosed material information, but also the internal mechanisms established for its implementation, describing them in items 21.1 and 21.2.
It is emphasized that this section of the Form requires the issuer to describe the main characteristics of the disclosure policy it has adopted. Therefore, the full text of the issuer's disclosure policy should not be inserted in the items of the section, although it may refer to the location on the worldwide web where the full text of its policy is available.
It is emphasized that the information provided in this section of the Form does not exempt the issuer from sending to CVM any updates eventually made to the Issuer's Information Disclosure Policy, as provided for in item XII of article 30 and in item VII of article 31 of CVM Instruction No. 480/09.
9.2.22. Extraordinary transactions (section 22)
Information must be provided in items 22.1, 22.2, and 22.3, with respect to the last 3 fiscal years, on:
a) the acquisition or alienation of any relevant asset that does not fit as a normal operation in the issuer's business, including a description of the conditions under which the transaction was carried out and the reasons for the acquisition and alienation. The information already described in items 6.5 and 8.3 may be cited here by reference; b) significant changes in the way the issuer's business is conducted, including information on the motivating facts and derived reflections on the issuer's business; c) relevant contracts entered into by the issuer and/or its controlled companies with third parties, not directly related to their operational activities.
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Source: Comissão de Valores Mobiliários — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works
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