RegAlertRule · CVM · 26 Feb 2015
Circular Letter CVM/SEP 02/2015
Issuers must submit registration requests to SEP with physical and electronic documents, including financial statements prepared for registration (referencing the last social year or a date within 120 days of filing if equity structure changed) and statements for the three most recent fiscal years. Foreign issuers sponsoring Level II or III BDR programs must appoint resident legal representatives in Brazil, replacing them within 15 business days of resignation or death, and disclose appointments via Empresas.NET. Cancellation of registration requires proof of security redemption or maturity, with deposits made at commercial banks and relevant facts disclosed; issuers remain liable for supervision fees in the quarter of cancellation.
SECURITIES AND EXCHANGE COMMISSION OF BRAZIL
Rua Sete de Setembro, 111/2-5th and 23-34th Floors – Center – Rio de Janeiro - RJ – ZIP Code: 20050-901 – Brazil Tel.: (21) 3554-8686 - www.cvm.gov.br Rua Sete de Setembro, 111/2nd Floor – Center – Rio de Janeiro - RJ – ZIP Code: 20050-901 – Brazil – Tel.: (21) 3554-8686 – http://www.cvm.gov.br.
Regional Superintendence of São Paulo: Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors – Bela Vista – São Paulo – SP – ZIP Code: 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 – ZIP Code: 70712-900 – Brazil – Tel.: (61) 3327-2030/2031
Circular Letter No. 2/2015/CVM/SEP
Rio de Janeiro, February 26, 2015.
SUBJECT: General guidelines on procedures to be observed by public, foreign, and incentivized companies
Dear Director of Investor Relations/Legal Representative,
Circular Letters issued by the Corporate Relations Superintendence (SEP) aim to guide securities issuers on the procedures to be observed when sending periodic and occasional information. Guidelines are also presented regarding interpretations given by the CVM Collegiate Board and the SEP concerning relevant aspects of legislation and regulation that must be considered by issuers when carrying out certain operations.
Through this document, the SEP intends to promote the disclosure of corporate information in a manner consistent with best corporate governance practices, aiming for transparency and fairness in relationships with investors and the market, as well as minimizing possible deviations and, consequently, reducing the need to formulate requirements and apply penalty fines and sanctions.
It should be noted that, starting in 2013, the SEP's annual Circular Letter began to also include 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 Circular Letter contains three new chapters compared to the previous one: Guidelines for Incentivized Companies (Chapter 10), Risk-Based Supervision Plan – SBR (Chapter 11), and Best Practices to be Adopted by Public Companies (Chapter 12).
This document consolidates the Circular Letters previously issued by the SEP, however, it does not dispense with reading the applicable norms, and the update of corporate legislation and CVM regulation must be observed, especially those that occurred after this date.
On 10/09/2014, CVM Instruction No. 552/14 was issued, which brought significant changes to CVM Instruction No. 480/09 (in addition to altering specific other Instructions). The changes brought by CVM Instruction No. 552/14 entered into force on 01/01/2015, with the exception of the changes in the Reference Form (Annex 24 of CVM Instruction No. 480/09), which will only come into force starting from 01/01/2016.
Thus, this Circular Letter already reflects the changes arising from CVM Instruction No. 552/14, with the exception of the modifications made to the Reference Form, which are not yet in force.
Finally, it is recommended:
a) regarding accounting matters, the reading of Circular Letters/SNC/SEP, available for consultation on the CVM website; b) regarding best practices for information disclosure, the consultation of pronouncements issued by CODIM, available at http://www.codim.org.br/; and c) with respect to regulation issued by the CVM, the consultation of public hearing reports, on the CVM website.
Sincerely,
FERNANDO SOARES VIEIRA
Superintendent of Corporate Relations
Table of Contents
Chapter 1. Issuer Registration............................................................................................ 11
1.1. Issuer categories......................................................................................................................11
1.2. Issuer registration request.............................................................................................................11
1.3. Foreign issuers............................................................................................................................12
1.4. Requests for category conversion...................................................................................................13
1.5. Consequences of non-delivery of information .................................................................................14
1.5.1. Penalty fines.......................................................................................................................14
1.5.2. Publication of the list of delinquent issuers.......................................................................15
1.5.3. Ex officio suspension of issuer registration...........................................................................15
1.5.4. Ex officio cancellation of issuer registration due to information delinquency.............16
1.5.5. Administrative sanctioning process.....................................................................................16
1.6. Other hypotheses for registration cancellation ..................................................................................17
1.6.1. Voluntary cancellation of registration.....................................................................................17
1.6.2. Ex officio cancellation of issuer registration due to its extinction.........................19
Chapter 2. Periodic Information ...................................................................................... 20
2.1. Management report .................................................................................................................20
2.2. Financial statements.................................................................................................................21
2.2.1. Financial institutions authorized to operate by the Central Bank of Brazil......................24
2.2.2. Advance disclosure of financial information.......................................................................26
2.2.3. Capital budget .............................................................................................................27
2.3. Periodic forms............................................................................................................................28
2.3.1. Registration Form ..............................................................................................................28
2.3.2. Reference Form .......................................................................................................28
a. Annual submission of the Form .................................................................................................. 28
b. Update of the Reference Form....................................................................................... 29
c. Resubmission of the Reference Form due to public distribution registration................. 31
2.3.3. Standardized Financial Statements – DFP ...................................................................31
2.3.4. Quarterly Information – ITR ................................................................................................32
2.3.5. Quarterly Report of Securitization Company.....................................................................34
2.4. Ordinary General Assembly – OGA...................................................................................................34
2.4.1. Notice of article 133 of Law No. 6.404/76.......................................................................34
2.4.2. Management proposal for OGA ....................................................................................35
a. Issuers registered in Category A............................................................................................. 35
b. Issuers registered in Category B............................................................................................. 39
2.4.3. OGA Convocation Notice.................................................................................................41
2.4.4. Summary and minutes of the OGA................................................................................................43
2.5. Report and communications of the fiduciary agent ..................................................................................43
Chapter 3. Main Occasional Information........................................................................ 44
3.1. Act and relevant fact.............................................................................................................................44
3.1.1. Distinction between Relevant Fact and Market Communication ..................................................48
3.2. Extraordinary General Assembly (EGA), special assembly (AGESP) and debenture holders' assembly (AGDEB)................................................................................................................................49
3.2.1. Convocation Notice for EGA, AGESP and AGDEB......................................................................49
3.2.2. Management proposal for EGA, AGESP or AGDEB .......................................................51
a. Management proposal – Category A....................................................................................... 51
b. Management proposal – Category B....................................................................................... 54
3.2.3. Summary and minutes of the EGA, AGESP or AGDEB ...............................................................................56
3.3. Projections.............................................................................................................................................56
3.4. Shareholders' agreement............................................................................................................................57
3.5. Group of companies convention....................................................................................................58
3.6. Bankruptcy petitions and judgments..........................................................................................................58
3.7. Petitions and judgments involving judicial and extrajudicial reorganization ...............................................58
3.8. Negotiations by administrators and related persons with securities of the issuing company...................................................................................................................................................59
3.9. Relevant shareholding .........................................................................................................60
3.9.1. Recipient of the obligation.......................................................................................................61
3.9.2. Object of the relevant participation ...........................................................................................62
a. Shares............................................................................................................................................... 62
b. Debentures convertible into shares, subscription bonuses, rights to subscribe for shares,
stock purchase options and others................................................................................................... 62
c. ADR, GDR and BDR.............................................................................................................................. 62
d. Share lending......................................................................................................................62
e. Indirect Participation....................................................................................................................... 63
3.9.3. Calculation of increase or reduction in relevant participation...................................................64
3.9.4. Group of persons acting in concert or representing the same interest.....................65
3.9.5. Responsibility of the administrator or manager.......................................................................66
3.9.6. Time and form of disclosure ...........................................................................................66
3.9.7. Content of the declaration of increase and reduction of participation..........................................67
3.9.8. Disclosure of the declaration by non-resident investor ........................................................68
3.10. Negotiation policy.......................................................................................................................68
3.11. Disclosure policy............................................................................................................................69
3.12. Bylaws...................................................................................................................................71
3.13. Meetings of the Board of Directors and the Fiscal Council..........................................................71
3.14. Communication of auditor change ..............................................................................................72
3.15. Transactions between related parties..............................................................................................72
3.16. Share-based remuneration plans....................................................................................73
3.17. Results release .......................................................................................................................73
3.18. Market maker ......................................................................................................................74
Chapter 4. Common Guidelines for Periodic and Occasional Information............................... 74
4.1. CVM and BM&FBOVESPA cooperation agreement ...............................................................................74
4.2. General guidelines...............................................................................................................................75
4.3. Obligation to maintain a website............................................................................................................77
4.4. Confidentiality request ...............................................................................................................77
4.5. Documents in foreign language ....................................................................................................78
Chapter 5. Special Rules on Issuers........................................................................ 78
5.1. Issuers with high market exposure....................................................................................78
5.2. Issuers in special situations ..........................................................................................................79
5.2.1. Issuers in extrajudicial reorganization ................................................................................79
5.2.2. Issuers in judicial reorganization.........................................................................................79
5.2.3. Issuers in bankruptcy.............................................................................................................80
5.2.4. Issuers in liquidation.........................................................................................................81
Chapter 6. Relevant Corporate Events and Other Guidelines......................................... 82
6.1. Common guidelines for ordinary and extraordinary general assemblies...........................................82
6.1.1. Shareholder representation in assembly .........................................................................82
6.1.2. Public requests for proxy.............................................................................................83
6.1.3. Request for list of shareholders' addresses (article 126, paragraph 3, of Law
No. 6.404/76)......................................................................................................................................84
6.1.4. Installation of the Fiscal Council and election of its members ....................................................85
6.1.5. Election of members of the Board of Directors .............................................................88
6.2. Incorporation, merger and spin-off.........................................................................................................91
6.2.1. Requests for waiver of compliance with requirements (CVM Resolution No. 559/08).............93
6.3. Acquisition of commercial company by public company ..................................................................94
6.4. Share conversion.............................................................................................................................95
6.5. Withdrawal right................................................................................................................................95
6.6. Capital increase by private subscription........................................................................................96
6.6.1. Surplus of shares in capital increase with credits..........................................................99
6.7. Capital reduction ..............................................................................................................................99
6.8. Share grouping.......................................................................................................................100
6.9. Period of prohibition on trading .....................................................................................................100
6.10. Transactions between related parties............................................................................................102
6.11. Trading with own-issued shares....................................................................................103
6.12. Bonus of treasury shares ...............................................................................................105
6.13. Dividends of preferred shares (article 203 of Law No. 6.404/76)...............................................105
6.14. Communication regarding non-payment of mandatory dividend due to the company's
financial situation...........................................................................................................................105
6.15. Late, corrective or complementary declarations of dividends..........................................105
6.16. Competence of the Board of Directors to deliberate on the issuance of debentures .........106
6.17. Composition of the executive board.........................................................................................................106
6.18. Request for certificates of entries in corporate books (article 100 of
Law No. 6.404/76).........................................................................................................................................106
6.19. Admission of shareholders in wholly-owned subsidiary (article 253 of Law No. 6.404/76)...........................108
Chapter 7. Appeals, Inquiries, Hearings and Requests for Review of Processes...................... 109
7.1. Appeals against decisions or understanding manifestations of the SEP ............................................109
7.2. Inquiries by public, foreign and incentivized companies.......................................................109
7.3. Communications with the SEP ..................................................................................................................110
7.4. Requests for hearings by individuals..........................................................................................112
7.5. Request for process review ..............................................................................................................112
7.6. Commitment term.....................................................................................................................114
7.7. Calculation of deadlines..........................................................................................................................114
7.8. Request for access to information.........................................................................................................115
Chapter 8. Empresas.NET System for Preparation and Delivery of Information................. 115
Chapter 9. Guidelines for the Preparation of the Reference Form............................. 117
9.1. Guidelines applicable to the entire Form......................................................................................117
9.1.1. General rules on the preparation and disclosure of information.........................................117
9.1.2. Field "other information deemed relevant" ...............................................................118
9.1.3. Scope and content of information provided...........................................................118
9.1.4. Information not applicable ..................................................................................................119
9.2. Guidelines for filling out the Reference Form ...................................................119
9.2.1. Identification of persons responsible for the content of the Form (section 1)................119
9.2.2. Auditors (section 2)...............................................................................................................120
a. Information about independent auditors (item 2.1).......................................................... 120
b. Remuneration of independent auditors (item 2.2) ............................................................... 120
c. Other information deemed relevant (item 2.3)...................................................................... 121
9.2.3. Selected financial information (section 3) ..................................................................121
a. Selected financial information (item 3.1) ......................................................................... 121
b. Non-accounting measurements (item 3.2) .............................................................................................. 122
c. Events subsequent to the last financial statements closing the social year (item 3.3) ................................................................................................................... 122
d. Description of the policy for the allocation of results (item 3.4)..................................................... 122
e. Dividend distributions and profit retentions occurring in the last 3 social years (item 3.5)................................................................................................................................. 123
f. Issuer's debt level (item 3.7)............................................................................. 124
g. Issuer's obligations according to the nature and maturity date (item 3.8) ................ 124
h. Other relevant information (item 3.9) .................................................................................... 125
9.2.4. Risk factors (section 4) .....................................................................................................125
a. Description of risk factors (item 4.1)...................................................................................... 125
b. Comments on the expectation of reduction or increase in exposure to relevant risks (item 4.2) .......................................................................................................................... 126
c. Judicial, administrative, or arbitral proceedings in which the issuer or its controlled companies are parties (item 4.3) ........................................................................................................................ 126
d. Judicial, administrative, or arbitral proceedings in which the issuer or its controlled companies are parties and whose opposing parties are directors or former directors, controllers or former controllers, or investors in the company or its controlled companies (item 4.4) ............................................................................................................................................ 128
e. Information on relevant confidential proceedings in which the issuer or its controlled companies are parties that have not been disclosed in items 4.3 and 4.4 (item 4.5)..................................... 130
f. Repetitive or connected judicial, administrative, or arbitral proceedings, which are not confidential and which are relevant collectively, in which the issuer or its controlled companies are parties (item 4.6)................................................................................................................................... 130
g. Other relevant contingencies not covered by the previous items (item 4.7)..................... 131
9.2.5. Market risks (section 5).................................................................................................131
a. Description of the main market risks (item 5.1)................................................................. 131
b. Description of the market risk management policy adopted by the issuer (item 5.2) ............................................................................................................................................ 131
9.2.6. Issuer history (section 6)..............................................................................................132
a. Brief history of the issuer (item 6.3)........................................................................................... 132
b. Main corporate events through which the issuer or any of its controlled or affiliated companies have passed (item 6.5) ........................................................................................... 132
c. Information on bankruptcy petitions, based on a relevant value, or on judicial or extrajudicial reorganization of the issuer, and on the current status of such petitions (item 6.6) ............................................................................................................................................ 133
9.2.7. Issuer activities (section 7) ...........................................................................................134
a. Main activities developed by the issuer and its controlled companies (item 7.1)......................... 134
b. Information on the issuer's operational segments (item 7.2.) ............................................ 134
c. Information on the products and services related to the operational segments disclosed in item 7.2 (item 7.3)....................................................................................................... 134
d. Information on the effects of state regulation on the issuer's activities (item 7.5) 135
e. Information on the issuer's relevant long-term relationships (item 7.8)............................ 135
9.2.8. Economic group (section 8)..................................................................................................136
a. Description of the economic group in which the issuer is included (item 8.1) ....................................... 136
b. Organizational chart of the economic group (item 8.2) ............................................................................. 136
c. Description of restructuring operations that occurred in the economic group (item 8.3).............. 137
9.2.9. Relevant assets (section 9)...................................................................................................138
a. Description of non-current asset items relevant for the development of the issuer's activities (item 9.1) ........................................................................................................ 138
9.2.10. Directors' comments (section 10) ...............................................................................138
a. Financial and equity conditions and Result of operations (items 10.1 and 10.2) ................. 139
b. Events with relevant effects, occurred and expected, in the financial statements (items 10.3).......................................................................................................................................... 140
c. Significant changes in accounting practices and Reservations and emphases present in the auditor's report (item 10.4).......................................................................................................... 141
d. Critical accounting policies (item 10.5).......................................................................................... 141
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) ................. 141
9.2.11. Projections (section 11) ..........................................................................................................142
a. Disclosure of Projections (item 11.1) .............................................................................................. 142
b. Monitoring and alteration of disclosed projections during the last 3 social years (item 11.2)............................................................................................................................................................... 143
9.2.12. General assembly and administration (section 12)....................................................................143
a. Description of the issuer's administrative structure (item 12.1)..................................................... 143
b. Description of the rules, policies, and practices related to general assemblies (item 12.2)................. 144
c. Dates and publication newspapers of the information required by Law No. 6.404/76 (item 12.3) .......... 145
d. Description of the issuer's rules, policies, and practices related to the board of directors (item 12.4) .................................................................................................................................................. 145
e. Identification of administrators and members of the fiscal council (item 12.6) ............................ 146
f. Identification of members of statutory committees and of audit, risk, financial, and remuneration committees (item 12.7)........................................................................................... 146
g. Information on administrators, members of the fiscal council, and audit committee (item 12.8)........................................................................................................................................................... 147
h. Subordination, service provision, or control relationships (item 12.10) ................................. 147
i. Agreements, including insurance policies, for payment or reimbursement of expenses borne by administrators (item 12.11)................................................................................. 147
j. Other information deemed relevant (item 12.12).................................................................. 148
9.2.13. Remuneration of administrators (section 13)..................................................................148
a. Description of the remuneration policy or practice of the board of directors, statutory and non-statutory management, the fiscal council, statutory committees, and audit, risk, financial, and remuneration committees (item 13.1) ......................................... 148
b. Remuneration of the board of directors, statutory management, and the fiscal council (item 13.2) .......................................................................................................................................... 149
c. Variable remuneration of the board of directors, statutory management, and the fiscal council (item 13.3).................................................................................................................. 151
d. Information, by body, on the shareholdings held by members of the board of directors, statutory management, and the fiscal council (item 13.5)........................................... 153
e. Share-based remuneration of the board of directors and statutory management (item 13.6) .......................................................................................................................................... 153
f. Open options of the board of directors and statutory management at the end of the last social year (item 13.7)...................................................................................................... 155
g. Exercised options and shares delivered related to share-based remuneration of the board of directors and statutory management (item 13.8)..................................................... 156
h. Information necessary to understand the data disclosed in items 13.6 to 13.8 (item 13.9) .......................................................................................................................................... 156
i. Pension plans in force granted to members of the board of directors and statutory directors (item 13.10).............................................................................................. 157
j. Value of the highest, lowest, and average value of individual remuneration of the board of directors, statutory management, and the fiscal council (item 13.11)......................................... 157
k. Contractual arrangements, insurance policies, or other instruments that structure remuneration or indemnification mechanisms for administrators (item 13.12)....................... 158
l. Percentage of the total remuneration of each body attributed to members of the board of directors, statutory management, or the fiscal council who are related parties to the issuer's controllers (item 13.13)........................................................................................ 158
m. Remuneration of members of the board of directors, statutory management, or the fiscal council received for any reason other than the function they hold (item 13.14)................ 159
n. Remuneration of members of the board of directors, statutory management, or the fiscal council recognized in the results of the issuer's controllers, companies under common control, and controlled companies of the issuer (item 13.15) .............................................................. 159
o. Other information deemed relevant (item 13.16).................................................................. 160
9.2.14. Human resources (section 14)............................................................................................160
a. Information on the issuer's human resources (item 14.1)................................................ 160
b. Description of the issuer's employee remuneration policy (item 14.3)......................... 161
9.2.15. Control (section 15)............................................................................................................161
a. Identification of the controlling shareholder or group of controlling shareholders (item 15.1).............................. 161
b. Identification of shareholders, or groups of shareholders acting in concert or representing the same interest, with a participation equal to or greater than 5% of the same class or species of shares (item 15.2)............................................................................................... 162
c. Capital distribution (item 15.3)................................................................................................ 163
d. Issuer shareholders' organizational chart (item 15.4) ................................................................... 164
e. Information on shareholder agreements that regulate the exercise of voting rights or the transfer of shares issued by the issuer (item 15.5) ............................................................... 165
f. Information on relevant changes in the participations of members of the control group and administrators of the issuer (item 15.6) ........................................................................... 165
9.2.16. Transactions with related parties (section 16)................................................................165
9.2.17. Share capital (section 17).....................................................................................................166
9.2.18. Securities (section 18) ...........................................................................................167
a. Description of the rights of each class and species of issued share (item 18.1).............................. 167
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) ............................................................. 168
c. Description of other securities (item 18.5).................................................................. 168
d. Other information deemed relevant (item 18.10).................................................................. 169
9.2.19. Buyback plans and treasury securities (section 19)................................169
a. Information on the issuer's share buyback plans (item 19.1)................................... 169
b. Movement of securities held in treasury (item 19.2).............................. 169
c. Securities held in treasury on the date of closing of the last social year (item 19.3)................................................................................................................. 170
d. Provide other information that the issuer deems relevant (item 19.4)................................. 170
9.2.20. Securities trading policy (section 20)..................................................170
9.2.21. Information disclosure policy (section 21) .............................................................170
9.2.22. Extraordinary business (section 22)..................................................................................171
Chapter 10. General Guidelines for Incentivized Companies ........................................ 171
10.1. Registration ...........................................................................................................................................171
10.2. Update of registration ...................................................................................................................172
10.3. Suspension of registration.....................................................................................................................172
10.4. Cancellation of registration ex officio................................................................................................172
10.5. Request for voluntary cancellation of registration.............................................................................173
10.6. Simplified registration.......................................................................................................................173
10.7. Waiver of debts.......................................................................................................................173
Chapter 11. Risk-Based Supervision Plan – SBR............................................. 173
Chapter 12. Best Practices to be Adopted by Open Companies....................... 174
12.1. Disclosure policy......................................................................................................................174
12.2. Trading policy.....................................................................................................................175
12.3. Risk management policy...............................................................................................176
12.4. Policy for contracting transactions between related parties..................................................176
12.5. Corporate calendar ...................................................................................................................176
12.6. Preparation of the Reference Form........................................................................................176
12.7. Timing of disclosure of relevant information .....................................................................176
12.8. Deadline for convening a general assembly of shareholders................................................................177
12.9. Adoption of CVM Opinion No. 35/08 ..........................................................................177
12.10.Audit committee report....................................................................................................178
12.11.Inclusion of candidates for administration members presented by non-controlling shareholders in the Administration's Proposal to shareholders' assemblies .............................................178
12.12.Periodic sending of the form of traded and held securities provided for in article 11 of CVM Instruction No. 358/02 .....................................................................................................179
12.13.Communication regarding the alienation or extinction of relevant share participation (article 12, paragraph 4, of CVM Instruction No. 358/02) .......................................................................................179
12.14.Open companies' page on the worldwide computer network.............................................179
12.15.Manual of accounting policies ........................................................................................................180
Chapter 1. Issuer Registration
1.1. Issuer categories
Under 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 securities of the issuer in regulated securities markets; and Category B, which authorizes the trading of securities of the issuer in regulated securities markets, except the following identified:
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 Obligations) of the Instruction establishes in its Sections II and III, which deal respectively with mandatory periodic and occasional information, some specific rules for each category of issuer regarding the discipline of information provision. As provided for in article 2 and in item I of article 1 of Annex 3 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 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, even if there is a concomitant offer.
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 social year, provided that such statements adequately reflect the equity structure of the issuer at the time of filing the registration request; or (ii) a subsequent date, preferably coinciding with the date of closing of the last quarter of the current year, but never earlier than 120 (one hundred and twenty) days counted from the date of filing the registration request, if: (i) a relevant change has occurred in the issuer's equity structure after the date of closing of the last social 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 that of the
the closing of the fiscal year shall only occur in cases where there has been an effective alteration in the issuer's equity structure; b) financial statements for the 3 (three) most recent 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 Article 29 of the Instruction, referring to the quarters of the current fiscal year, provided that more than 45 (forty-five) days have passed since the closing of each quarter. The standardized financial statements form – DFP and the quarterly information form – ITR shall correspond to the dates of the respective financial statements, according to the criteria mentioned above. The financial statements for the closing of the fiscal year shall serve as the basis for filling out the DFP, and the interim financial statements for the ITR. It is noted that paragraph 1 of Article 4 of CVM Instruction No. 480/09 provides that the counting of the deadline for analyzing the registration request provided in the caput shall only begin on the date of 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 shall 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 appearing in the individual, separate or consolidated financial statements, with the one that best represents the economic essence of the business prevailing for the purposes of this classification.
The classification as a foreign issuer will be verified at the time of the registration request (i) of the issuer with the CVM, (ii) of the public offering for the distribution of depositary receipt certificates – 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 into any of the hypotheses mentioned in letters “a” and “b” of the previous paragraph; and b) a calculation memo 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 classification as a foreign issuer in the case of a public offering for the distribution of depositary receipt certificates – 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. 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 classification as foreign issuers at the time of the registration request for a public offering for the distribution of depositary receipt certificates – BDR or for a BDR program.
Article 3 of Annex 32-I of CVM Instruction No. 480/09 provides that the following persons must appoint legal representatives domiciled and resident in Brazil, with powers to receive citations, notifications, and summonses related to actions filed 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, summonses, notifications, and requests for clarification:
a) the foreign issuer that sponsors a Level II or Level III depositary receipt certificates – BDR program; b) directors or persons who perform functions equivalent to those of a director in the foreign issuer that sponsors a Level II or Level III depositary receipt certificates – BDR program; and c) members of the board of directors, or equivalent body, of the foreign issuer that sponsors a Level II or Level III depositary receipt certificates – BDR program. 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 performing 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 (DRI) 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 (DRI or equivalent person). Furthermore, minutes of Board of Directors meetings, Board of Directors meetings, assemblies, or other documents dealing with the election or removal of the Legal Representative must be sent via the Empresas.NET System, within the deadlines provided for in CVM Instruction No. 480/09. It is worth highlighting that foreign issuers are subject to Law No. 6.385/76, even though the Brazilian corporate law (Law No. 6.404/76) is not applicable to them. Thus, 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 regard 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 following sanctioning procedures.
1.5.1. Coercive Fines
Initially, it is worth clarifying that coercive fines are imposed, observing the provisions of the 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 deadlines for delivering the periodic information listed in Article 21 of CVM Instruction No. 480/09 shall 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.
It is worth highlighting that, in accordance with paragraph 2 of Article 5 of CVM Instruction No. 452/207, the Superintendent may cumulatively determine the collection of a fine and the initiation of a sanctioning process, if he considers that the delay in providing information is part of a broader conduct that should be the object of an administrative sanction. Note that from the decision to apply coercive fines, an appeal may be filed to 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, it is emphasized the need to maintain updated registration data, notably the company's and DRI's addresses, as recommended in this circular (see item 2.3.1 and Chapter 8). 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 shall be received with a devolutive effect, and if there is a just fear of difficult or uncertain repair resulting from the appealed decision, the Superintendent may, ex officio or upon request, give suspensive effect to the appeal. Notwithstanding, it is worth informing that the CVM Collegiate Body, in a meeting on 23.11.2010 (CVM Process RJ2010/16497) , expressed itself in the sense that item VI of CVM Deliberation No. 463/03 (which provides that if there is a total or partial denial of the request for suspensive effect, 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.
See http://www.cvm.gov.br/port/descol/resp.asp?File=2010-046D23112010.htm.
It is worth noting 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 emphasizing 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 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 maintain contact with 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 Delinquent Registry (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 article, which shall only be imposed with the observation 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 delinquent issuers
Article 59 of CVM Instruction No. 480/09 provides that the SEP will publish semi-annually, on the CVM website on the worldwide computer network, 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 question 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 the SEP shall suspend 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, the 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 on the worldwide computer network. The issuer whose registration is suspended may request the reversal of the suspension through a reasoned request, sent to the SEP, accompanied by documents proving compliance with periodic and occasional obligations in arrears, including those that had delivery deadlines subsequent to the suspension of the 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 observation of the procedure provided for in paragraph 2 of Article 9 of Law No. 6.385/76. It is worth noting 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 eventual infractions committed before the cancellation of the registration.
1.5.4. Ex Officio Cancellation of Issuer Registration for Non-Payment of Information
Article 54 of the Instruction provides for two hypotheses for the ex officio cancellation of the issuer's 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, the 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 on the worldwide computer network, in accordance with the sole paragraph of Article 55 of CVM Instruction No. 480/09. It is worth noting 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 eventual 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. Regarding the delay in providing information, paragraph 1 of Article 5 of CVM Instruction No. 452/07 provides that the Superintendent will determine the initiation of a sanctioning process when he concludes that the said delay caused a risk of relevant damage to the market or to investors, considering, for this purpose, among other factors, and as the case may be, the amount and dispersion of the securities issued by the participant in circulation in the market, the quantity of the entity's supervised clients, the businesses usually intermediated by it, and the values under administration, management, or custody. For its part, 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. Thus, the CVM may investigate through an administrative process the eventual responsibility of administrators (and when applicable, the receiver, the trustee, 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 shall only be imposed with observation of the administrative process mentioned in the previous paragraph, observing also 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 stipulates differentiated rules for the voluntary cancellation of registration, according to the category in which the issuer is registered.
Article 47 of the Instruction conditions the cancellation of registration of Category B issuers 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 the 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 amount due 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 giving account of:
a) the decision to cancel the registration with the CVM; b) the realization of the deposit, mentioning the value, banking institution, branch, and checking 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 in regulated markets; or c) unanimous deliberation 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 receipt certificates, which have been publicly distributed or admitted to trading in 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 Offering for the Acquisition of Shares (OPA), formulated by the controlling shareholder or by the open company itself, having as 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 offering 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 worth noting that CVM Instruction No. 480/09 provides that a foreign issuer that sponsors a Level II or Level III depositary receipt certificates – BDR program 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 shall be addressed to the SEP, while requests formulated by issuers
Registrants in Category A must be directed to the Securities Registration Superintendence – SRE.
It is worth noting that Article 51 of CVM Instruction No. 480/09 provides that the issuer is responsible for disclosing the approval or denial of the cancellation of registration to investors, in the same manner established for the disclosure of material facts.
It is alerted that the constitution of a wholly-owned subsidiary does not result in the cancellation of the issuer's registration. In these cases, it is necessary to submit a request for cancellation of registration, in the case of Category A companies to the SRE and in the case of Category B companies to the SEP, in accordance with Articles 49 and 50 of CVM Instruction No. 480/09, 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 update of the registration maintained with the CVM.
It is also worth emphasizing that it is mandatory to forward the documents and periodic information whose delivery deadline is prior to the date of cancellation of the issuer's registration.
Finally, it is clarified that the issuer is liable for the supervision fee regarding 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 equity 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
According to Article 219 of Law No. 6.404/76, the company is extinguished by the closing of liquidation, as well as by merger or consolidation, and by spin-off with transfer of all assets to other companies.
In cases of merger, consolidation, 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 public companies from the date of the Shareholders' Meeting that deliberated the merger, consolidation, or spin-off. In addition to the mandatory sending of the Minutes of the respective Shareholders' Meeting via the Empresas.NET System, the company or its successor is requested to formally communicate said extinction to the SEP.
It is worth emphasizing that it is mandatory to forward the documents and periodic information whose delivery deadline is prior to the date of cancellation of the company's registration.
It is also clarified that the company is liable for the supervision fee regarding 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 equity 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 should be noted that, in view of Article 223, paragraph 3, of Law No. 6.404/76, if the merger, consolidation, or spin-off involves a public company, the succeeding company will also be public, 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 the form of paragraph 4, the non-compliance with the provisions of Article 223, paragraph 3, gives the shareholder the right to withdraw from the company, through the reimbursement of the value of their shares (article 45), within the 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 the issuer's registration is its extinction.
The 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's page on the worldwide web, in accordance with the sole paragraph of Article 54 of CVM Instruction No. 480/09.
Chapter 2. Periodic Information
2.1. Administrative Report
Article 133 of Law No. 6.404/76 establishes that, in addition to the financial statements and other documents cited, public companies must publish the administrative report on social business and on the main administrative facts 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 Ordinary Shareholders' Meeting be made available to shareholders, at the company's headquarters, up to one month before the date set for the holding of the OSM (30 days). It is also required by Articles 6 and 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's Internet page.
The Administrative Report must be prepared by issuers in line with the recommendations contained in CVM Orientation Opinion No. 15/87 and with the information they disclosed in section 10 of the Reference Form (Directors' Commentary).
The Administrative Report should cover information related to decisions taken based on guidance received from the controlling shareholder regarding the Company's activities – investments, signing of contracts, pricing policy, among others –, as well as the effects of such decisions, quantifying whenever possible, in the Company's performance. If applicable, it is also important to describe the main investments made as a result of the exercise of public policies.
Finally, the Report must address the prospects and plans for the current and future fiscal year, especially those related to the goals that the Company must pursue in compliance with its corporate purpose, based on objective premises and foundations, and, if applicable, in light of what is defined in Multi-Year Plans.
It is emphasized that Article 2 of CVM Instruction No. 381/03 determines that issuers must disclose in the Administrative Report the following information regarding the provision, by the independent auditor or by parties related to it, of any service that is not external audit:
a) the date of contracting, the duration period, 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 in relation to fees related to 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 administration 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 hypothesis that independent auditors have not provided other services besides external audit, the company must make this information clear in the Administrative Report.
It is emphasized that paragraph 2 of Article 2 of CVM Instruction No. 381/03 allows issuers to refrain from disclosing the information required in letter "b" above, when the total value of contracted fees represents less than 5% (five percent) of the fees related to external audit services. We draw attention that even in this case the issuer's obligation to provide in the Administrative Report the other information demanded in Article 2 of CVM Instruction No. 381/03, cited above, will persist.
Let us remind, finally, that CVM Instruction No. 381/03 also requires that the information provided in the Administrative 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 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 caput of Article 25 of CVM Instruction No. 480/09, the issuer must deliver to the CVM, via the Empresas.NET System (see Chapter 8), the financial statements and, if applicable, the consolidated financial statements on the same date they are made available to the public, this date not exceeding, in the case:
a) of national issuers, 3 (three) months from the end of the fiscal year; and b) of 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 national or foreign issuers must be accompanied by the following documents:
a) administrative report; b) independent auditor's report;
c) opinion of the fiscal council or equivalent body, if any, accompanied by any dissenting votes; d) capital budget proposal prepared by the administration, if any; e) declaration by the directors that they reviewed, discussed and agreed with the opinions expressed in the independent auditors' report, stating the reasons, in case of disagreement; f) declaration by the directors that they reviewed, discussed and agreed with the financial statements; g) annual summary 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, by issuance of receivables certificates under fiduciary regime.
It must be emphasized that, due to the alteration promoted by CVM Instruction No. 509/11, paragraph 1 of Article 25 of CVM Instruction No. 480/09 came to provide, as cited above, the mandatory sending, together with the financial statements, of the annual summary report of the Statutory Audit Committee, whenever installed.
The presentation of the annual summary 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, by meeting, among others, 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 equivalent body to the fiscal council, if that committee or body has issued said opinion.
It is emphasized that, if there is a functioning fiscal council, the company must, in any case, forward, together with the financial statements, the opinion issued by this body, accompanied by any dissenting votes.
The financial statements of national 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 OFFICE-CIRCULAR/CVM/SNC/SEP/No. 001/2013, of 08/02/2013, the CVM issued guidance regarding relevant aspects to be observed in the preparation of Financial Statements.
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, 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 norms issued by the CVM are fully convergent with international norms, consolidated financial statements must be prepared in accordance with these rules.
It is worth remembering that foreign issuers who have their headquarters 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. This decision was incorporated into CVM Instruction No. 480/09 through the changes arising from CVM Instruction No. 552/14.
The financial statements of foreign issuers must be audited by an independent auditor registered with the CVM or in 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 the sole paragraph of Article 27 of CVM Instruction No. 480/09.
For public 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 Shareholders' Meeting (OSM), it being worth remembering that, in accordance with 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 OSM (30 days), informing of the availability of financial statements, at the company's headquarters.
According to paragraph 5 of Article 21 of CVM Instruction No. 480/09, the issuer is exempt from delivering the communication referred to in item VI of said article (Notice to Shareholders), as well as its publication when the documents referred to in Article 133 of Law No. 6.404/76 (notably the financial statements) are published up to 1 (one) month before the date set for the holding of the OSM, in accordance with Article 133, paragraph 5, of the cited Law.
Article 289 of Law No. 6.404/76 determines that the publications ordered therein must be made in the official organ of the Union, State or Federal District, according to the place where the company's headquarters is located 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 OSM, according to paragraph 3, of Article 289, of Law No. 6.404/76.
National issuers must send to the CVM the financial statements prepared according to the criteria mentioned above, via the Empresas.NET System, category "Economic-Financial Data", type "Complete Annual Financial Statements".
It should be 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", the sending of the digitized version of the publication in a newspaper, or other formats that hinder reading or printing, not being admissible.
Still in this sense, we draw attention that the sending of the PDF version of the Standardized Financial Statements Form (DFP Form) does not fulfill the purpose of delivering the financial statements required by virtue 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 in accordance with paragraph 3, of Article 133, of Law No. 6.404/76, the expected date of publication must be indicated.
Foreign issuers must send the financial statements to the CVM, via the Empresas.NET 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.
These financial statements must be sent via the "Economic-Financial Data" category, type "Complete Annual Financial Statements".
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 closing of business on the stock exchange or in the organized over-the-counter market in which the securities of its issuance are admitted to trading.
It is emphasized that the sending of the DFP Form does not exempt 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 public 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 issuer 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 administrative 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 in the form of a public company 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 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 Letter-Circular No. 3.435/10 2 and in Circular No. 3.516/10 3, 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 emphasizing, in accordance with paragraph 3 of Article 177 of Law No. 6.404/76, that the financial statements of public companies will observe the norms issued by the CVM and will be 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 national 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.
In accordance with 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 Shareholders' Meeting, that they are at the disposal of shareholders, among other documents, a copy of these financial statements.
This same Law also establishes, in its Article 132, that the Ordinary Shareholders' Meeting 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 Article 133, of Law No. 6.404/76 (i) individual financial statements of closing of exercise 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 the Empresas.NET System, category "Economic-Financial Data", type "Complete Annual Financial Statements". It is emphasized that the respective DFP Form must be filled in with the data from these financial statements.
If the 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 forward them, via the Empresas.NET System, on the same date of their
The Letter-Circular No. 3.435/10 established that, for the purposes 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 way; 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 Article 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.
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 open companies [...] that disclose interim 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 “Article 1 of Resolution CMN No. 3.853, of April 29, 2010, when applied exclusively to institutions that disclose interim consolidated accounting statements prepared under international accounting standards, in conformity with the pronouncements issued by the International Accounting Standards Board (IASB), did not establish the obligation to disclose interim consolidated accounting statements under this standard, nor did it prohibit the disclosure of interim consolidated accounting statements prepared under 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 interim consolidated accounting statements prepared under international accounting standards.
Item I of Article 29 of CVM Instruction No. 480/09 establishes that Form ITR must be filled out with the data of 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 consolidated interim financial statements in IFRS would not be mandatory for financial institutions. In light of this and considering 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 currently reviewing the issue.
2.2.2. Advance disclosure of financial information
The advance disclosure of financial information, which will be disclosed subsequently in the financial statements, must be carried out exceptionally. If the company opts for the advance disclosure of certain data, it must do so in an equitable manner and emphasize that they are preliminary information, informing, even, whether they were, or were not, audited.
It should be remembered that, in accordance with 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 through a Relevant Fact, since, by definition, financial statements are considered relevant by CVM Instruction No. 358/02.
Finally, it should be remembered that, in the event of advance disclosure of financial information, the period of prohibition on trading 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 meeting must comprise all sources of resources and applications of capital, fixed or current, and will be submitted by the administrative bodies to the assembly, with the justification of profit retention proposed.
Profit Retention
Art. 196. The general meeting may, upon proposal by the administrative bodies, decide to retain a portion of the net profit of the fiscal year provided for in a capital budget previously approved by it.
§ 1º The budget, submitted by the administrative bodies with the justification of the proposed profit retention, must comprise all sources of resources and applications of capital, fixed or current, 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.
§ 2º The budget may be approved by the ordinary general meeting 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 scheduled for the holding of the AGM, 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, comprising all sources of resources and applications of capital, fixed or current.
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 scheduled for the holding of the AGM, 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, comprising all sources of resources and applications of capital, fixed or current.
The capital budget must be sent to the CVM, via Empresas.NET System, category “Assembly”, type “AGM” or “AGM/E”, species “Administration 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. Catalog Form
The Catalog Form is an electronic document, of periodic and occasional submission, 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 Catalog Form must be filled out and sent to the CVM through the Empresas.Net program, available for download on the CVM website, at the link “Document Submission”.
The issuer must proceed to update the Catalog 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, regardless of this update, annually the issuer must confirm, by May 31 of each year, that the information contained in the catalog 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 the first version of the Catalog Form of the current year, by May 31.
2.3.2. Reference Form
a. Annual submission of the Form
The Reference Form is an electronic document, of periodic and occasional submission, 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 AGM. 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 addition, it is necessary to always include the information contained in the financial statements of the previous fiscal year that are discussed and voted on at that meeting.
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 fiscal year.
After the holding of the AGM 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 occurs, the issuer may opt for (i) to resubmit the Reference Form of the previous fiscal year; or (ii) to present the document relating to the current fiscal year.
In this case, the issuer must pay attention to (i) not resubmitting the document relating to the previous fiscal year as if it were the Reference Form updated with all the information of the current fiscal year; or (ii) not presenting the Reference Form updated with all the information of the current fiscal year as if it were the resubmission of the document relating to the previous fiscal year.
In the annual submission 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 sent to the CVM through the Empresas.Net program (see Chapter 8), available for download on the CVM website, at the link “Document Submission”. The guidelines for the preparation of the Form can be consulted in this circular letter (see Chapter 9).
b. Update of the Reference Form
CVM Instruction No. 480/09 provides, in paragraph 3 of Article 24, certain events that impose the obligation of issuers registered in Category A 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 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 alteration;
g) variations in the shareholding position of the aforementioned 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 alteration;
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 rescission of a shareholders’ agreement filed at the headquarters of the issuer or of which the controller is a party regarding the exercise of voting rights or control power of the issuer;
k) declaration of bankruptcy, judicial reorganization, liquidation or judicial homologation of extrajudicial reorganization; and
l) communication, by the issuer, of the change of the independent auditor in accordance with specific regulation.
In the same way, issuers registered in Category B, in accordance with 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;
f) declaration of bankruptcy, judicial or extrajudicial reorganization or judicial homologation of extrajudicial reorganization; and
g) communication, by the issuer, of the change of the independent auditor in accordance with specific regulation.
In the case of election of administrators, we also remind that the Reference Form must be updated, within the regulatory deadline, even if in the election the administrators were reappointed, given the change in mandates.
In the update of a Reference Form already delivered, which implies the delivery of a new version, issuers must inform, in the “Presentation Type” field, whether the update refers to a “Spontaneous Resubmission” or “Resubmission by CVM/Bovespa Requirement”.
In addition, in the “Reason for Resubmission” field, the issuer must clearly state all sections and items of the form that have been altered, including a brief description of the reason for each change. Issuers must also inform if the resubmission is due to a request for registration of public distribution of securities.
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 necessary to alert, finally, that the general guidelines contained in Chapter 9 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 the event of a 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 a request for registration of public distribution, the issuer may opt to resubmit the Reference Form of the previous fiscal year or to present the Reference Form of the current year, provided that the information relating to the previous fiscal 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, the sections and items altered must also be indicated in the “Reason for Resubmission” field, including 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 economic-financial situation of the issuer, 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, and it is not 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 Chapter 8).
According to Article 28 of CVM Instruction No. 480/09, the DFP form must be filled out with the data of the financial statements prepared in accordance with the accounting rules applicable to the issuer, in accordance with 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 as the sending of 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 as the sending of the financial statements, if this occurs on an earlier date.
In this sense, according to a decision by the CVM Board, of July 15, 2014 (REG. No. 8620/13), in the analysis of a consultation formulated by IBRACON, there is no obligation to fill out the information relating to the penultimate fiscal year in DFP Forms, in cases where the financial statements relating to the same period do not contain this data.
It is emphasized that the sending 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 issuers that are financial institutions, 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 over-the-counter market organized in which the securities issued by it are admitted to trading.
The DFP form must be disclosed simultaneously with the disclosure of the company’s Financial Statements.
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 Chapter 8).
According to Article 29 of CVM Instruction No. 480/09, the ITR form must be filled out with the data of the quarterly accounting information prepared in accordance with the accounting rules applicable to the issuer, in accordance with 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 for the last one.
It should be clarified 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 provided for in CVM Instruction No. 480/09, with wording given by CVM Instruction No. 511/11, all registered issuers must send the ITR form within the same deadline 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, in accordance with Law No. 6,404/76, as determined by paragraph 2 of article 29 of CVM Instruction No. 480/09.
In the case of issuers that are financial institutions, attention is drawn to the provisions set forth in this Circular Letter (see item 2.2.1).
If projections are disclosed, the issuer must confront them quarterly, in the appropriate field of the ITR form and the DFP form (in the case of the last quarter), comparing 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 its securities are admitted to trading.
In the understanding of the SEP, corroborated by the Specialized Federal Prosecutor’s Office at the CVM, it is not possible to require that the members of the Board of Directors expressly approve the company’s quarterly financial statements.
This understanding is based on the absence of legal or regulatory provision imposing this obligation on the Board of Directors and is reinforced by the difference between the requirements concerning the preparation and presentation of annual financial statements and quarterly information, being more rigorous in the first case.
On the other hand, given the competence attributed by Law to the members of the Board of Directors and, mainly, in order to fulfill their duty of diligence, we understand that, at a minimum, it is advisable for the directors to analyze the quarterly information in advance of its disclosure to the market and make the recommendations they deem appropriate.
In the understanding of this Superintendence, the company could not deny prior access to the quarterly information (before its disclosure to the market), in the event of a request by any member of the Board of Directors. It is emphasized that the members of this body, as well as other administrators, have the duty to keep confidential any relevant information not yet disclosed (article 155, paragraph 1 of Law No. 6,404/76). Any prior access to the quarterly information would fall within this legal duty of confidentiality.
Without prejudice to the above, the members of the Board of Directors cannot excuse themselves from acting diligently in the supervision of the company’s business and the preparation of financial statements, under the justification that there is no legal provision for them to express themselves on the intermediate financial information.
In concrete situations, the director must be diligent and adopt the best way of acting to fulfill their fiduciary duties. On the other hand, the CVM will also not refrain from investigating responsibilities when faced with the non-compliance with these duties.
2.3.5. Quarterly Report of Securitization Companies
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 delivery of the 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 investors to have easier and more 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 via the Empresas.Net system (see Chapter 8).
Guidance for the preparation of the Quarterly Report of Securitization Companies can be obtained in CIRCULAR LETTER/CVM/SIN/SEP/No. 01/2012 4.
2.4. Ordinary General Meeting – OGM
According to the statement of article 132 of Law No. 6,404/76, annually, within the first four months following the end of the fiscal year, there must be an ordinary general meeting (OGM) to take the accounts of the administrators, examine, discuss and vote on the financial statements, deliberate on the allocation 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.
In accordance with 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 meeting is considered a serious offense.
2.4.1. Notice of article 133 of Law No. 6,404/76
Article 133 of Law No. 6,404/76 establishes that the administrators must communicate, up to 1 (one) month before the date scheduled for the holding of the OGM, by announcements published in the manner provided for in article 124 (see item 2.4.3), that the documents indicated below are available to shareholders, and the announcements must specify the location or locations where shareholders can obtain copies of these documents:
a) the administration report on the social business and the main administrative facts of the closed fiscal year; b) a copy of the financial statements; c) the report of the independent auditors; d) the opinion of the fiscal council, including dissenting votes, if any; and e) other documents pertinent to matters included on the agenda.
See http://www.cvm.gov.br/port/atos/oficios/Of%C3%ADcio%20Circular%20SINSEP%20n%C2%BA%201- %20informe%20trimestral.pdf.
At least 5 (five) days before the date scheduled for the holding of the OGM, the company must publish the documents cited in letters “a”, “b” and “c” above (paragraph 3 of article 133). It is highlighted that, regardless of this publication, the caput of article 133 of Law No. 6,404/76 requires that the documents pertinent to matters included on the agenda of the OGM be made available to shareholders, at the company’s headquarters, up to one month before the date scheduled for the holding of the meeting (30 days).
In accordance with item VI of article 21 of CVM Instruction No. 480/09, the issuer must send to the CVM via the Empresas.NET System, category “Notice to Shareholders”, type “Notice art. 133 of Law No. 6,404/76”, the communication provided for in article 133 of Law No. 6,404/76, within a deadline of 1 (one) month before the date scheduled for the holding of the OGM or on the same day of its publication, whichever occurs first.
The OGM that gathers the total number of 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 and in item VIII of article 21 of CVM Instruction No. 480/09 as cured, but the publication of the documents and their sending via the Empresas.NET System before the holding of the meeting is mandatory (paragraph 4 of article 133).
According to paragraph 5 of article 21 of CVM Instruction No. 480/09, the issuer is exempt from delivering the communication referred to in item VI of said article (Notice to Shareholders), as well as its publication, when the documents referred to in article 133 of Law No. 6,404/76 (notably the financial statements) are published up to 1 (one) month before the date scheduled for the holding of the OGM, in accordance with article 133, paragraph 5, of the cited Law.
2.4.2. Administration Proposal for OGM
a. Issuers registered in Category A
Regarding the minimum documents and information that must be made available to shareholders when convening the OGM, open companies registered in Category A must pay attention to the provisions of CVM Instruction No. 481/09, recently amended by CVM Instruction No. 552/14 – 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, regardless of the publication provided for in paragraph 3 of article 133 of Law No. 6,404/76, the caput of this article requires that the documents pertinent to matters included on the agenda of the OGM be made available to shareholders, at the company’s headquarters, up to one month before the date scheduled for the holding of the OGM (30 days), and this is also required by article 21, VIII, of CVM Instruction No. 480/09, which states that, within the same deadline, all documents necessary for the exercise of the right to vote at the OGM must be available on the CVM’s Internet page.
Furthermore, article 9 of CVM Instruction No. 481/09 provides, for issuers registered in Category A, that within the same deadline above, the following documents and information must be available on the CVM’s Internet page:
a) administration report on the social business and the main administrative facts of the closed fiscal year (included in the Financial Statements and in the DFP form – see items 2.2 and 2.3.3); b) copy of the financial statements (sent via the Empresas.NET System – see item 2.2); c) administrators’ comment on the company’s financial situation, in accordance with item 10 of the Reference Form (“Directors’ Comments”) (sent, via the Empresas.NET System, in the “Assembly” category, type “OGM” or “OGM/E”, species “Administration Proposal”, subject “Administrators’ comment on the company’s financial situation”); d) report of the independent auditors (included in the Financial Statements and in the DFP form – see items 2.2 and 2.3.3); e) opinion of the fiscal council, including dissenting votes, if any (included in the Financial Statements and in the DFP form – see items 2.2 and 2.3.3, as well as sent via the Empresas.NET 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 the Financial Statements”); f) DFP form (sent via the Empresas.Net System – see Chapter 8); g) proposal for the allocation of the net profit of the fiscal year that must contain, at a minimum, the information indicated in Annex 9-1-II of the Instruction (sent via the Empresas.NET System by the “Assembly” category, type “OGM” or “OGM/E”, species “Administration Proposal”, subject “Allocation of Results”); and h) opinion of the audit committee, if any (sent via the Empresas.NET System by the “Board Meeting” category, type “Audit Committee”, species “Minutes”, subject “Opinion on the Financial Statements” – see item 2.2).
It should be noted that the administration’s proposal for the allocation of net profit must contain, at a 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 the assembly’s deliberation, as such a procedure would make it a mere repetition of information already contained in the Convocation Notice.
It is also recommended that companies disclose in the administration’s proposal information on the eventual incidence of tax on the proposed dividends.
According to the decision of the Collegiate Body of 09/27/2011 (CVM Process RJ2010/14687) 5, companies that have recorded a loss in 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 Administration’s Proposal that Annex 9-1-II of CVM Instruction No. 481/09 is not being presented due to the recording of a loss in the fiscal year.
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.
See http://www.cvm.gov.br/port/descol/respdecis.asp?File=7312-1.HTM.
The sole paragraph of article 6 of CVM Instruction No. 481/09, in turn, determines that the documents and information required therein must be made available to shareholders until the date of publication of the first convocation announcement, unless Law No. 6,404/76, the Instruction or another CVM norm establishes a longer deadline.
For this reason, 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 a minimum, the documents and information required by articles 10 and 12 of CVM Instruction No. 481/09 within a deadline of 1 (one) month before the date scheduled for the holding of the meeting. To allow the informed decision of shareholders regarding the election of members of the Board of Directors or the Fiscal Council, as the case may be, if there is a Nominating or Indication Committee or equivalent body, it is recommended that the Company make available the minutes of the meeting of said Committee that analyzed the adherence of the nominees, or, alternatively, mention the decision of said Committee, based on pre-defined criteria and the Nomination Policy, or equivalent document, if it exists.
Such information must be included in the administration’s proposal, which must be sent via the Empresas.NET System, category “Assembly”, type “OGM” or “OGM/E”, species “Administration Proposal”, subject “Election of members of the Boards of Directors and Fiscal” or “Remuneration of administrators and directors”.
To comply with the requirement of article 10 of CVM Instruction No. 481/09, the company registered in category A must present the information of items 12.5 to 12.10 of the content of the Reference Form provided for in Annex A of CVM Instruction No. 552/14.
According to the understanding stated by the CVM Collegiate Body in a meeting held on 11/04/2014 (CVM Processes No. RJ2013/4386 and No. RJ2013/4607) 6, the definition of the number of members of the Board of Directors, when the 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 convocation notice, that on its agenda the number of members to compose the Board of Directors of the Company will be deliberated.
Furthermore, the CVM Collegiate Body understood, on the same occasion, that the administration’s proposal must contain the possible scenarios regarding the number of members to be elected, either through cumulative 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 cumulative voting process.
In this sense, it is advisable for the controlling shareholder/administration to inform the number (fixed or minimum) of directors for a certain term that would be elected by cumulative or majority voting (for example, 10 members), and this number could be
See http://www.cvm.gov.br/port/descol/respdecis.asp?File=8979-0.HTM.
“Art. 141. (...) §7º Whenever, cumulatively, the election of the board of directors takes place under the system of cumulative voting and the holders of ordinary or preferred shares exercise the prerogative to elect directors, it shall be ensured 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 directors in a number equal to that elected by the other shareholders, plus one, regardless of the number of directors that, according to the bylaws, compose the body.”
increased by up to 2 members due to separate elections (i.e., reaching the number of 11 or 12 directors).
In line with the provisions of article 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 article 10 of CVM Instruction No. 481/09.
This procedure will facilitate, in addition, 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 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 Empresas.NET System, in the “Notice to Shareholders” category, type “Other Notices”, including in the subject that it concerns the 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 up to a certain deadline before 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 assembly, 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 for the Board of Directors and the Fiscal Council at the very moment of the assembly.
In order to allow investors to better understand 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) the period to which the remuneration proposal refers (for example, from the current OGM to 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 (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 mislead investors.
To facilitate reading by users, it is recommended that the document with the Administration’s Proposal contain an index.
Whenever there is a need to re-present the Administration’s Proposal due to compliance with CVM requirements or spontaneously, the Company must indicate in the “Reason for Re-presentation” field the fact motivating the re-presentation. In the case of compliance with a requirement formulated by the CVM, reference must be made to the letter issued.
Finally, it is highlighted that there is no case of exemption from delivery of the Administration’s Proposal for issuers registered in Category A, since, at a minimum, the company must provide up to 1 (one) month before the date scheduled for the holding of the OGM the administrators’ comment on the company’s financial situation, in accordance with item 10 of the Reference Form, as required by article 9, item III, of CVM Instruction No. 481/09.
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, in accordance with 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 Empresas.NET System, category “Assembly”, type “OGM” or “OGM/E”, species “Administration Proposal”, choosing pertinent subjects according to the guidance provided in this Circular Letter (see item “a” above).
The administration’s 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 mislead investors.
If the OGM is also convened to elect administrators or members of the fiscal council or to fix the remuneration of administrators, 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 administration’s proposal, which must be sent via the Empresas.NET System, category “Assembly”, type “OGM” or “OGM/E”, species “Administration Proposal”, subject “Election of members of the Boards of Directors and Fiscal” or “Remuneration of administrators and directors”. To allow the informed decision of shareholders regarding the election of members of the Board of Directors or the Fiscal Council, as the case may be, if there is a Nominating or Indication Committee or equivalent body, it is recommended that the Company make available the minutes of the meeting of said Committee that analyzed the adherence of the nominees, or, alternatively, mention the decision of said Committee, based on pre-defined criteria and the Nomination Policy, or equivalent document, if it exists.
As per the understanding set forth by the CVM Collegiate Body in a meeting held on 11/04/2014 (CVM Processes No. RJ2013/4386 and No. RJ2013/4607) 8, the definition of the number of members of the Board of Directors, when the bylaws provide for a minimum and maximum number, must be the subject of deliberation at the general shareholders' meeting.
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 convening notice, that the number of members to compose the Company's Board of Directors will be deliberated on its agenda.
Furthermore, the CVM Collegiate Body understood, on the same occasion, that the administration's proposal should 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 support their mobilization regarding the multiple voting process.
In this sense, it is recommended that the controlling shareholder/administration inform the number (fixed or minimum) of councilors for a given term that would be elected by multiple or majority vote (for example, 10 members), with such number possibly being increased by up to 2 members due to separate elections (i.e., reaching the number of 11 or 12 councilors).
In line with the provisions of Article 6, item II, of CVM Instruction No. 481/09, companies must disclose information about candidates for the Board of Directors and the 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 Article 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 such prerogative be exercised to the maximum degree of equality possible with shareholders.
The suggested form of disclosure is through the Empresas.NET 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 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 until a certain deadline prior to the date scheduled for the meeting.
These practices, however, should be viewed as faculties granted to shareholders to facilitate their articulation and the exercise of rights granted in Law No. 6.404/76. As per understanding issued by SEP in the analysis of a specific case, requirements for the presentation of
See http://www.cvm.gov.br/port/descol/respdecis.asp?File=8979-0.HTM.
“Art. 141. (...) §7º Whenever, cumulatively, the election of the board of directors takes place under the multiple voting system and the holders of ordinary or preferred shares exercise the prerogative to elect councilors, it shall be ensured 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 that 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 assembly, even if provided 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 assembly.
As per decision of the Collegiate Body of 09/27/2011 (CVM Process RJ2010/14687) 10, companies that have incurred a loss in the fiscal year are exempt from presenting information regarding the allocation of the fiscal year's results.
Companies that fall into this situation must inform in the Administration's Proposal that information regarding the allocation of the fiscal year's results is not being presented due to the determination of a loss in the fiscal year.
To facilitate reading by users, it is recommended that the document with the Administration's Proposal contain an index.
Whenever there is a need to resubmit the Administration's 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 the CVM, reference must be made to the letter issued.
It is also emphasized that, in accordance with paragraph 4 of Article 133 of Law No. 6.404/76, the attendance of all shareholders at the Ordinary General Meeting (AGO) only allows the delivery of the Administration's Proposal outside the deadline provided in the caput of the article, if this document is published before the holding of the assembly.
2.4.3. Convening Notice for AGO
In accordance with item II of paragraph 1 of Article 124 of Law No. 6.404/76, the convening of a general meeting of a public 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 convening being 15 (fifteen) days and for the second convening, 8 (eight) days. However, SEP recommends that the convening notice for AGO or AGO/E be published and disclosed in the Empresas.NET System with at least 30 days' advance notice relative to the holding of the Assembly, simultaneously with the Administration's Proposal.
It is emphasized that for the holding of a meeting in second convening, a new Notice is required. It is considered irregular to include the second convening of the AGO already in the Notice of the first convening.
Thus, in the event that the AGO is not installed in the first convening, a new convening must occur through the publication of a new notice which must inform, in addition to the agenda, the location, date and time when the meeting will be held in second convening. The aforementioned meeting cannot be held, in second convening, 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 convening notices for AGO and AGO/E of issuers registered in both Category A and Category B must explicitly list, 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, the minimum percentage of participation in 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 convening 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, through the Empresas.NET System, in the category "Notice to Shareholders", 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 made by shareholders at the assembly.
As per the understanding set forth by the CVM Collegiate Body in a meeting held on 11/04/2014 (CVM Processes No. RJ2013/4386 and No. RJ2013/4607) 11, the definition of the number of members of the Board of Directors, when the bylaws provide for a minimum and maximum number, must be the subject of deliberation at the general shareholders' meeting.
Thus, without prejudice to the provisions of paragraph 7 of Article 141 of Law No. 6.404/76 12, the most appropriate procedure is the disclosure, in the convening notice, that the number of members to compose the Company's Board of Directors will be deliberated on its agenda.
Furthermore, the CVM Collegiate Body understood, on the same occasion, that the administration's proposal should 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 support 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 given term that would be elected by multiple or majority vote (for example, 10 members), with such number possibly being increased by up to 2 members due to separate elections (i.e., reaching the number of 11 or 12 councilors).
A copy of the convening notice for the ordinary general meeting must be sent to the CVM, through the Empresas.NET System, category "Assembly", types "AGO" or "AGO/E", species "Convening 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 public companies, the shareholder may participate and vote remotely in the general meeting, in accordance with CVM regulation.
Although the aforementioned regulation has not yet been issued, it is emphasized that the CVM has already publicly stated that there is no impediment for companies to hold assemblies where remote voting is used. To this end, it is advised 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 persons 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 AGO
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 Empresas.NET System, on the same day of its holding, by the category "Assembly", types "AGO" or "AGO/E", species "Summary of Decisions", as well as the minutes of the AGOs, within 7 (seven) business days of its holding, with indication of the dates and newspapers of their publication by the category "Assembly", types "AGO" or "AGO/E", species "Minutes".
In this sense, it should be observed that the summary of decisions taken at the assembly (provided for in item IX of Article 21 of CVM Instruction No. 480/09) is not confused with the minutes of the AGO (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 assembly's deliberations.
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 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 conclave.
In this sense, we highlight that, in accordance with item X of Article 21 of CVM Instruction No. 480/09, the minutes of the AGO must be accompanied, in the same file, by any declarations of vote, dissent or protest. In addition, the minutes must contain all documents referenced and related to the assembly's deliberations, such as contracts.
Whenever possible, AGO minutes archived at the CVM should also contain the attendance list and the exact quorum for installation. It is also recommended that the minutes contain, at least, the indication of relevant shareholders who elected members to the board of directors and fiscal council.
2.5. Report and communications of the fiduciary agent
Law No. 6.404/76 determines, in letters "b" and "c" of paragraph 1 of Article 68, that fiduciary agents must, respectively:
a) annually, prepare and make available to debenture holders, within 4 (four) months of the closing of the company's fiscal year, a report informing about 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, and the report must also contain a declaration by the agent regarding its aptitude to continue in the exercise of the function; b) notify debenture holders, within a maximum period of 60 (sixty) days, of any default, by the company, of obligations assumed in the issuance deed.
Thus, it falls to 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 Empresas.NET System, through the category "Economic-Financial Data", type "Fiduciary Agent Report", within 4 (four) months of the closing of the fiscal year or on the same day of its disclosure by the fiduciary agent, whichever occurs first.
In addition, without prejudice to the provisions of Article 3 of CVM Instruction No. 358/02, communications of the fiduciary agent prepared in compliance with Article 68, paragraph 1, letter "c" of Law No. 6.404/76 must be sent by issuers to the CVM, immediately after receiving the notification sent by the fiduciary agent, through the Empresas.NET System, category "Economic-Financial Data", type "Notification of fiduciary 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. 9.514/97 and the rules that provide for the exercise of the function of fiduciary agent of debenture holders apply to the fiduciary agent of Real Estate Receivable Certificates (CRI). Thus, CRI fiduciary agents must obligatorily send their report regarding CRI issuances whose public offering registration requests were made after 01/03/2005, in accordance with CVM Instruction No. 414/04. The same applies to the fiduciary agent of Agricultural Receivable Certificates (CRA), when it exists, as per decision issued by the CVM Collegiate Body, on 11/18/2008 13.
Thus, it falls to issuers of receivable certificates admitted to trading in regulated markets in Brazil to send the report provided for in item XII of Article 21 of CVM Instruction No. 480/09, via Empresas.NET System, through the category "Economic-Financial Data", type "Fiduciary Agent Report", within 4 (four) months of the closing of the fiscal year or on the same day of its disclosure by the fiduciary agent, whichever occurs first.
Chapter 3. Main Event Information
3.1. Relevant Act and Fact
In accordance with Article 157, paragraph 4, of Law No. 6.404/76, the administrators of the public company are obliged to immediately communicate to the stock exchange and disclose through the press any deliberation of the general assembly or of the company's administration bodies, or any relevant fact that occurred in its business, that may influence, in a considerable manner, the decision of investors in the market to sell or buy securities issued by the company.
In CVM Instruction No. 358/02, in turn, the disclosure and use of information about relevant acts or facts, 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 bylaw provision, and also in the acquisition of a significant lot of shares issued by a public company, and the trading of shares of a public company pending the disclosure of a relevant fact to the market, are regulated.
It should be noted that, on 02/05/2014, CVM Instruction No. 547/14 was published, amending CVM Instruction No. 358/02, which relaxed the regime for disclosing information about relevant acts or facts. The main objective of this reform was to offer public companies the option to disclose relevant fact communications through news portals present on the internet and not only in large circulation newspapers. The new Instruction entered into force on 03/10/2014.
As instructed by paragraph 7 of Article 3 of CVM Instruction No. 358/02, with wording given by CVM Instruction No. 547/14, any alteration in the communication channels used, including for the adoption of the channel provided for in item II of paragraph 4 of Article 3 of CVM Instruction No. 358/02, must be preceded by (i) updating the relevant act or fact disclosure policy, in accordance with Article 16 of CVM Instruction No. 358/02; (ii) updating the company's registration form; and (iii) disclosing the change to be implemented, in the manner previously used by the company for disclosing its relevant facts. In the event of replacing the internet news portal used for the disclosure of relevant acts and facts with another, it is necessary to update the registration form and disclose a relevant fact regarding the subject, but there is no need to promote alteration in the relevant act or fact disclosure policy.
According to Article 3 of CVM Instruction No. 358/02, it is incumbent upon the DRI to send to the CVM, through an electronic system available on the CVM's page on the worldwide web, and, if applicable, to the stock exchange and over-the-counter market entity in which the securities issued by the company are admitted to trading, any relevant act or fact that occurred or is related to its business (defined in Article 2 of this Instruction), as well as guarantee its broad and immediate dissemination, simultaneously, in all markets in which such securities are admitted to trading.
Following the guidance of Article 5 of CVM Instruction No. 358/02, the disclosure of the relevant act or fact must be made, whenever possible, before the start or after the closing of trading on the stock exchanges and over-the-counter market entities in which the securities issued by the company are admitted to trading.
Paragraph 1 of the same article determines that, if the securities issued by the company are admitted to trading simultaneously in markets of different countries, the disclosure of the relevant act or fact must be made, whenever possible, before the start or after the closing of trading in both countries, prevailing, in case of incompatibility, the operating hours of the Brazilian market.
Although the Instruction provides for the disclosure of a relevant fact, whenever possible, before the start of trading in the market, SEP understands as a good practice that the disclosure occurs only after the closing of trading in all countries in which the securities are traded, allowing a longer period for investors to analyze the effects resulting from the disclosed information.
In addition, the disclosure of a relevant fact shortly before the opening of trading in the market may cause a delay in the start of trading with the company's securities.
When it is not possible for the company to disclose a relevant fact outside of trading hours, the Investor Relations Director may request, always simultaneously with the stock exchanges and entities
8 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=8979-0.HTM.
9 “Art. 141. (...) §7º Whenever, cumulatively, the election of the board of directors takes place under the multiple voting system and the holders of ordinary or preferred shares exercise the prerogative to elect councilors, it shall be ensured 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 that elected by the other shareholders, plus one, regardless of the number of councilors that, according to the bylaws, compose the body.” 10 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=7312-1.HTM. 11 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=8979-0.HTM. 12 “Art. 141. (...) §7º Whenever, cumulatively, the election of the board of directors takes place under the multiple voting system and the holders of ordinary or preferred shares exercise the prerogative to elect councilors, it shall be ensured 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 that elected by the other shareholders, plus one, regardless of the number of councilors that, according to the bylaws, compose the body.” 13 See http://www.cvm.gov.br/port/infos/Comunicado CRA.asp.
from the organized over-the-counter market, both national and foreign, in which the company's securities are admitted to trading, the suspension of trading of the company's securities for the time necessary for the adequate dissemination of relevant information, in accordance with paragraph 2 of Article 5 of CVM Instruction No. 358/02. It should be noted that the request for suspension of trading is not mandatory, but optional, in these cases.
The sending of the file with the text of the material act or fact must be done through the Empresas.NET System, category “Material Fact”, before or simultaneously with its disclosure through the channels provided for in Article 3, paragraph 4, of CVM Instruction No. 358/02 (newspapers of large circulation usually used by the company or a news portal present on the Internet), indicating the respective locations and dates of disclosure.
The obligation to disclose through the Empresas.NET 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 class entities, investors, analysts, or with a selected audience, in the country or abroad. However, ensuring equitable treatment of all market participants, and in order to prevent, among other things, the possibility of using insider information, it requires that the relevant 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.
In the event that controlling shareholders, directors, members of the board of directors, the audit committee, and any bodies with technical or advisory functions, created by statutory provision, have personal knowledge of a material act or fact and ascertain the omission of the Investor Relations Department (DRI) in fulfilling 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 act or fact to the CVM.
Exceptionally, according to paragraph 5 of Article 157 of Law No. 6.404/76 and the caput of Article 6 of CVM Instruction No. 358/02, material acts or facts 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 a material act or fact could put at risk the legitimate interest of the Company, 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, in accordance with Article 7, paragraph 1, of CVM Instruction No. 358/02.
Notwithstanding, 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 act or fact, in the event that the information escapes control or there is an atypical fluctuation in the quotation, price, or quantity traded of the securities issued by the publicly held 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 regarding the material act or fact 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 available, translated into the languages of all countries in which 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 understood 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 RJ2006/5928 14 and PAS CVM No. 24/05 15). If the relevant information escapes the control of the administration or there is an atypical fluctuation in the quotation, price, or quantity traded of the securities issued by the publicly held company or referenced to them, the DRI must inquire of persons with access to material acts or facts, with the aim of verifying whether they have knowledge of information that should be disclosed to the market.
Therefore, in cases where failures in the disclosure of a material act or fact 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 audit committee, and any bodies with technical or advisory functions, created by statutory provision, are subject to the determination of liability for the eventual 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 information already disclosed is established, it is the responsibility of the company's administration and, in particular, its DRI to analyze the potential impact of the news on trading and, if necessary, to manifest itself immediately regarding the aforementioned news, through the Empresas.NET System, and not only after receiving a question from the CVM or BM&FBOVESPA.
The decision regarding the disclosure of material acts or facts 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 the responsibility of 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 to be disclosed 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.
14 See http://www.cvm.gov.br/port/inqueritos/2007/rordinario/inqueritos/2007_05_04_RJ2006_5928.asp.
15 See http://www.cvm.gov.br/port/inqueritos/2008/rordinario/inqueritos/2405ata2%C2%AAsessao_Nova%20informa%C3%A7%C3% A3o%20inclu%C3%ADda.asp.
It is also emphasized that the same rules provided for in the norms dealing with the disclosure of information, notably those governing the disclosure of material information (CVM Instruction No. 358/02) and establishing general rules on content and form of the information that issuers must observe (Articles 14 to 19 of CVM Instruction No. 480/09), apply to disclosures made on social media. This means, for example, that administrators and controlling shareholders: (a) may only disclose information relating to material acts or facts on social networks, after or simultaneously with the disclosure of such 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, information that is true, complete, consistent, and does not induce the investor to error, as required in Article 14 of CVM Instruction No. 480.
Based on 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 about the material act or fact, as well as request additional clarifications regarding its disclosure.
It is alerted that, in accordance with Article 18 of CVM Instruction No. 358/02, the transgression of the provisions contained in the aforementioned Instruction constitutes a serious offense, for the purposes provided for in paragraph 3 of Article 11 of Law No. 6.385/76.
3.1.1. Distinction between Material Fact and Market Communication
CVM Instruction No. 358/02 defines as a material act or fact any decision of a controlling shareholder, deliberation of the general assembly or of the administration bodies of the publicly held company, or any other act or fact of a political-administrative, technical, business, or economic-financial nature that has occurred or is related to its business that may influence in a considerable manner:
a) the quotation of the securities issued by the publicly held 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 condition of holder of securities issued by the company or referenced to them.
Unlike the Market Communication, the disclosure of a material act or fact is subject to a specific formality: immediate disclosure to the CVM, to stock exchanges, or to over-the-counter market entities in which the publicly held company trades its securities, and disclosure through the press (publication in a newspaper of large circulation usually used by the company) or by a news portal present on the Internet (which makes available, in a section available for free access, the information in its entirety). The forwarding to the CVM and to the exchange is done through the filing of the information in the Empresas.NET System, in the category “Material Fact”.
The “Market Communication” represents a category that was created in the Empresas.NET 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 other information not characterized as a material act or fact, which the company considers useful to be disclosed to shareholders or to the market (such as material disclosed in meetings with analysts, etc.). Clarifications provided by companies regarding inquiries made by the CVM or by the exchange are also filed in this category. It should be noted that for each of these cases there is an appropriate “type” within the chosen “category” in the Empresas.NET System.
The distinction between the material act or fact and the “Market Communication” is 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 must be treated internally and disclosed in the manner required for relevant information, which includes publication in newspapers of large circulation usually used by the company or disclosure on a news portal present on the Internet (which makes available, 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 administration bodies where there is a deliberation that characterizes a material act or fact), 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 (AGE), Special Assembly (AGESP), and Debentureholder Assembly (AGDEB)
3.2.1. Call Notice for AGE, AGESP, and AGDEB
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 publicly held 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 assembly, the agenda, and, in the case of bylaws 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. By virtue of the provision in paragraph 2 of Article 71 of Law No. 6.404/76, the provisions of the aforementioned law regarding the general assembly of shareholders apply to the debentureholder assembly, insofar as applicable.
It is recommended, however, that companies adopt, whenever possible, a minimum period of 30 (thirty) days for the calling of the AGE, AGESP, or AGDEB, as an example of what is already required by Article 9 of CVM Instruction No. 481/09 for the Administration Proposal of the Ordinary General Assembly (AGO), so that shareholders or debentureholders have sufficient time to analyze the deliberations to be taken and, if necessary, articulate to participate in the assembly.
It is emphasized that for the holding of an assembly in second call, the publication of a new Call Notice is necessary. It is considered irregular to include the second call of the AGE, AGESP, or AGDEB 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 occur through the publication of 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 aforementioned assembly may not 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 OGAs, the call notices for Extraordinary General Assemblies (AGE), Special Assemblies (AGESP), and Debentureholder Assemblies (AGDEB) of issuers registered in both Category A and Category B must explicitly enumerate, in the agenda, all matters to be deliberated, with the use of the rubric “general matters” for matters that require assembly deliberation being 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, mandatorily, 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 verification that it meets the provisions of Article 141 of Law No. 6.404/76 and CVM Instruction No. 165/91, the company must disclose, through the Empresas.NET System, in the category “Notice to Shareholders”, 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.
According to the understanding expressed by the CVM Collegiate in a meeting held on 11/04/2014 (CVM Processes No. RJ2013/4386 and No. RJ2013/4607) 16, the definition of the number of members of the Board of Directors, when the bylaws provide for a minimum and maximum number, must be the subject of deliberation in the general assembly of shareholders.
Thus, without prejudice to the provision in paragraph 7 of Article 141 of Law No. 6.404/76 17, 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.
Furthermore, the CVM Collegiate understood, on the same occasion, that the administration's proposal should 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 term that would be elected by multiple or majority vote (for example, 10 members), which number could be increased by up to 2 members due to separate elections (i.e., reaching the number of 11 or 12 councilors).
In accordance with item I of Articles 30 and 31 of CVM Instruction No. 480/09, issuers must forward, through the Empresas.NET System, category “Assembly”, type “AGE”, “AGESP”, or
16 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=8979-0.HTM.
17 “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 councilors, it shall be ensured 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 bylaws, compose the body.”
“AGDEB”, species “Call Notice”, the call notices for extraordinary, special, and debentureholder assemblies, whose publications follow the mold of Article 124, paragraph 1, item II, of Law No. 6.404/76.
We remind you 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 publicly held 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 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 AGE, AGESP, or AGDEB
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 AGE, AGESP, or AGDEB must be made available to shareholders, at the company's headquarters, upon publication of the first announcement calling the general assembly. In addition, issuers of securities registered in Category A must send all documents necessary for the exercise of the right to vote in extraordinary, special, and debentureholder assemblies 18 through an electronic system available on the CVM page on the worldwide computer network (Empresas.NET system), as determined by item II of Article 30 of CVM Instruction No. 480/09.
In the case of issuers registered in Category A, it is worth alerting that CVM Instruction No. 481/09 has come to dispose of the documents and minimum 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 forwarded to the CVM, through the Empresas.NET system (see Chapter 8), by the date of publication of the first call announcement, unless Law No. 6.404/76, CVM Instruction No. 481/09, or another norm issued by the CVM establishes a longer deadline.
Thus, when calling a general assembly, issuers registered in Category A must pay attention to the provisions of CVM Instruction No. 481/09, especially with regard to the provision in its Articles 8 to 21.
The forwarding of the documents and information required in Articles 8 and 10 to 21 for issuers registered in Category A must be done, through the Empresas.NET System, in the form
18 As provided for in paragraph 2 of Article 71 of Law No. 6.404/76, combined with 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 matters to be debated in the general assembly of debentureholders must be made available, at the company's headquarters, upon publication of the first announcement calling the general assembly. These documents and the information necessary for the exercise of the right to vote must be made available to the public through the Empresas.NET System, category “Assembly”, type “AGDEB”, species “Administration Proposal”.
below specified, upon publication of the first notice convening the general assembly:
a) information provided for in article 8 of CVM Instruction No. 481/09, to be included in the management proposal and sent by the "Assembly" category, type "AGO/E", "AGE" or "AGESP", species "Management Proposal", subject "Matter of special interest of a related party"; b) information indicated in article 10 of CVM Instruction No. 481/09, to be sent by the "Assembly" category, type "AGO/E", "AGE", species "Management Proposal", subject "Election of members of the Boards 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 by the "Assembly" category, type "AGO/E", "AGE" or "AGESP", species "Management Proposal", subject "Bylaw amendment"; d) Information indicated in article 12 of CVM Instruction No. 481/09 to be sent by the "Assembly" category, type "AGO/E", "AGE", species "Management Proposal", subject "Remuneration of directors and board members"; e) information indicated in article 13 of CVM Instruction No. 481/09, to be sent by the "Assembly" category, type "AGO/E", "AGE", species "Management Proposal", subject "Share-based Remuneration Plan"; f) information indicated in article 14 of CVM Instruction No. 481/09, to be sent by the "Assembly" category, type "AGO/E", "AGE", species "Management Proposal", subject "Capital Increase", with the exception of the following:
(i) opinion of the Audit Committee in a capital increase (Item 4 of Annex 14 of CVM Instruction No. 481/09), to be sent by the "Board of Directors Meeting" category, type "Audit Committee", species "Minutes", subject "Opinion on capital increase"; (ii) reports and studies that supported the setting of the issue price in capital increase (Item 5, letter "k", of Annex 14 of CVM Instruction No. 481/09) to be sent by 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 by the "Economic
Data" category, type "Valuation Report", subject "Asset valuation report". g) information indicated in article 15 of CVM Instruction No. 481/09, to be sent by the "Assembly" 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 by the "Assembly" 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 by the "Board of Directors 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 by the "Assembly" category, type "AGO/E", "AGE", "AGESP", species "Management Proposal", subject "Creation of preferred shares or alteration in their preferences, advantages or conditions for redemption or amortization"; j) information indicated in article 18 of CVM Instruction No. 481/09, to be sent by the "Assembly" 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 by the "Assembly" 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 acquisition price of control (Item 13 of Annex 19 of CVM Instruction No. 481/09), to be sent by the "Economic-Financial Data" category, type "Valuation Report", subject "Report used in acquisition of control"; l) information indicated in article 20 of CVM Instruction No. 481/09, to be sent by the "Assembly" 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 by 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 by the "Assembly" category, type "AGO/E", "AGE", species "Management Proposal", subject "Choice of Appraisers". Even in cases where the assembly deals with more than one of the subjects related in CVM Instruction No. 481/09, a single "Management Proposal" document containing the appropriate attachments must be forwarded via the Empresas.NET 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 AGE, AGESP or AGDEB are not provided for in CVM Instruction No. 481/09, it is necessary to present a proposal with the
information and documents necessary for the understanding by shareholders of the matter to be deliberated in the assembly. 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 the enumeration of the items to be submitted to assembly deliberation, as such a procedure would make it a mere repetition of information already contained in the Notice of Convocation. To facilitate reading by users, it is recommended that the document with the Management Proposal contain an index. In line with the provisions of article 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 given to candidates proposed by the management or by controlling shareholders by virtue of article 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 noted that, if it is possible for holders of DRs to exercise voting rights, 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 Empresas.NET System, in the "Notice to Shareholders" category, type "Other Notices", including in the subject that it concerns the 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 until a certain deadline prior to the date scheduled for the assembly. 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 understanding issued by SEP in the analysis of a concrete case, requirements for the presentation of information about candidates prior to the assembly, 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 assembly. Whenever there is a need to resubmit the Management Proposal as a result of 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 in the AGE, AGESP or AGDEB must be made available to shareholders, at the company's headquarters, upon publication of the first notice convening the general assembly. Thus, even if CVM Instruction No. 481/09 does not apply to issuers registered in Category B, these must send, on the same date as the publication of the first notice of convocation of 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 in the AGE, in the AGESP or in the AGDEB 19 , including those that are expressly required by Law No. 6.404/76 or by Instructions issued by CVM.
19 As provided for in paragraph 2 of article 71 of Law No. 6.404/76, combined with 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 pertinent to the matters to be debated in the general meeting of debentureholders must be made available, at the company's headquarters, upon publication of the
The sending of the documents and information necessary for the exercise of voting rights must be done through the Empresas.NET System, category "Assembly", type "AGO/E", "AGE", "AGESP" or "AGDEB", as appropriate, species "Management Proposal", choosing pertinent subjects according to the guidelines provided in this letter (see item "a"). It should be noted that, even in cases where the assembly deals with more than one subject, a single "Management Proposal" document containing the appropriate attachments must be forwarded via the Empresas.NET System, mentioning, in the subject, the respective items of the agenda. In any case, the management proposal must not be limited to the enumeration of the items to be submitted to assembly deliberation, as such a procedure would make it a mere repetition of information already contained in the Notice of Convocation. The documents must contain the information necessary for the understanding of the matters to be discussed in the assembly. 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. It is recommended that, in line with the provisions of article 6, item II, of CVM Instruction No. 481/09, companies registered in Category B 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 given to candidates proposed by the management or by controlling shareholders by virtue of article 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 noted that, if it is possible for holders of DRs to exercise voting rights, 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 Empresas.NET System, in the "Notice to Shareholders" category, type "Other Notices", including in the subject that it concerns the 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 until a certain deadline prior to the date scheduled for the assembly. 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 understanding issued by SEP in the analysis of a concrete case, requirements for the presentation of information about candidates prior to the assembly, 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 assembly.
first notice of convocation of the general assembly. The sending of the documents and information necessary for the exercise of voting rights must be done through the Empresas.NET System, category "Assembly", type "AGDEB", species "Management Proposal".
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 as a result of 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 AGE, AGESP or AGDEB
Issuers registered in Categories A and B must mandatorily forward, 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 the assembly takes place, via the Empresas.NET System, category "Assembly", types "AGE", "AGESP" or "AGDEB", species "Summary of Decisions", as well as the minutes of the assemblies, within 7 (seven) business days of their holding, via the System Empresas.NET, category "Assembly", types "AGE", "AGESP" or "AGDEB", species "Minutes". In this sense, it is worth noting that the summary of decisions taken at the assembly (provided for in item III of articles 30 and 31 of CVM Instruction No. 480/09) is not to be confused with the minutes of the AGE (provided for in item IV of articles 30 and 31 of CVM Instruction No. 480/09), which, in accordance with the provisions of paragraph 1 of article 130, of Law No. 6.404/76, may be drafted in the form of a summary of the facts 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 assembly's deliberations. It is highlighted 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 assembly 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 facultative provision, however, it is necessary that the issuer forwards the minutes of the general assembly complete, on the same day of the holding of the meeting. In this sense, we highlight that, in accordance with item IV of article 30 (companies registered in Category A) and item IV of article 31 (companies registered in Category B) of CVM Instruction No. 480/09, the minutes of the AGE, AGESP or AGDEB must be accompanied, in the same file, by any declarations of vote, dissent or protest. Furthermore, the minutes must contain all documents referenced and related to the deliberations of the assembly, such as contracts. Whenever possible, the minutes of AGE, AGESP and AGDEB filed with CVM must also contain the attendance list and the exact quorum for installation. 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. According to item XXI of the sole paragraph of article 2 of CVM Instruction No. 358/02, the modification of projections disclosed by the company is an example of a relevant fact. Similarly, the initial disclosure of projections or the disclosure of projections regarding periods different from those of projections previously disclosed are also considered relevant facts, and therefore the determinations of CVM Instruction No. 358/02 apply. 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, may 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 noted 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.
3.4. Shareholders' Agreement
Without prejudice to the disclosure of a Relevant Fact regarding the celebration of shareholders' agreements, in accordance with article 2 of CVM Instruction No. 358/02, issuers registered in Category A must forward to CVM, via the Empresas.NET System:
a) Shareholders' agreements and other corporate pacts filed with the issuer, within 7 (seven) business days from their filing, in the "Shareholders' Agreement" category; b) Information about shareholders' 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 signature, term of validity, parties and description of the provisions relating to the issuer, within 7 (seven) days
business days from the issuer's knowledge of their existence, in the "Information about shareholders' agreements provided for in article 30, item XIX, of IN No. 480/09" category.
It is noted that the alteration of their clauses, their extinction due to term or resolutory condition, or the celebration of a new shareholders' agreement implies its update with CVM.
Shareholders' agreements that lose validity must be cancelled via the "Cancellation of documents" functionality of the Empresas.NET System, informing in the "Reason for cancellation" field that the aforementioned shareholders' agreement lost its validity. The document, even cancelled, will remain available for consultation on the CVM and BM&FBOVESPA websites, in the case of issuers listed there, in the condition of cancelled document and will state the reason for its cancellation.
3.5. Group of Companies Convention
According to item IX of article 30 of CVM Instruction No. 480/09, the controlling company and its controlled companies that constitute, in accordance with article 265 of Law No. 6.404/76, groups of companies, by obligating themselves to combine resources or efforts for the realization of their respective objects, or to participate in common activities or ventures, are obliged to send a copy of the convention to CVM, via the Empresas.NET System, category "Group of Companies Convention", within a period of up to 7 (seven) business days 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 Judgments
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 Empresas.NET 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 "Bankruptcy Petitions" category; b) judgment denying or granting the bankruptcy petition, via the "Bankruptcy Judgment" category, subjects "Judgment denying the bankruptcy petition" or "Judgment 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 Judgments 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 Empresas.NET 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 supporting documents, on the same day of filing 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 filing in court, in the category “Information on Companies in Judicial or Extrajudicial Recovery”, type “Recovery Plan”; c) court decision denying or granting the judicial recovery request, with the indication, in the latter case, of the judicial administrator appointed by the judge, on the same day of its knowledge by the issuer, in the category “Information on Companies in Judicial or Extrajudicial Recovery”, type “Decisions”; d) request for homologation of the extrajudicial recovery plan, with the accounting statements prepared specifically to support the request, on the same day of filing in court, in the category “Information on Companies in Judicial or Extrajudicial Recovery”, type “Request for homologation of extrajudicial recovery plan”; e) court decision denying or granting the homologation of the extrajudicial recovery plan, on the same day of its knowledge by the issuer, in the category “Information on Companies in Judicial or Extrajudicial Recovery”, type “Decisions”.
It is alerted that the decree of judicial recovery and the judicial homologation of extrajudicial recovery are scenarios 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. Transactions by directors 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 public company (through 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 the completion of each transaction; b) on the first business day after assuming office; and c) when submitting the documentation for the registration of the company as public.
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.
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 members of the board of directors.
If the company presents information regarding the securities traded and held by 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 positions held or in the month in which the appointment of the aforementioned persons occurs.
Such information must be forwarded via the Empresas.NET System, category “Securities Traded and Held (article 11 of Instr. CVM No. 358)”, type “Consolidated Position” and “Individual Position”, highlighting that the form templates for completion are available on the CVM website, at the link “Document Submission”, “XML File Standards and others”.
With the objective of having complete and reliable information, it is requested that Companies, as an example of what many issuers already do, 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 in with the information that, during that period, there was no trading in the company's securities, its controlled, controlling, or affiliated companies, repeating the initial balance values in the final balance.
It should be noted 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. It is recommended that both the persons mentioned in the caput of article 11 of CVM Instruction No. 358/02 and the DRI keep archived the proof of sending and receiving the messages exchanged regarding the movements carried out.
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 of which must contain 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), with only the consolidated positions being available to the external public through consultation on the CVM and BM&FBOVESPA websites, in the case of companies listed there.
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 informed.
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 that comes to acquire or alienate relevant participation in shares or class of shares representing the share capital of a public company, is obliged to, immediately after the operation, communicate to the Company the change in its participation.
According to the wording of article 12 of the aforementioned Instruction, it is noted that the relevant participation must be computed specifically in relation to the class or species of shares, in order to qualify the participation, allowing the identification of rights attributed to it.
It is also noted that, in accordance with article 20 of Instruction No. 358/02, the obligation of communication commented here:
a) applies to 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 integrated into 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 agreement 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 relevant participation to send a notice to the public company, reporting the operation (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 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 agreement is maintained”, except, in accordance with the sole paragraph of the provision, 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 public 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 public company.
Even in cases where operations take place through contracted third parties, whether they are administrators, managers, or representatives of non-resident investors, the obligation to disclose information provided for in article 12 remains that of 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 Relevant Participation
a. Shares
According to the caput of article 12, the focus of the disclosure obligation is the direct and indirect shareholdings held in the share capital of the public company.
b. Debentures convertible into shares, subscription bonuses, rights to subscribe for shares, call options on shares, and others As can be verified from the combined reading of the caput with paragraphs 1, 2, and 3 of article 12 of CVM Instruction No. 358/02, relevant participation also refers to any rights on shares and other securities mentioned in the same article. For this purpose, convertible debentures, subscription bonuses, rights to subscribe for shares, call options on shares, and any other securities representative or convertible into shares, or any contracts that may result in the exercise of rights based on shares issued by a public company, must be considered. Thus, financial derivative instruments that have physical settlement in shares issued by a public 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 – ADR, Global Depositary Receipts – GDR, 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, to the extent that they are titles representing shares of Brazilian public 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 is 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 shares of the issuer represented through these titles.
d. Share lending
It should be noted that the investor or group of investors who reaches, 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 public company, must proceed with the disclosure of the declaration provided for in article 12 of CVM Instruction No. 358/02. Similarly, 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 shares held by the declaring investor that was acquired or alienated through share lending. The obligation to communicate 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) company controlled, directly or indirectly, by the investor; b) exclusive investment fund, whose only unitholder is the investor; c) investment fund or portfolio where the administrator's decisions can be influenced by the investor; d) person with whom the investor maintains a trust agreement.
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 set of shares held by him directly and indirectly.
In cases where 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 share participation, but is the controlling shareholder of company Y, which in turn reaches a participation corresponding to 5% of the ordinary or preferred shares of the public 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 its indirect participation in the capital of the public company. On the other hand, if investor X holds direct participation in the public company and is also the controlling shareholder of company Y, which also holds participation in the public 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 public 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 Increase or Reduction of Relevant Participation
Regarding the increase in share participation, the aforementioned Instruction determined the disclosure of a declaration in 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 public company, that is, crosses the 5% mark (article 12, caput); (ii) each time the said participation of the holder of 5% or more of the species or class of shares representing the capital of a public 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 public company acquires another 2% (two percent) of the same species, totaling 6% (six percent) share participation. 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, as it crossed the 5% (five percent) share participation 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), only the obligation to disclose a new relevant participation declaration will materialize, from the second acquisition, since, in accordance with paragraph 1 of article 12 of CVM Instruction No. 358/02, it was the moment when a positive variation of 5% (five percent) was verified.
Regarding the decreases in share participation, CVM Instruction No. 358/02 prescribed the obligation to disclose a declaration in 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 public 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 said participation of the holder of 5% or more of the species or class of shares representing the capital of a public 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 found that the same investor mentioned above, holder of 12% (twelve percent) of the total of a species of shares of a public company, who alienates 5% (five percent) of his participation, passing his 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 his participation.
A new disclosure of declaration will be demanded in the event that the same investor, holder of 7% (seven percent) of a species of shares of a public company, alienates at least 2% (two percent) of his share participation, 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 share participation is not exclusively tied to a single operation, being also assessed cumulatively, and referring to the acquisition, alienation, or extinction of shares and rights on shares both in the onerous mode (purchase and sale, swap, and lending) and gratuitous mode (donation).
3.9.4. Group of persons acting jointly or representing the same interest
The obligation to communicate the variation in relevant share participation covers not only individual investors, but also the group 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) company and its direct or indirect controller; d) exclusive fund and its only unitholder; and e) hypotheses 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 share participation 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 the investors with indirect participation in the share capital of the public 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 provided by the administrator must identify the manager and indicate the total share participation held, jointly, by the funds and portfolios under its management. It is not mandatory to discriminate the funds or portfolios and their respective share participations, according to a Decision of the CVM Collegiate Body, in an extraordinary meeting held on 11/03/2011 (CVM Process RJ2011/2324) 20.
It is worth clarifying that, in accordance with the same Decision, in the case of a relevant participation being reached individually by a certain fund or portfolio under discretionary management, the Declaration must identify the manager and the total share participation held, jointly, by all funds or portfolios under its management, and it is not mandatory to reveal the fund holding the relevant participation.
20 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. 306/99, the portfolio manager must guarantee, through adequate internal control mechanisms, the permanent compliance with current norms and regulations, referring to the various alternatives and modalities of investment, to the portfolio administration activity itself, and to ethical and professional conduct standards.
Thus, in the event of the investor's omission regarding compliance with the provisions of Article 12 of CVM Instruction No. 358/02, the portfolio manager or resource manager 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 of the effective possibility of reaching a relevant shareholding; and (iii) being able to exercise, at its discretion, the political rights of shares of a company acquired for its clients.
Furthermore, according to paragraph 3 of Article 57 of CVM Instruction No. 409/04, the investment fund administrator is liable for damages resulting from its own acts and omissions that cause them, whenever it acts contrary to the law, regulations, and normative acts issued by the CVM.
In turn, Article 58 of the same Instruction provides that the administrator is responsible for providing information to the CVM, in the manner set forth in the cited Instruction and when requested.
The sole paragraph of Article 14 of CVM Instruction No. 306/99 establishes that "the administrator must guarantee, through adequate internal control mechanisms, the permanent compliance with current norms and regulations, referring to the various alternatives and modalities of investment, to the portfolio administration activity itself, and to ethical and professional conduct standards," whereas Article 21-A of the same Instruction determines that the cited Article 14 is applicable "to the activities of administration and management of investment funds registered with the CVM."
In light of the foregoing, the administrator of investment funds may be held liable for infringement of Article 12 of CVM Instruction No. 358/02.
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 reduction in relevant participation must be made immediately after the participation referred to therein is reached. As a rule, to observe the deadline established in the aforementioned Article, disclosure must occur in the case of share acquisitions on a stock exchange and in the over-the-counter market, until the beginning of the 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 participation 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 participation already held by the investor, would represent a relevant percentage of the type or class of shares issued by a publicly-held company, disclosure must occur on the day the contract is signed.
The communication of relevant participation in debentures convertible into shares, subscription warrants, other rights to subscribe for 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, their alienation or non-exercise.
As a rule, an increase in participation of more than 5% does not need to be disclosed in the press.
Only in cases where the acquisition results from or has been carried out with the objective of altering the control composition 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.
The sellers of relevant shareholdings, in accordance with Article 12, paragraph 4, of the aforementioned regulation, must inform the alienation or extinction of their shares issued by a publicly-held company by sending a "Declaration of Alienation of Relevant Shareholding" to the Company.
The "Declarations of Acquisition of Relevant Shareholding" as well as the "Declarations of Alienation of Relevant Shareholding" must be sent to the IRD (Investor Relations Department) of the publicly-held company.
Once received by the Company, the IRD must forward the declarations via the Empresas.NET System, category "Market Communication," type "Acquisition/Alienation of 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 spontaneously, the dates and newspapers in which the publication was effected must be informed.
The IRD must also 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 Reduction of Participation
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 participation and quantity targeted, containing, if applicable, a declaration by the acquirer that its purchases do not aim to alter the control composition or the administrative structure of the company; c) number of shares, subscription warrants, as well as rights to subscribe for shares and options to purchase shares, by type and class, already held, directly or indirectly, by the acquirer or a person affiliated with them; d) number of debentures convertible into shares, already held, directly or indirectly, by the acquirer or a person affiliated with them, specifying the quantity of shares subject to possible conversion, by type and class; e) indication of any agreement or contract regulating the exercise of voting rights or the purchase and sale of securities issued by the company; and f) if the shareholder is a resident or domiciled abroad, the name or corporate name and the registration number in the National Registry of Individuals or the National Registry of Legal Entities of their attorney-in-fact or legal representative in the Country for the purposes of Article 119 of Law No. 6.404/76.
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 participation 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 them in derivative contracts.
Finally, it is recommended that, in the communication regarding the alienation or extinction of relevant participations, 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 their 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 their legal representative, pursuant to 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, respecting respective competencies, the occurrence of any irregularity of their knowledge."
In cases where the non-resident investor omits compliance with the provisions of Article 12 of CVM Instruction No. 358/02, their 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, their own issued shares.
The preparation of a trading policy for securities acquires greater relevance in the case of issuers that adopt or will adopt incentive programs for their employees and executives, such as stock option plans, as, by establishing internal rules, these companies define a general line of guidance, while at the same time making it clear to their investors that they are attentive to the fairness and transparency of operations involving the securities they issue, especially 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 fiscal council, 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 trading, 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.
The trading policy should not, however, represent a mere repetition of the text of the aforementioned Instruction, but contain a detailed description of the procedures and measures effectively adopted by the company to avoid infringements of the norms dealing with trading in the company's shares by the company itself, controlling shareholders, administrators, members of the fiscal council, or other bodies created by statutory provision.
Issuers registered in Category A that have this policy must forward it via the Empresas.NET System, category "Trading Policy of the Company's Shares," 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, voluntary submission in the manner described above is recommended.
If the issuer opts to prepare the trading policy and the disclosure policy as a single document, it must forward it via the Empresas.NET System, both through the category "Trading Policy of the Company's Shares" and through the category "Disclosure Policy of Relevant Acts or Facts."
3.11. Disclosure Policy
The policy for the disclosure of 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 contemplate, at a minimum, the channel or channels of communication used to disseminate information about relevant acts and facts (in accordance with Article 3, paragraph 4, of CVM Instruction No. 358/02) and the procedures related to maintaining confidentiality regarding undisclosed relevant information.
It is recommended that the Disclosure of Information Policy provide for adequate internal controls for each type of information to be treated as such, for example, by creating a classification by order of relevance, and access controls for each type of information.
Additionally, it is advisable that the Disclosure Policy establish objective criteria for determining the timing, form, and means of disclosing information, and for identifying exceptional cases that would justify an exception to the rule of immediate disclosure and the request to maintain confidentiality with the CVM.
CVM Instruction No. 358/02 did not make any restriction or exception to the obligation to adopt the document. Therefore, it is sufficient for the company to be regularly registered with the CVM, regardless of its corporate organization and the nature of the securities issued, to have the duty to adopt the disclosure policy.
Issuers must forward the Disclosure Policy to the CVM via the Empresas.NET System, category "Disclosure Policy of Relevant Acts or Facts," as provided for in Article 30, item XII (for issuers registered in Category A), and 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 forward it via the Empresas.NET System, both through the category "Trading Policy of the Company's Shares" and through the category "Disclosure Policy of Relevant Acts or Facts."
The policy for the disclosure of 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.
It is recommended that the disclosure policy be prepared in a clear, objective, and detailed manner, bringing specific procedures, such as:
- Objective criteria to distinguish, when possible, cases of disclosure of information to the market through a Relevant Fact or a Market Communication;
- Obligations of the IRD to disclose information to the market, as well as to supervise any information leaks in the media and/or atypical fluctuations related to the trading of the company's securities;
- Timing of disclosure of relevant facts, which should preferably occur after the closing of the trading session (in Brazil and in any foreign markets where the company's securities are traded);
- Procedures to be adopted when the disclosure of a Relevant Fact must occur during the trading session, addressing any request for suspension of trading of the securities until the relevant information is adequately disseminated;
- Contingency plan in the event of a leak of relevant information, in order to accelerate the disclosure of the information through official channels and avoid the persistence of a situation of information asymmetry;
- Maintenance of controls identifying persons who have knowledge of relevant facts not yet disclosed to the market;
- Obligations of controlling shareholders, administrators, and other persons affiliated with the company to promptly notify the IRD in the event of having knowledge of relevant information;
- Procedures to be adopted when there is doubt regarding the relevance of certain information;
- Recommendations to ensure compliance with the duty of confidentiality;
- Cases of exceptions to the obligation to disclose; and
- Liability in cases of non-compliance with the disclosure policy.
3.12. Bylaws
In accordance with CVM Instruction No. 480/09, issuers registered in Category A and Category B are obliged, pursuant to item XIII of Article 30 and item XXIII of Article 31 of the aforementioned Instruction, respectively, to present the consolidated bylaws, within 7 (seven) business days counted from the date of the assembly that deliberated the alteration. The submission must be made via the Empresas.NET System, in the category "Bylaws."
The submission of the bylaws attached to the minutes of the assembly that deliberated its alteration does not dispense with its submission via the Empresas.NET System in the category "Bylaws."
3.13. Meetings of the Board of Directors and the Fiscal Council
CVM Instruction No. 480/09 determines, in items V and VI of Article 30, that issuers registered in Category A must forward, via the Empresas.NET System, the following information, within the indicated deadlines:
a) minutes of Board of Directors meetings, provided they contain deliberations intended to produce effects vis-à-vis third parties, accompanied by any manifestations forwarded by the councilors, within 7 (seven) business days counted from their holding, via the category "Administration Meeting," type "Board of Directors," species "Minutes"; b) minutes of Fiscal Council meetings that approved opinions, accompanied by any manifestations forwarded by the councilors, within 7 (seven) business days counted from the date of disclosure of the act or fact subject of the opinion, via the category "Administration Meeting," type "Fiscal Council," species "Minutes."
It should be noted that issuers registered in Category B are obliged to forward, via the Empresas.NET System, in the manner described above, the minutes of Board of Directors meetings, provided they contain deliberations intended to produce effects vis-à-vis third parties, accompanied by any manifestations forwarded by the councilors, within 7 (seven) business days counted from their holding, as provided for in item V of Article 31 of CVM Instruction No. 480/09.
Issuers whose securities are admitted to trading in organized markets must also observe the rules established by the entities administering such markets regarding the deadline for providing information about Board of Directors deliberations that impact the rights and the manner of trading of their issued securities.
Finally, although minutes relating to Board of Directors meetings have not been included in the Instruction among the mandatory eventual 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 rescission 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 IRD, via the Empresas.NET 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 fiscal council of the audited entity, when in operation, to verify the correct compliance by the administrators with the provisions of Article 28.
It is also worth noting 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.
3.15. Transactions Between Related Parties
As determined by Article 30, item XXXIII, of CVM Instruction No. 480/09, publicly-held companies registered in Category A must disclose communication regarding transactions between related parties, in accordance with the provisions of Annex 30-XXXIII of the aforementioned Instruction, within 7 (seven) business days counted from the occurrence of each transaction subject to disclosure.
Such disclosure must occur through the Empresas.NET System, category "Transactions Between Related Parties," type: "Communication Regarding Transaction Between Related Parties."
Considering the diversity of ways in which transactions between related parties can occur, it is not possible to establish, a priori, uniform and objective criteria or determine all situations that may demarcate the moment of occurrence of a transaction of this type.
However, the SEP advises that the term "occurrence" be interpreted as: (i) the date of signing the contract, if any, that establishes the transaction or set of transactions between related parties; or (ii) when there is no contract, the date of settlement of the transaction or the date of commencement of its execution, whichever occurs first.
In accordance with Annex 30-XXXIII of CVM Instruction No. 480/09, only the following should be subject to disclosure:
I – the transaction or the set of correlated transactions, whose total value exceeds the lesser of the following values:
a) R$50,000,000.00 (fifty million reais); or b) 1% (one percent) of the issuer's total assets; and II – at the discretion of the administration, the transaction or the set of correlated transactions whose total value is lower than the above parameters, taking into account: (a) the characteristics of the operation; (b) the nature of the related party's relationship with the issuer; and (c) the nature and extent of the related party's interest in the operation.
Furthermore, the following do not need to be disclosed: (a) transactions between the issuer and its direct and indirect subsidiaries, except in cases where there is equity participation in the subsidiary by the direct or indirect controllers of the issuer, its administrators, or persons linked to them; (b) transactions between the issuer's direct and indirect subsidiaries, except in cases where there is equity participation in the subsidiary by the direct or indirect controllers of the issuer, its administrators, or persons linked to them; and (c) remuneration of administrators. The disclosure of this communication does not interfere with other legal and regulatory obligations to disclose information about related-party transactions, such as those existing in the Reference Form or in the companies' financial statements.
3.16. Stock-based compensation plans
The company must disclose, through the Empresas.NET system, any stock-based compensation plans it has, including stock option plans.
Traditional stock option plans must be archived in the Empresas.NET system, in the "Option Plan" category.
The other stock-based compensation plans must be archived in the "Stock-Based Compensation Plan (Except Option Plan)" category.
The reference date of the document must represent the date of approval of the compensation plan.
All stock-based compensation plans related to the remuneration of the administrators of the open company must be archived in the Empresas.NET system, even if the shares used in the plan are not issued by the company itself, but by a holding company, subsidiary, affiliate, or company under common control.
3.17. Earnings releases
Companies that opt to disclose earnings releases must do so through the Empresas.NET system, category "Economic-Financial Data", type "Press-Release". This disclosure must generally occur after the disclosure of the financial statements, annual or interim, that served as the basis for its preparation.
In preparing earnings releases, considering the risks arising from the disclosure of only a portion of the information contained in the financial statements, special attention must be paid to observing the principles contained in Articles 14 to 16 of Instruction No. 480/09, particularly with regard to the disclosure of complete, consistent information that does not mislead the investor. In this sense, the content and form of the press release must be structured with the concern of avoiding the disclosure of information that could lead the investor to a conclusion different from that which would be obtained after reading the complete financial statements. Among other aspects, positive and negative information of equal relevance included in the press release must be disclosed with the same prominence. In the case of disclosure of non-accounting information, the principles contained in CVM Instruction No. 527/12 must always be observed, where applicable, especially with regard to the need to reconcile these data with accounting figures.
3.18. Market maker
The activity of market maker is regulated by CVM Instruction No. 384/03. According to the definition given in Article 2 of this CVM Instruction, a market maker is a legal entity, duly registered with stock exchanges and over-the-counter organized market entities, interested in carrying out operations intended to foster the liquidity of securities registered for trading. The market maker may exercise its activity autonomously or be hired by the issuer of the securities in which it specializes, by holding, subsidiary, or affiliate companies of the issuer, or by any holders of securities who have an interest in forming a market for the shares in their ownership. At the time of hiring or dismissing the market maker, by the issuer or its controlling shareholder, the company must inform the CVM and the stock exchange or the over-the-counter organized market entity, as applicable: I – name and qualification of the market maker; II – the company's objective in the operation; III – the duration of the contract; IV – the quantity of shares in circulation in the market, by type and class, according to the definition contained in CVM Instruction No. 10/80; V – indication of any agreement or contract between the market maker and the controller, when applicable, regulating the exercise of voting rights or the purchase and sale of securities issued by the company. In the case of hiring by a party other than the issuing company or its controlling shareholder, the hired institution must inform the fact to the stock exchange or the over-the-counter organized market entity, as applicable. The market maker's activity seeks to establish a reference price for the trading of the asset, and its importance will be measured by the results obtained with its performance, since the possibility of buying and selling assets at any time encourages people to invest in these shares. For this reason, this Superintendence understands that both the hiring and the dismissal of a market maker are decisions that may considerably influence investors' decisions to buy, hold, or sell such securities; thus, both the hiring and the dismissal of a market maker must be reported to the market as a relevant fact, in accordance with CVM Instruction No. 358/02.
Chapter 4. Common Guidelines for Periodic and Occasional 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 for cooperation and organization of the supervision 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 in the agreement, the SEP and the Issuers Regulation Directorate of the Exchange (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 support to the exchange will occur, whether by performing consulting 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 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 website (www.cvm.gov.br), on the "Legislation and Regulation" link.
4.2. General guidelines
The submission of periodic and occasional 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 made through the Empresas.NET system (see Chapter 8).
It should be noted that the final deadlines for the delivery of periodic and occasional information are non-extendable, as there is no express authorization in the legislation to authorize, for any reason, a request for extension of the delivery deadline for this information.
For information whose delivery deadline is not stipulated in CVM Instruction No. 480/09 in business days, it should be noted that, coinciding with Saturday, Sunday, or national holiday, the final date for presenting periodic and occasional information will be the following business day, as established by Article 66 of Law No. 9.784/99. The issuer that fails to comply with the obligations to deliver 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 listed 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, where applicable, the liquidator, judicial administrator, managerial administrator, intervenor, or liquidator), in accordance with Articles 9, item V, and 11 of Law No. 6.385/76. Furthermore, it is noted that it constitutes a serious offense, for the purposes provided for in paragraph 3 of Article 11 of Law No. 6.385/76, the violation of the provisions of CVM Instruction No. 358/02, as provided 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 occasional information provided for in CVM Instruction No. 480/09, in accordance with its Article 60. 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 occasional information. In this sense, it is worth mentioning the vote delivered by the President of the CVM to PAS RJ2011/9493 (minutes of the Collegiate Meeting No. 6, of 05.02.2013) 21 suggesting that, on these occasions, the DRI must disclose a Market Notice informing (a) that the company will not disclose the said periodic information within the deadlines established in the Corporate Law or in specific norms regarding the subject; (b) the reasons why the company will not be able to meet the deadline; (c) the effective measures that are being taken to correct the problem; and (d) the estimated deadline, within reasonableness, for the disclosure of the periodic information that will not be provided in a timely manner.
21 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=8121-3.HTM.
In order for the documents related to periodic and occasional information to be prepared and delivered in an integral manner to the CVM, we recommend that companies observe the following minimum requirements of legibility and clarity in the preparation of this information:
a) Texts may not exceed the minimum margin limits that allow for their printing, nor should they be overlapped by graphic elements, tables, headers, etc.; b) The content must have sufficient resolution for electronic or printed reproduction; c) Page numbering must not contain repetitions, and numbering by section must be respected; d) Analytical indexes and cross-references must faithfully reflect the pages on which each content is located; e) The minimum font size limit is 7pt, especially for covers and tables; f) The logical integrity of the disclosed file must be preserved, without defective pages; g) No text or image may be cut, totally or partially; h) Numbered and alphabetical lists must be correctly sequenced and without repetitions, in a unified and continuous manner; and i) Practices that prioritize reading fluency and consultation of information must be used; Although not crucial, the following should also be observed:
a) Page breaks and paragraphs that prevent truncated reading, in order to avoid "orphan" and "widow" lines; b) Use of typography and font size consistent throughout the entire document; c) Consistency in sequences of alphabetical and numbered lists, in order to prevent doubts regarding the logical structure of the document; d) Consistent page size throughout the same document; e) Avoid improper separation of titles, table headers, or footnotes from their respective contents, across two pages; f) Pay attention to misaligned or poorly formatted tables, which hinder the understanding of information; g) In pages of files that have been digitized, avoid the presence of spots resulting from the digitization process, such as threads and black margins; h) Pages with signatures may be digitized or replaced with the expression "/s/" – indication that the original contains the signature of the person responsible for the information; i) Observe the optimization of page and section spaces; and j) Avoid blank pages with repetition of headers and/or footers.
4.3. Obligation to maintain a page on the World Wide Web
CVM Instruction No. 480/09 determines, in its Article 13, that the issuer must send to the CVM and the entities administering the markets in which its securities are admitted to trading the periodic and occasional 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 website on the World Wide Web. The issuer registered in Category A must also place and maintain the information it discloses on its website for 3 (three) years, counted from the date of disclosure. It should be noted that this archiving rule refers to all periodic and occasional information provided for in 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 the 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 need 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 Empresas.NET system, is not considered a valid procedure to comply with the provision of the norm. Although not mandatory, it is recommended that companies registered in Category B place and maintain the periodic and occasional information provided in compliance with Articles 21 and 31 of CVM Instruction No. 480/09 on their own website on the World Wide Web, similar to what is required for companies registered in Category A by Article 13, paragraph 2, of the said Instruction.
4.4. Confidentiality request
In accordance with Article 56 of CVM Instruction No. 480/09, the SEP may request the submission of additional information and documents beyond those required by this Instruction or ask for clarification on information and documents submitted, through a communication sent to the issuer, granting it a deadline to comply 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 the reasons why the issuer believes that their disclosure to the public would put 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, and the word "confidential" must appear 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 atypical fluctuation in the quotation, price, or quantity traded of the issuer's securities. It should be noted that, in accordance with paragraph 1 of Article 56 of CVM Instruction No. 480/09, 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 worth remembering, furthermore, 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.
Requests for confidentiality related to responses to investigations conducted by the SEP, in accordance with Article 9 of Law No. 6.385/76, must be addressed directly to the SEP, as they do not fall into the two situations described above.
4.5. Documents in foreign language
By analogy to that provided 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 Empresas.NET system 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, and the issuer must arrange 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 high market exposure
In accordance with Article 34 of CVM Instruction No. 480/09, issuers with high 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 request for registration of the public offering of distribution of securities. The status of issuer with high market exposure must be declared by the issuer in the request for registration of the public offering of 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 memorandum 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 registration requests for distribution offerings of securities for such issuers, regulated in Articles 6º-A and 6º-B of CVM Instruction No. 400/03, amended by CVM Instruction No. 482/10, is carried out with greater speed, within 5 (five) business days from the protocol of the request at the CVM.
5.2. Issuers in special situation
5.2.1. Issuers in extrajudicial recovery
In addition to the periodic and occasional information provided for in Sections II and III of Chapter III of CVM Instruction No. 480/09, issuers in extrajudicial recovery must send to the CVM reports on compliance with the payment schedule and other obligations established in the extrajudicial recovery plan, with a frequency not exceeding 90 (ninety) days, as provided in Article 35 of the Instruction. These reports must be sent through the Empresas.NET system, category "Information on companies in judicial or extrajudicial recovery", type "Plan Compliance 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, managerial administrator, intervenor, 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, particularly with regard to 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 Empresas.NET system (see item 2.3.1 and Chapter 8).
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 to court of the detailed report at the end of the recovery process.
Thus, these issuers must send, through the Empresas.NET 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 deadlines specified:
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".
Alert is issued 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, that person will be equated to the DRI for all purposes provided for in the legislation and regulation of the securities market.
It should be noted that, in addition to sending the aforementioned documents, issuers must update their registration data with the CVM, particularly regarding the change in the company's status and its responsible person, by sending the Registration Form, within 7 (seven) business days counted from the event that caused the alteration, in accordance with article 23 of CVM Instruction No. 480/09. It should be noted that the responsible person's data must also be updated via the Empresas.NET System (see items 2.3.1 and Chapter 8).
5.2.3. Issuers in Bankruptcy
According to article 38 of CVM Instruction No. 480/09, the issuer in bankruptcy is exempt only from providing the periodic information referred to in Section II of Chapter III of CVM Instruction No. 480/09.
Therefore, these issuers must send to the CVM, via the Empresas.NET 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 bankruptcy situation, in the category “Information Companies in Bankruptcy”, type “Causes and circumstances of bankruptcy”; b) administrative accounts, in the category “Information Companies in Bankruptcy”, type “Administrative accounts”; c) any other accounting information presented to the judge in the bankruptcy process, in the category “Information Companies in Bankruptcy”, type “Other accounting information”; d) accounts presented at the end of the bankruptcy process, in the category “Information Companies in Bankruptcy”, type “Accounts presented at the end of the bankruptcy process”; e) final report on the bankruptcy process, in the category “Information Companies in Bankruptcy”, type “Final Report”; and f) sentence closing the bankruptcy process, in the category “Information Companies in Bankruptcy”, type “Closing Sentence”.
Alert is issued 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, that person will be equated to the DRI for all purposes provided for in the legislation and regulation of the securities market.
It should be noted that, in addition to sending the aforementioned documents, issuers must update their registration data with the CVM, particularly regarding the change in the company's status and its responsible person, by sending the Registration Form, within 7 (seven) business days counted from the event that caused the alteration, in accordance with article 23 of CVM Instruction No. 480/09. It should be noted that the responsible person's data must also be updated via the Empresas.NET System (see items 2.3.1 and Chapter 8).
5.2.4. Issuers in Liquidation
According to article 40 of CVM Instruction No. 480/09, the issuer in liquidation is exempt only from providing the periodic information referred to in Section II of Chapter III of CVM Instruction No. 480/09.
Therefore, these issuers must send to the CVM, via the Empresas.NET 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 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 Companies in Liquidation”, type “General list of creditors”; c) definitive general list of creditors, in the category “Information Companies in Liquidation”, type “Definitive general list of creditors”; d) report and final balance sheet of the liquidation, in the category “Information Companies in Liquidation”, type “Report and Final Balance Sheet of Liquidation”; e) other reports, opinions, and accounting information, in the category “Information Companies in Liquidation”, type “Other reports, opinions, and accounting information”; and f) act of closing the liquidation, in the category “Information Companies in Liquidation”, type “Act of Closing Liquidation”.
Alert is issued 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, that person will be equated to the DRI for all purposes provided for in the legislation and regulation of the securities market.
It should be noted that, in addition to sending the aforementioned documents, issuers must update their registration data with the CVM, particularly regarding the change in the company's status and its responsible person, by sending the Registration Form, within 7 (seven) business days counted from the event that caused the alteration, in accordance with article 23 of CVM Instruction No. 480/09. It should be noted that the responsible person's data must also be updated via the Empresas.NET System (see items 2.3.1 and Chapter 8).
Chapter 6. Relevant Corporate Events and Other Guidelines
6.1. Common Guidelines for Ordinary and Extraordinary General Assemblies
6.1.1. Representation of Shareholders in Assembly
Paragraph 1 of article 126 of Law No. 6.404/76 establishes that a shareholder may be represented in an assembly by a proxy constituted 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 co-owners.
The CVM Collegiate, in a meeting held on 11/04/2014 (CVM Process RJ2014/3578) 22, understood that corporate shareholders may be represented in shareholders' assemblies through their legal representatives or through duly constituted agents, in accordance with the company's constitutive acts and the rules of the Civil Code.
Thus, there is no need for this agent to be a shareholder, administrator of the company, or lawyer.
CVM Instruction No. 481/09 provides, in its article 5, that the call announcement must list the documents required for shareholders to be admitted to the assembly.
The Instruction allows the company to request the prior deposit of the documents mentioned in the call announcement, if the bylaws contain a provision on the subject, but determines that the shareholder who attends the assembly armed with the required documents may participate and vote, even if they failed to deposit them previously.
Thus, the impediment to participation in an assembly of a shareholder representative 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 noted that, in a meeting held on 06/24/2008 (CVM Process RJ2008/1794) , 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 the proxies.
Thus, the company may always, at its discretion, dispense with the recognition of signature and the consularization of the instruments of proxy granted by shareholders to their representatives.
The Collegiate also understood that there is no obstacle to proxies being granted electronically, given, moreover, 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.
22 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=9306-0.HTM.
23 See http://www.cvm.gov.br/port/descol/resp.asp?File=2008-024D24062008.htm.
6.1.2. Public Requests for Proxy
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 assemblies, also established norms to discipline public requests for proxy for the exercise of voting rights.
For the purposes of CVM Instruction No. 481/09, public requests for proxy are considered:
a) requests that employ public means of communication, such as television, radio, magazines, newspapers, and pages on the worldwide computer network; 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 fit into any of the above hypotheses will be considered private requests, not subject to the procedures provided for in the aforementioned instruction.
It should be noted that investment funds whose decisions on the exercise of voting rights in assemblies are taken discretely by the same manager are considered as a single shareholder, in accordance with CVM Instruction No. 481/09.
According to the Instruction, any public request for proxy for the exercise of voting rights must be sent to all shareholders with voting rights in the assembly in question.
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 if partially, must be sent to the CVM, on the date of the start of the request, via the Empresas.NET 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 the information required in article 23 of CVM Instruction No. 481/09, to the DRI by the business day prior to the date of the start of the request (article 26, paragraph 1, of the same Instruction).
In line with the provisions of Law No. 6.404/76, CVM Instruction No. 481/09 determines that proxies subject to public request 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 must abstain regarding such proposals; and c) be restricted to a single assembly.
When the public proxy request is made by the company, the administration must communicate to the market its intention to make 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 assembly.
In this sense, the rule stipulates that proxies subject to public request promoted by the administration regarding the election of administrators and members of the fiscal council must allow the shareholder to vote both for the candidates indicated by the administration, as well as for candidates indicated by shareholders representing at least 0.5% (zero point five percent) of the social capital.
Shareholders representing at least 0.5% (zero point five percent) of the social 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% (zero point five percent) of the social capital, the rule 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 if 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.
The 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 the supporting documents of the reimbursable expenses incurred.
It should be noted that the company that accepts electronic proxies via a system on the worldwide computer network 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 assemblies, independent of the prior request for proxy 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 assemblies, 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 assembly, leaves no doubt as to the need for a convened assembly, or one on the verge of being 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% (zero point five percent) or more of the social 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 list of shareholders; 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 that vote; and (iii) be directed to all holders of shares whose addresses are in the company.
Still according to CVM Instruction No. 481/09, the address list 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, letter “a”, that holders of preferred shares without voting rights or with restricted voting rights will have the right to elect, in separate voting, one member and respective alternate; the same right will 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 societies and that one of its members, and respective alternate, will be elected by minority ordinary shares and another by preferred shares, if any.
When interpreting article 161, paragraph 4, letter “a”, of Law No. 6.404/76, the CVM exposed, through CVM Orientation Opinion No. 19/90, that in order not to make the right attributed by law to preferred shareholders merely nominal, it must be understood that, in the separate voting 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 a 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 Orientation Opinion No. 19/90, is that, in the election processes for the fiscal council provided for in article 161, paragraph 4, letter “a”, and in article 240 of Law No. 6.404/76, no shareholders who do not fit into the concept of minority that the law sought to protect should participate, that is, besides controllers, persons linked to them should also not participate.
It should be noted that the CVM Collegiate confirmed, on more than one occasion, in sanctioning processes, that entities over which the company's controller has a 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 slot of preferred shareholders or in the slot of minorities. In this sense, see the decision of the CVM Collegiate issued in PAS CVM No. 11/2012, in a judgment session held on 12/02/2014 24 .
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 entity's own governance is necessary.
Thus, as already stated in the vote of President-Relator Marcelo Trindade in PAS CVM No. 07/05 25, the impediment to vote extends to pension entities sponsored by the open company or by its holding companies when, cumulatively:
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 counselors to be elected by minority shareholders was taken with the majority participation of the administrators elected by the 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 should be noted that, as mentioned in the vote of Director Otávio Yazbek, within the scope of CVM Process No. RJ2009/13179 26, the impediment to vote is directed to the shareholder. It is then up to the table president to declare this impediment only in cases where the prohibition is evident. Thus, the table president of the assembly should only impede the vote of shareholders in the separate election, if it remains evident, in each case, that there is the decisive influence of the controller or sponsor on the voting decision of the complementary private pension entity.
The table president, after evaluating and concluding that the controller's influence is not evident, must draw attention in the assembly (leaving, moreover, recorded in the respective minutes) to the understanding issued by the SEP in this Circular Letter, in the sense that it is up to each complementary private pension entity to evaluate if 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 assembly, elements that allow demonstrating that there was no said influence.
24 See http://www.cvm.gov.br/port/inqueritos/2014/rordinario/inqueritos/11-2012-Petrobras.htm.
25 See http://www.cvm.gov.br/port/inqueritos/2007/rordinario/inqueritos/04_24_07-05.asp.
26 See http://www.cvm.gov.br/port/descol/resp.asp?File=2010-035D09092010.htm.
As provided in paragraph 2 of Article 161 of Law No. 6,404/76, the Fiscal Council, when its operation is not permanent, shall be installed by the general meeting upon request by shareholders representing at least 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 operation shall end at the first ordinary general meeting after its installation.
CVM Instruction No. 324/00 establishes a scale reducing, based on share capital, the minimum percentages of share participation necessary to request the installation of a Fiscal Council of an open company as provided 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 27. However, the percentage of share participation for separate election, as provided in paragraph 4(a) of Article 161 of Law No. 6,404/76, cannot be reduced by the CVM, as it does not fall under any of the hypotheses provided in Article 291 of the same law.
For this reason, in cases where (i) there are no non-controlling shareholders holding preferred shares; and (ii) minority shareholders holding ordinary shares do not reach the percentage for separate election of a Fiscal Council member, the CVM's understanding 28 is that the shareholders present, including the controller, may elect the Fiscal Council members by majority vote. The controlling shareholder is not obliged to participate in the election of the Fiscal Council members in the aforementioned case, and if it does not do so, all councilors will be elected by the votes of the other shareholders, regardless of their participation in the 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 29 and 09/23/2008 30 (CVM Process RJ2007/11086), to the effect that the requirement of "10% or more of the shares with voting rights" provided 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 separate voting, a member and respective alternate of the Fiscal Council, but rather to the number of shares with voting rights held by all non-controlling 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 12.5 to 12.10 of the content of the Reference Form provided in Annex A of CVM Instruction No. 552/14, 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 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 Article 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 Article 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 DR holders to exercise voting rights, 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 Empresas.NET System, in the category "Notice to Shareholders", type "Other Notices", including in the subject that it concerns the indication of candidates for Fiscal Council member 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 applicable.
Regarding the election of alternate members of the Fiscal Council, Article 161, paragraph 1, of Law No. 6,404/76 provides that the Fiscal Council shall 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.
The election of alternate members of the Fiscal Council is therefore mandatory, and the Fiscal Council must be composed of principal and alternate members in equal number, 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 oversight, provided 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 in the caput of Article 141; and b) the separate election mechanism provided in paragraph 4 of Article 141, in which they may elect one member and their alternate by 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 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 share capital.
The CVM Collegiate, in a meeting held on 11/04/2014 (CVM Processes RJ2013/4386 and RJ2013/4607) 31, understood that treasury shares must be excluded from the total number of shares or the total number of shares with voting rights, as applicable, for the purpose of calculating the percentages indicated in Article 141, paragraphs 4 and 5, of Law No. 6,404/76.
Article 239 of Law No. 6,404/76 further ensures to 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 Board of Directors 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 Advisory Opinion CVM No. 19/90 and in sanctioning processes regarding participation in the separate election provided 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 of election of members of the Board of Directors established in these provisions 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. In this sense, see the decision of the CVM Collegiate issued in CVM PAS No. 11/2012, in a judgment session held on 12/02/2014 32.
The SEP understands that the understanding established in the vote of President-Relator Marcelo Trindade in CVM PAS No. 07/05 33 (see item 6.1.4) also applies to the elections of members for the Board of Directors governed by 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 emphasized that, as mentioned in the vote of Director Otávio Yazbek, within the scope of CVM Process RJ2009/13179 34, the impediment to vote is directed to the shareholder. It is then up to the chairman of the board to declare this impediment only in cases where the prohibition is evident. Thus, the chairman 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 chairman of the board, after evaluating and concluding that the controller's influence 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 Board members by non-controlling shareholders, it is emphasized that in the meeting held on 04/11/2006 35, 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 RJ2005/5664), which, in cases where the company has only issued shares with voting rights, shall have the right to elect and dismiss one member and their alternate of the Board of Directors, in separate voting in the general meeting, excluding the controlling shareholder, the majority of holders who hold at least 10% of the total 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 separate election mechanism provided in Article 141, paragraph 4, item I. Being especially directed at ordinary shareholding shareholders, 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.
On the other hand, the occurrence of the election of a member of the Board of Directors by minority shareholders holding ordinary shares, provided in Article 239 of Law No. 6,404/76, excludes the application of paragraph 5 of Article 141 of the same Law.
Thus, if there is the election of a member to the Board of Directors by non-controlling shareholders holding ordinary shares, based on Article 239, there would be no possibility for other non-controlling ordinary shareholders to join preferred shareholding shareholders to elect another member based on Article 141, paragraph 5, 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 about the minimum documents and information that must be made available to shareholders whenever the general meeting is convened to deliberate on certain matters provided in the Instruction. Such documents and information must be sent by the date of publication of the first notice of convocation, 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 12.5 to 12.10 of the content of the Reference Form provided in Annex A of CVM Instruction No. 552/14, 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 Article 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 Article 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 DR holders to exercise voting rights, 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 Empresas.NET System, in the category "Notice to Shareholders", type "Other Notices", including in the subject that it concerns the indication of candidates for Board of Directors/Fiscal Council member 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 in the Bylaws, cannot be used as an imposition to obstruct the right of shareholders provided in Law No. 6,404/76 to indicate and elect members for 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).
6.2. Merger, consolidation, and spin-off
The administrative bodies or partners of the societies involved in operations of merger, share incorporation, consolidation, or spin-off 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 merger by the controlling company, of a controlled company, the justification presented to the general meeting of the controlled company must contain, in addition to the information provided in Articles 224 and 225, the calculation of the replacement ratios of the shares of non-controlling shareholders of the controlled company based on the value of the net assets of the shares of the controlling and controlled companies, evaluated with both assets 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 Empresas.NET System, category "Assembly", type "EGM" or "AGO/E", species "Justification of Merger, Spin-off or Consolidation" and "Protocol of Merger, Spin-off or Consolidation", 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 at least 15 days in advance of the date of the general meeting that will deliberate on the protocol and justification.
The replacement 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, in addition to the criteria used, the values that served as the basis for the calculation of the replacement ratios must also be disclosed. Moreover, it is important to emphasize that the identification, in the relevant fact, of the experts or the specialized company to evaluate the net assets of the company and the declaration of the existence or not, 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 provided 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 the Empresas.NET 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 operations of merger or consolidation involving a controlling and controlled company or societies under common control shall be made by a specialized company, in the case of open companies.
It should be emphasized that not only the protocol, the justification, and the evaluation reports, but also the legal, accounting, financial opinions, evaluations, financial statements, studies, and any other information or documents that have been made available to the controller or used by him, for the planning, evaluation, promotion, and execution of operations of merger, consolidation, or spin-off involving an open company, must be made available to all shareholders from the date of publication of the conditions of the operation.
It is worth noting, furthermore, that the recommendations of Advisory Opinion No. 35/08 apply to operations of merger, consolidation, and share incorporation involving a controlling society and its controlled companies or societies under common control. Thus, although the procedures described in the aforementioned opinion are not exclusive nor exhaustive, the CVM understands that their adoption is an adequate way to comply with the fiduciary duties of administrators provided 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, to the effect that the recommendation contained in said opinion refers to the constitution of an independent committee for negotiating the conditions of the operation, in a way
27 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=5489-0.HTM.
28 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=5489-0.HTM.
29 See http://www.cvm.gov.br/port/descol/resp.asp?File=2008-017D06052008.htm.
30 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=5633-2.HTM.
31 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=8979-0.HTM.
32 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=8977-0.HTM.
33 See http://www.cvm.gov.br/port/inqueritos/2007/rordinario/inqueritos/04_24_07-05.asp.
34 See http://www.cvm.gov.br/port/descol/resp.asp?File=2010-035D09092010.htm.
35 See http://www.cvm.gov.br/port/descol/resp.asp?File=2006-014D11042006.htm.
36 See http://www.cvm.gov.br/port/descol/resp.asp?File=2005-045D08112005.htm.
that its constitution merely to confirm a previously established exchange relationship distorts the purposes of such a body.
Additionally, it is recommended that deliberations and negotiations regarding the operation be duly documented, among other procedures, through the preparation of minutes of all meetings, in order to support any analysis of compliance with fiduciary duties provided by law by members of the Board of Directors and the independent committee.
Furthermore, it is not recommended to disclose any exchange relationship that the administration or controlling shareholder deems applicable to the intended operation before the completion of the work of the independent committees, as such disclosure at an earlier stage may, in fact, influence the quotation of the shares issued by the companies involved until the conclusion of the negotiations.
Finally, in cases where the merger, consolidation, or spin-off operation gives rise to a right of withdrawal, public companies whose shares are admitted to trading on regulated markets must, as provided in Article 20 of CVM Instruction No. 481/09, disclose the information set forth in Annex 20 to said instruction, in the manner described in this Letter (see item 3.2).
6.2.1. Requests for waiver of compliance with requirements (CVM Deliberation No. 559/08)
On 18.11.08, 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 require compliance with certain requirements is not justified, in cases of operations involving public companies related to the merger of a subsidiary by a parent company, merger of a parent company by a subsidiary, merger of a controlling company with a subsidiary, merger of shares of a controlled or controlling company, or merger, consolidation, and merger of shares of societies under common control, provided that the requirements listed in the Deliberation are present.
The SEP's opinion in these cases may refer only to the non-necessity of observing the following requirements:
a) preparation of a report based on the value of the net equity of the shares of the parent and controlled companies, with both equities evaluated according to the same criteria and on the same date, at market prices, in accordance with Article 264 of Law No. 6.404/76; b) publication, in the press, of the Relevant Fact referred to in Article 2 of CVM Instruction No. 319/99; and c) preparation of audited financial statements by an independent auditor registered with the CVM, in accordance with Article 12 of CVM Instruction No. 319/99.
The SEP does not have competence to waive the publication of the Relevant Fact provided for in Article 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 entity 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 entity will depend on the deliberation of the general meeting of the purchaser, specially convened to consider 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 an 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 equity 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 where public companies acquire commercial entities through their subsidiaries, affiliates, or wholly-owned subsidiaries, which are closed companies or present another corporate type.
Nevertheless, in the analysis of concrete situations, controllers 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 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 net annual profit per share of the last two fiscal years], 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, observing the provisions of its item II."
In view of the above, upon the disclosure of the acquisition of a commercial entity, the public company must inform whether the acquisition was carried out by the public company itself or through a subsidiary, affiliate, 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 give rise to 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 said Instruction, in the manner oriented in this Letter (see item 3.2).
Although 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 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 paragraph 1 of Article 256 of Law No. 6.404/76 is not confused with the evaluation required by paragraph 2 of the same article, since its function is to support 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 consider to be the one that best evaluates that investment.
The valuation report referred to in paragraph 1 of Article 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 Empresas.NET System, in the category "Economic-Financial Data" and type "Valuation 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 societies 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 to occur after the implementation of the operation.
If the operation gives rise to 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 period 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 said instruction, in the manner oriented in this Letter (see item 3.2).
6.4. Conversion of shares
In cases of conversion of shares, without prejudice to the provisions of CVM Instruction No. 358/02, the administration's proposal, to be sent via the Empresas.NET 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 decisions, such as the reasons or purposes of the operation; the mandatory or optional nature of the operation and the eligibility of the right of withdrawal for dissenting shareholders; the conversion ratio between the classes or species of shares; the criterion for determining the said conversion ratio; 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 date that will be used to identify the shareholders who may exercise the right of withdrawal, the reimbursement value per share and its method of calculation, and the periods and procedures that the 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 they were 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" should be understood the date of disclosure of the Relevant Fact in the electronic system available on the CVM's Internet page and in the communication channels described in 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 the assembly or the disclosure of the relevant fact, whichever occurred first, regardless of the date of disclosure of the document via the Empresas.NET System.
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 shares of a species or class that has liquidity and dispersion in the market will not have the right to withdrawal, considering that:
a) liquidity exists when the species or class of shares, or the 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 exists when the controlling shareholder, the controlling company, or other societies under its control hold less than half of the species or class of shares.
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 in futures exchanges, currently Ibovespa and IBrX-50.
It is also worth noting that, within 10 (ten) days following 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 believe that the payment of the reimbursement price of the shares to the dissenting shareholders who exercised the right of withdrawal 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 subject of a Relevant Fact, within the aforementioned period. The administration's decision to ratify the said deliberation must, as a rule, be the subject of a Market Notice.
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 said instruction, in the manner oriented in this Letter (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 decisions, such as:
a) justification regarding the need to carry out the operation; b) main characteristics of the operation:
i. quantity of shares to be issued by species (and class, if any) and potential dilution of shareholding. The potential dilution represents the maximum percentage of dilution suffered by the shareholder who fails to exercise their right of preference in the subscription of the new shares issued. The determination of this percentage can be obtained by dividing the quantity of new shares to be issued by the sum of this quantity with the initial quantity of shares before the capital increase, multiplying the quotient obtained by 100;
ii. issue price; criterion adopted for determining the issue price and detailed information on the economic aspects that underpinned the choice of this criterion;
iii. periods and procedures to be observed by shareholders in exercising the right of preference and in the subscription and payment of the issued shares: date to be considered for identifying the shareholders who will have the right to subscribe to the new shares and the percentage that shareholders will have the right to subscribe with up to 10 decimal places; and
iv. treatment regarding surplus shares not subscribed (in accordance with paragraph 7 of Article 171 of Law No. 6.404/76). In the case of pro-rata distribution of surplus shares not subscribed, the percentage for exercising the right to subscribe to surpluses must be obtained by dividing the quantity of unsubscribed shares by the total quantity of shares subscribed by subscribers who expressed interest in the surpluses during the preference period, multiplying the quotient obtained by 100;
c) Valuation Report and other documents that supported the fixing of the issue price; d) copy of the audit committee's opinion, if it is functioning, with divergent votes, if applicable; e) inform (a) whether shareholders who do not wish to exercise their rights of preference for subscription may negotiate them on the stock exchange or request the assignment of their rights; and (b) the periods for negotiation or assignment of such rights; and f) inform whether the shares to be issued as a result of the capital increase will participate on equal terms in all benefits, including dividends and any capital remuneration that may be approved in the fiscal year. If they participate pro rata tempore, inform from when they will participate fully 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 said instruction, in the manner oriented in this Letter (see item 3.2), when the capital increase is deliberated in assembly.
If the capital increase by private subscription operation is to be deliberated in a Board of Directors meeting, public companies registered in Category A must, as provided in Article 30, item XXXII, of CVM Instruction No. 480/09, as amended by CVM Instruction No. 552/14, disclose the information provided for in Annex 30-XXXII to said Instruction, on the same date of disclosure of the minutes of the board meeting or within 7 (seven) business days of the date of the meeting of said body, whichever occurs first. This communication must be disclosed via the Empresas.NET System (category "Notice to Shareholders", type "Capital increase by private subscription deliberated in BOD"), mentioning in the subject the information disclosed.
Regarding the role of the Audit Committee, as a rule, it is not competent for this body to express a prior opinion on statutory alterations related to authorized capital. However, in cases where the alteration of authorized capital is being deliberated in a General Assembly, to enable the approval of a capital increase by the Board of Directors, whose main characteristics are already defined and known to shareholders, it is understood that the Audit Committee should express its opinion on the capital increase prior to the General Assembly that will deliberate on the modification of the authorized capital, in order to, in accordance with Article 163, III, of Law No. 6.404/76, support the decision of the shareholders.
In this regard, the Audit Committee's opinion, in cases of capital increase, must expressly contain the opinion of the body (favorable or unfavorable) on the proposed operation, and it is not sufficient to simply mention the presence of necessary and sufficient information for shareholders to deliberate the topic in assembly.
It is worth remembering that, in the understanding of the CVM Collegiate Body (see decision of 07/01/2014 – CVM Process No. RJ2013/6295 37), 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.
In this sense, once the possibility of partial homologation is provided for, the company must inform in Annex 14 of CVM Instruction No. 481/09 (item 5.r) or in Annex 30-XXXII of CVM Instruction No. 480/09 (Article 2, XVII) regarding the granting or not of a final deadline for investment review, in the case of partial placement of the shares object of the capital increase, in which Articles 30 and 31 of CVM Instruction No. 400/03 were observed.
It is worth highlighting, finally, that the CVM Collegiate Body established an understanding in the meeting held on 07/01/2014 (CVM Process No. RJ2013/6295) 38 that it is possible to effectuate homologation of a private capital increase partially subscribed, regardless of the realization of public distribution efforts for surpluses.
In the decision, the Collegiate Body summarized 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 implemented; 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; d) that at the end of the preference period, it is verified that at least the minimum amount indicated in the deliberation approving the increase has been subscribed; and e) that the capital increase that admits partial subscription cannot be implemented if the subscribed amount does not reach, at least, the minimum value indicated in the deliberation approving 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 shares in capital increase with credits
As provided in Article 171, paragraph 2, of Law No. 6.404/76, in a capital increase through 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 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, observing the decision issued by the CVM Collegiate Body on 07/01/2014 (see item 6.6) which establishes that the body deliberating on the increase must dispose of the surpluses, being able to (i) order them to be sold on the stock exchange, for the benefit of the company, or (ii) distribute them, in proportion to the values subscribed, among the shareholders who had requested, in the subscription bulletin or list, a reserve of surpluses.
Thus, in capitalization with credits, shareholders who exercise their right of preference and manifest the intention, in the subscription bulletin or list, to subscribe to the surpluses, must be given 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 distributed 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 prevail.
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 themselves, without granting the right to subscribe to these surpluses to other shareholders who exercised their right of preference and expressed 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 social 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 social capital with restitution to shareholders of part of the
the value of the shares, or by the decrease in their value, when not fully paid, to the amount of the down payments, will only become effective 60 (sixty) days after the publication of the minutes of the general meeting that deliberated on it.
Whenever the general meeting is convened to deliberate on capital reduction, issuers registered in Category A must disclose, through the Empresas.NET System (see item 3.2.2), at minimum, the following information required by CVM Instruction No. 481/09: (a) the value of the reduction and the new share capital; (b) a detailed explanation of the reasons, method, and consequences of the share capital reduction; (c) a copy of the audit committee's opinion, if it is in operation, when the proposal for share capital reduction is initiated by the administrators; (d) as applicable: (i) the value of the refund per share; (ii) the value of the decrease in the value of the shares to the amount of the down payments, in the case of non-fully paid capital; or (iii) the number of shares subject to the reduction.
It is noted that, even though CVM Instruction No. 481/09 does not apply to issuers registered in Category B, these must send, on the same date as the publication of the first announcement 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 General Meetings.
6.8. Share Grouping
In the case of share grouping, in the Material Fact disclosing the operation, the grouping factor must be informed and the procedures to be adopted detailed in order to ensure shareholders the option to remain part of the shareholder register with at least one new unit of capital, should these shareholders manifest such intention within the period established in the general meeting that deliberated on the grouping.
The administration's proposal to be submitted to the meeting must contain the entire procedure proposed for the grouping, the grouping factor used, the treatment to be given to fractions, and the composition of the share capital after the grouping.
6.9. Trading Blackout Period
Article 13 of CVM Instruction No. 358/02 establishes that, before the disclosure to the market of a material 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 audit committee, and any bodies with technical or advisory 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 material act or fact;
b) by anyone who has knowledge of information regarding a material 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 prohibition will also prevail when there is an intention to promote a merger, total or partial spin-off, consolidation, transformation, or corporate reorganization.
In the supervision of SEP, the disclosure of "Market Communication – Other Communications Not Considered Material Facts" that may impact the trading of securities issued by the company may be treated as a material fact for the purposes of Article 13 of CVM Instruction No. 358/02, in addition to liability for non-disclosure of the information as a material fact.
The prohibitions cited above will cease to be in effect as soon as the company discloses the material fact to the market, unless trading with the shares could interfere with the conditions of the said transactions, 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 call option according to the stock option grant plan approved in a general meeting.
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 the company's own shares, 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 prohibition 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 cited 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 prohibition in the 15-day period preceding the disclosure of accounting information, the rule establishes that such prohibition will not apply to the acquisition of the company's own shares that are carried out in accordance with an investment plan previously approved by the company, in the manner provided for in paragraph 3 of Article 15 of the aforementioned instruction.
For the determination of the blackout 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 scheduled for 05/10, the blackout period will be between 04/25 and 05/09). It is noted that trading on the day of disclosure itself is prohibited before the information becomes public.
Since 01/01/2014, the supervision of SEP, within the scope of the Risk-Based Supervision Plan (see Chapter 11), covers 100% of the transactions carried out by administrators, controllers, and the company itself in the 15-day period preceding the disclosure of quarterly and annual accounting information.
It is also worth remembering that, regardless of the objective blackout period 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 is prohibited by those who have knowledge of the content of the financial statements before their disclosure.
Attention is drawn to the fact that stock lending is an operation that is also covered by the prohibition provided 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 valid on the date of closing or maturity of the contract.
Additionally, the trading prohibition provided in Article 13 also applies to private transactions.
It is worth remembering that, in the event of advance disclosure of financial information, the trading blackout period provided for in Article 13, paragraph 4, of CVM Instruction No. 358/02 is also advanced.
The company must organize material, to make available to the CVM, if requested, indicating who had access to the disclosed material information, as well as the time of such access, in accordance with CVM Instruction No. 358/02.
Finally, it is recommended that the Company's Investor Relations Director inform the persons mentioned in the caput of Article 13 of CVM Instruction No. 358/02 and, if possible, all employees of the company, regarding the occurrence of blackout periods.
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 the preparation and disclosure of a Related-Party Transactions Policy, allowing the mitigation of conflicts through specific evaluation and approval rules applicable to these transactions.
It is also recommended that related-party transactions be analyzed by the Statutory Audit Committee, when present, or another specific body, which would be responsible for evaluating the conditions under which such transactions are established and to ensure they are carried out in the best interest of the company. The approval of these operations must be preceded by effective negotiation, in which persons without personal interests in the matter participate on behalf of the company, and it is also advisable to create approval tiers according to the relevance of the transaction. Finally, related-party transactions and the entire decision-making process preceding them must be documented in a manner that allows for subsequent verification, when necessary.
It is reiterated that CVM Guidance Opinion No. 35/08 enumerates guidelines that may be applicable to various related-party transactions, and not only those that take the form of mergers, acquisitions, and share incorporations. It is up to the 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.
As determined by Article 30, item XXXIII, of CVM Instruction No. 480/09, open companies registered in Category A must disclose communication regarding related-party transactions (see item 3.15).
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, except for 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 the 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, the 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 type and class; and (e) the political and equity rights attributable to treasury shares, among other points. It is noted that, in accordance with Article 11 of CVM Instruction No. 10/80, the Board of Directors' resolution authorizing the acquisition of shares, for cancellation or retention in treasury, or their respective alienation, must be communicated immediately to the CVM and to the Stock Exchange where the company's titles are traded, through a Material Fact (item XV of the sole paragraph of CVM Instruction No. 358/02). Furthermore, considering the potential impact such programs may have on the price of the Company's issued shares, we remind you that the information regarding the conditions and approval of the program and the effective intention to acquire the shares must be disclosed in a complete, precise, and non-misleading manner.
It is worth noting that Article 23 of the Instruction provides that, respecting the prohibition of Article 2, the CVM may authorize, in special and fully circumscribed cases and upon prior request, the carrying out of the company's operations 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 undistributed dividends.
Regarding the use of balances from the reserves and current year profit accounts as collateral for transactions to acquire the company's own-issued shares, ascertained through intermediate financial information, it is remembered that the CVM Collegiate, in the meeting held on 11/25/2008 (CVM Process RJ2008/2535)
39, understood the employment of its use to be appropriate, under the support of 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 the 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:
39 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 the 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 ongoing 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 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 intended values for the acquisition of the company's own shares; and
d) in any case, the use of the result of the ongoing fiscal year for projected result values is prohibited.
It is noted 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 RJ2008/9839)
40, the Collegiate also expressed 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 meeting is subsequently convened to deliberate on the alteration of the statutory clause regarding the share 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 41 .
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.
Regarding the disclosure of the board of directors' resolution that authorized the acquisition of shares, for cancellation or retention in treasury, the information provided in Article 8 of CVM Instruction 10/80 must be observed.
It is worth noting that even companies that have depositary receipts of shares (units) admitted to trading in regulated markets and whose board of directors approves
40 See http://www.cvm.gov.br/port/descol/resp.asp?File=2008-043D11112008.htm.
41 See http://www.cvm.gov.br/port/audi/ed1113sdm.pdf.
a repurchase program for these securities, must inform the quantity of shares to be acquired within the program and the quantity of shares in circulation, as provided in Article 8, letters "b" and "d" of the aforementioned instruction.
6.12. Bonus Issue of Treasury Shares
In a meeting held on 11/25/2008 (CVM Process RJ2008/6446)
42, 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, thus correcting the numerical expression of the volume of the company's 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 the share capital, in exchange for the reduction of profit reserves, the resulting delivery of shares does not represent a transfer of value from the company to its shareholders via profit distribution.
6.13. Dividends on 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 Regarding 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 EGM that it is incompatible with the company's financial situation. The audit committee, if in operation, must give an opinion on this information, and the administrators must send to the CVM, within 5 (five) days of the holding of the general meeting, 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 through the Empresas.NET System (category "Notice to Shareholders", type "Other notices"), mentioning in the subject the disclosed information.
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.
42 See http://www.cvm.gov.br/port/descol/resp.asp?File=2008-045D25112008.htm.
It is worth noting that this orientation is in line with the Collegiate's decision in a meeting of 05/03/2006 (CVM Process SP2004/0381) 43, in response to the SEP's consultation on the shareholder base to be used in the cited cases.
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's decision of 12/13/2011 (CVM Process RJ2011/8312)
, 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
Upon the consolidation of 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, reelection 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 meeting, including in its notice the amendment 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 RJ2003/13119 and RJ2003/7260) 45, the company exercises, with regard to certain records, a public function equivalent to that of agents delegated state power (such as real estate registry offices), given that the transfer of ownership of shares, and the constitution of
45 See http://www.cvm.gov.br/port/descol/resp.asp?File=2003-013119.htm and http://www.cvm.gov.br/port/descol/resp.asp?File=2003-07260.htm.
43 See http://www.cvm.gov.br/port/descol/resp.asp?File=2006-017d03052006.htm.
44 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=7916-0.HTM.
45 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=4270-1.HTM.
real burdens upon them, only completed with the transcription in the social books, or in the registers that serve as their equivalent.
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 the CVM in case of denial of the request by the company's administration.
In a decision dated 12/08/2009 (CVM Process RJ2009/5356) 46, the CVM Collegiate Body expressed its understanding, in response to a consultation formulated by a market agent, regarding the main conditions for granting the certificate of entries in the social books in question, as well as its content, highlighting the main aspects:
a) the provision in Article 100, paragraph 1, does not oblige the public company to provide a certificate of entries in the social books when the request is justified by facilitating 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, albeit brief, reasoning to legitimize its approval, 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 social 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) thus, the provision of the complete list of shareholders is imposed, based on this provision, in the hypotheses where shareholders must act jointly to defend a right, due to the law or the bylaws establishing a minimum quorum for petitioning before the Judiciary, Public Administration, or the company's bodies. Examples of this include 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 any matter to be included in the agenda has the clear character of defending rights; f) for the same reason, it is also justified, in light of the provision in Article 100, paragraph 1, the granting of the complete list 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 defending a collective or homogeneous individual right, the request for the provision of a certificate of entries in the social books formulated with the purpose of
46 See http://www.cvm.gov.br/port/descol/resp.asp?File=2009-047D08122009.htm.
facilitating the mobilization of shareholders to defend their interests does not meet the requirements established in Article 100, paragraph 1, of the LSA.
In light of this, it should be emphasized that the requester cannot invoke Article 100, paragraph 1, to gather non-controlling shareholders in order to complete the legal quorum for: (a) adoption of multiple voting, 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' assembly, the appropriate route 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 RJ2010/2689 and RJ2010/0620) 47 reiterated the understanding described above, established in the meeting of 12/08/2009. Finally, it is worth recalling the decision of the CVM Collegiate Body in the meeting held on 05/28/2013 (CVM Process RJ2012/13291) 48, in which, among others, it reiterated the understanding issued in the already cited decision of 12/08/2009, as well as emphasized that paragraph 1 of Article 100 of the Corporations Law does not require the requester to have any participation in the company's capital, after all, even a non-shareholder can request the certificates of entries contained in the books mentioned in items I to III of Article 100 of Law No. 6.404/76, observing the requirements established therein.
6.19. Admission of shareholders in a wholly-owned subsidiary (Article 253 of Law No. 6.404/76)
Article 253 of Law No. 6.404/76 establishes that, in proportion to the shares they hold in the company's capital, shareholders will have the right of preference to (i) acquire shares of the capital of the wholly-owned subsidiary, if the company decides to alienate them in whole or in part; and (ii) subscribe to a capital increase of the wholly-owned subsidiary, if the company decides to admit other shareholders.
The CVM Collegiate Body, in a meeting held on 03/29/2011 (CVM Process No. RJ2010/13425) 49, understood that the provision in this article only applies to companies converted into wholly-owned subsidiaries due to a share incorporation operation (Article 252 of Law No. 6.404/76).
Additionally, on the same occasion, the CVM Collegiate Body concluded that, in cases where the social capital of the subsidiary is distributed among two or more shareholders, the specific regime of wholly-owned subsidiaries, provided for in Article 253, would only be applicable if it were evident that the shareholding structure was constituted to defraud the law. Issuers registered in Category A, when disclosing to the market the admission of shareholders in a wholly-owned subsidiary, must inform whether the right of preference in the subscription or acquisition of the subsidiary's shares will be granted to their shareholders, and in case such right is not safeguarded for their shareholders, the reasons why Article 253 of Law No. 6.404/76 will not be observed must be provided. In the administration's proposal to be submitted to the assembly, Category A registered issuers must disclose, through the Empresas.NET System (see item 3.2.2) at minimum, the following
47 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 48 See http://www.cvm.gov.br/port/descol/respdecis.asp?File=8586-1.HTM.
49 See http://www.cvm.gov.br/port/descol/resp.asp?File=2011-012D29032011.htm.
information: (a) quantity of new shares to be issued by the wholly-owned subsidiary or quantity of shares of the wholly-owned subsidiary to be alienated; (b) unit price for subscription or acquisition of the shares; (c) date to be considered for the identification of shareholders who will have the right to subscribe or acquire the shares and (d) percentage that shareholders will have the right to subscribe or acquire.
Chapter 7. Appeals, Consultations, 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 knowledge by the interested party.
The Superintendent must, within a period of 10 (ten) business days from the receipt of the appeal, reform or maintain the appealed decision and, in the latter case, forward the process to the Collegiate Body even if he 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 in the devolutive effect and if there is just fear of damage of difficult or uncertain repair resulting from the execution of the decision, the Superintendent may, ex officio or upon request, give suspensive effect to the appeal. In case of denial (total or partial) of the request for suspensive effect, 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 the re-examination of the decision denying the suspensive effect, in accordance with item VI of CVM Deliberation No. 463/03. The Superintendent will notify the appellant about the Collegiate Body's decision within a period of 5 (five) business days. It is also worth noting that, upon request by a member of the Collegiate Body, the Superintendent who issued the appealed decision, or by the appellant himself, 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 grounds, 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 a period of 15 (fifteen) days, and submitted by him to the Collegiate Body for deliberation. Regarding appeals against the application of coercive fines, see item 1.5.1.
7.2. Consultations by public, foreign, and incentivized companies
Consultations regarding the application of norms and regulations issued by the CVM and the understanding of provisions of Laws No. 6.385/76 and 6.404/76 and subsequent amendments, must be sent in writing, via protocol, by the DRI or person equivalent to the SEP, with the identification of the issuer.
If the consultation is made by legal representatives of the issuers, it must be accompanied by their respective mandates of representation.
The formulation of the consultation must be clear regarding its object, avoiding generic form and theoretical consultations, guiding the sense that all elements and arguments judged important for the conclusive manifestation of the CVM are presented.
Consultations on accounting matters must be accompanied by a manifestation of the independent auditor on the subject.
It is worth highlighting that the presentation of a consultation by the issuer does not exempt it from compliance, within the due deadlines, with legal and regulatory obligations, even if object of the formulated consultation.
7.3. Communications with the SEP
In the case of forwarding of questions, answers, appeals to decisions or understandings of the SEP or petitions/representations, companies must use direct correspondence, sending via the Empresas.NET System is not admitted, except when oriented in this sense by the SEP.
In this sense, it is worth highlighting that the sending of these correspondences through the Empresas.NET System, when not expressly requested by the SEP, has been used by some companies, causing, sometimes, embarrassment to its own administration or difficulty in following up on answers to requests or manifestations of this Superintendency. It is emphasized that the deadlines for attending to the requests contained in the 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 sending the email or, if the Letter was sent only by postal mail, the date of signing 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 attending to consultations 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 information technology 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 Sanitation and water and gas 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 information technology 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 - Sanitation, water and gas 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 corporate legislation and regulation can also be sent to the SEP, by companies, through the email address: sep-consultas@cvm.gov.br. Throughout the year 2014, administrators, fiscal councilors, and shareholders exchanged correspondence, through which they formulated questions directly to the administration of the public company, sending copies of these correspondences to the Department of Corporate Relations (SEP). This mode of proceeding should be avoided.
With the objective of properly processing the demands, administrators and fiscal councilors who wish to forward consultations or complaints to the CVM must do so observing the procedures indicated in this item, sending direct correspondence to the SEP and indicating the request and its foundation.
Complaints or consultations formulated by shareholders must be forwarded through the Citizen Service, whose form is available at the link below:
http://cvmweb.cvm.gov.br/swb/default.asp?sg_sistema=sac&dest=1 This procedure allows the citizen, upon receiving the registration number confirming the electronic protocol of their correspondence, to be certain that their communication was received by the CVM.
7.4. Requests for hearings by 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 HEARING FOR PRIVATE INDIVIDUALS. It is recommended that the issuer fill out as completely and detailed as possible the object of the hearing, as well as inform, in the "Subject" field, whenever possible and if applicable, the number of the Letter, Instruction, or other CVM act to which the subject of the hearing refers. In this request, there must be a clear specification of the subject to be treated, having as a necessary condition, in the case of consultations by issuers, their prior forwarding, as described in this Letter (see item 7.2). It is also recommended that the issuer contact the SEP by telephone before scheduling the hearing for private individuals in the system, aiming to verify the availability of the agenda.
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. It must also be kept 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 for the investigation of 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 requester's interest in obtaining access to the records, unless it is an accused in a sanctioning administrative process, in which case the granting of review will always be assured.
The granting depends on the authorization of the head of the Superintendency responsible for conducting the administrative process or the Relator, in case there is a pending appeal or decision by the Collegiate Body, with the postponement of the granting of review being optional in the interest of the service when such measure would prejudice 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 assemblies of public companies or interruption of the flow of their convocation period, 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 requester 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 the 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 processes of investigation of irregularities, apply to complaints formulated by investors and any other market participants, including regarding requests for review formulated by them. In sanctioning administrative processes, the accused will be admitted to the granting of review through a request addressed: (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. The requests for review will be analyzed on a case-by-case basis, with the requesters having, in the case of denial of the request, recourse 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 decision of denial is issued by the Relator, an appeal of his decision to the Collegiate Body will be available, within a period of 5 (five) days, counted from the date of knowledge by the interested party. 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 or email in response to the request. Without prejudice to the above, requests for access to information may also be made, based on the "Access to Information Law" (see item 7.8).
7.6. Commitment Term
The Commitment Term may be entered into between the investigated or accused party 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 should be noted initially that, according to paragraph 3 of Article 7 of CVM Deliberation No. 390/01, the submission of a proposal for a commitment term is admitted even during the preliminary investigation phase.
In the case of an administrative sanction proceeding, Article 7 of CVM Deliberation No. 390/01 provides that the interested party wishing to enter into a Commitment Term must manifest this intention by the end of the deadline for presenting a defense, without prejudice to the burden of presenting such defense. The party must also submit the Complete Proposal for Commitment Term to the Coordination for the Control of Administrative Processes – CCP, within 30 days after the presentation of the defense. According to Article 11, paragraph 5, of Law No. 6,385/76, the aforementioned proposal must not be forwarded in the name of the company, but rather by the investigated or accused party themselves. In exceptional cases, where it is understood that the public interest determines the analysis of a proposal for the entry into a commitment term submitted outside the aforementioned deadline, such as in cases of substantial indemnity offers to those harmed by the conduct subject to the process and modification of the factual situation existing at the end of the said deadline, the Collegiate Body will examine the request, provided it is formulated before its decision in judgment. The Commitment Term suspends the ongoing administrative proceeding for the period stipulated for its compliance and may be entered into at any time; however, it is recommended to present the intention to do so as soon as possible, given the speed and procedural economy. Information regarding commitment terms, including those already entered into with the CVM, which may serve as examples for the presentation of proposals, is available on the CVM website at the link “Administrative Sanction Proceedings – Commitment Terms”. Finally, it is worth highlighting that, according to Article 4 of the aforementioned Deliberation, the entry into a commitment does not imply a confession regarding the factual matter, nor recognition of the illegality 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 federal public administration, must be observed. In this sense, the calculation of deadlines in the aforementioned 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 official notification, which may be carried out, as provided for 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 occurrence. In the event that 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 business day. Additionally, as determined by Article 23 of Law No. 9,784/99, the acts of the process must take place 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 conducted in a partial period, with closure before the normal time, 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 should be noted that the protocol of documentation directed to the SEP or its respective Management Offices in a city other than its location, although admissible, does not affect the calculation of the deadline, which continues to be governed by the location of the CVM headquarters.
7.8. Request for Information Access
The CVM, through CVM Deliberation No. 481/05, regulated the granting of access to records of administrative processes of any nature instituted within the scope of the CVM (see item 7.5).
Additionally, CVM Deliberation No. 710/13 establishes the procedures for information access provided for in Law No. 12,527/11 (“Access to Information Law”), regulated by Decree No. 7,724/12, within the scope of the CVM.
In accordance with Article 2 of the aforementioned Deliberation, the request for information access must be made electronically on the CVM website on the worldwide computer network, or physically, at the Citizen Information Service – SIC of the CVM, by filling out a Standard Form.
In the case of partial or total denial of information access or failure to provide the reasons for the denial of access, the applicant may file an appeal, within ten days, counted from the knowledge of the decision, to the General Superintendent. If such appeal is denied, the applicant may file an appeal, within ten days, counted from the knowledge of the decision, to the President of the CVM (Article 3 of CVM Deliberation No. 710/13). As provided in Article 4 of the aforementioned Deliberation, in the case of omission of response to the request for information access, the applicant may present a complaint, within ten days, to the General Superintendent. The deadline to present the complaint begins thirty days after the presentation of the request for information access. Finally, if the appeals provided for above are denied or the complaint mentioned in the previous paragraph is fruitless, the applicant may file an appeal, within ten days, counted from the knowledge of the decision, to the Office of the Comptroller General of the Union.
Chapter 8. Empresas.NET System for the Preparation and Delivery of Information
The Empresas.NET System is a system developed in partnership with BM&FBOVESPA with the aim of facilitating compliance, by companies, with regulatory obligations to disclose information to participants in the capital market.
As a result of the unification of the platforms of the IPE and Empresas.NET Systems, from 28/02/2015, all periodic and occasional information must be forwarded through the Empresas.NET System, even those that were previously sent via the IPE System. For more information, it is recommended to read OFFICE-CIRCULAR/CVM/SEP/No.01/2015, of 30/01/2015.
The information referred to by the Empresas.NET System is provided for, notably, in CVM Instructions No. 480/09, 481/09 and 358/02, as well as in other normative acts of the CVM or are adopted by virtue of good corporate governance practice.
The Empresas.NET System is the only means of forwarding to the CVM and to BM&FBOVESPA, in the case of companies listed there, of the periodic and occasional information of open companies, and it is no longer accepted that the documents listed in Empresas.NET are delivered at the protocols or sent by registered mail.
Documents and information sent through the Empresas.NET System will be available for public consultation simultaneously on the CVM website and on the BM&FBOVESPA website, in the case of companies listed there, with the exception of the form for the notice provided for in Article 11 (individual) of CVM Instruction No. 358/02.
The download of the Empresas.NET System can be done through the CVM website on the worldwide computer network (http://www.cvm.gov.br, section ACCESS TO INFORMATION, Market Participants, Document Submission, Empresas.NET), as well as on the BM&FBOVESPA website (http://www.bmfbovespa.com.br, section Services – Solutions for Companies, Mandatory Information Systems, Empresas.NET). Doubts regarding the installation, use, and operation of the Empresas.NET System, as well as reports of problems or difficulties in sending documents, must be forwarded to the Post-Trading Support Superintendency of BM&FBOVESPA (SSP). Contact with the SSP can be made: (a) on business days, from 7 a.m. to 10 p.m. via email ssp@bvmf.com.br and by phone (11) 2565-5000. After 10 p.m. and on weekends and holidays, exclusively by phone (11) 2565-5000. Issues received after 10 p.m. on business days and on weekends and holidays will be treated after 7 a.m. on the next business day, except those related to system availability for receiving information, which will be treated immediately. Doubts regarding the content of the Registration, Reference, DFP, ITR, and Quarterly Report of Securitization Companies forms may be forwarded to the CVM, via email: sep-consultas@cvm.gov.br. It is absolutely essential to read the document “Manual for the Provision of Periodic and Occasional Information”, available on the CVM website, which presents a list of the categories, types, and species of documents provided for in the Empresas.NET System, classified by the obligation or not of sending, by the periodicity of their disclosure and by the need or not of publication by the press, as well as bringing guidance regarding the procedure to access the system (sending and cancellation of data). The limitation on the size of files to be included in the Empresas.NET System is imposed by the system itself and aims to facilitate investor access to information archived in the Empresas.NET System, since, in turn, it depends on file download processes, which are unfeasible in many cases for sizes above 5 Mb. The imposed limitation aims for the best 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 limit of the Empresas.NET System, 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 department, with the aim of reducing the size of the file. The use of compression algorithms is suggested to try to reduce the space occupied by images and texts to be placed in the files.
If no solution is found, a request can be forwarded to GEA-1 or GEA-2 (see item 7.3) to expand the file size limit, which will be evaluated at the time. The current limitations of the system are imposed in an isonomic manner to all companies.
It is worth highlighting that the CVMWEB System continues to be used to access the functionality of appeal against punitive fines, on the CVM website. See item 1.5.1.
Chapter 9. Guidelines for the Preparation of the Reference Form
On 10/09/2014, CVM Instruction No. 552/14 was issued, which brought significant changes to CVM Instruction No. 480/09 (in addition to altering pointually other Instructions). The changes brought by CVM Instruction No. 552/14 entered into force on 01/01/2015, with the exception of the changes in the Reference Form (Annex 24 of CVM Instruction No. 480/09), which will only enter into force from 01/01/2016. Thus, this Circular-Office does not reflect the changes arising from CVM Instruction No. 552/14 regarding the Reference Form, part that is not yet in force.
9.1. Guidelines applicable to the entire Form
9.1.1. General rules on the preparation and disclosure of information
CVM Instruction 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 true, complete, consistent information that does not induce the investor to error (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 for in Annex 24 of CVM Instruction No. 480/09. Whenever the presentation of a table is required, the information must be provided in this way (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 specifying 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 3 financial statements closing the social 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 3 financial statements closing the social year and to the latest accounting information disclosed by the issuer, such as, for example, the 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 social 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 social year and to the latest accounting information disclosed by the issuer, such as, for example, the information regarding the last quarterly information form – ITR disclosed by the issuer. It is also noted 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 3 social 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 3 social years and to the current social year. Item 10.6.b (deficiencies and recommendations on internal control present in the independent auditor's report provided for in Article 25 of CVM Instruction No. 308/99) must be filled out based on the communication of internal control deficiencies forwarded by the independent auditors to the Company's administration. Administrators must diligence with the independent auditors so that the communication regarding the last social year is made available in a timely manner, considering the provision of item II of Article 25 of CVM Instruction 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 conformity with the last written communication of internal control deficiencies forwarded by the independent auditors to the Company's administration. Finally, we guide issuers to the unnecessary inclusion in the Reference Form of 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 that justify 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 social 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 social years. It is noted 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 reviewed the Reference Form; b) all information contained in the document complies with the provisions of CVM Instruction No. 480, especially Articles 14 to 19; c) the set of information contained therein is a true, accurate, and complete portrait of the economic-financial situation of the issuer and the risks inherent to its activities and the securities issued by it.
It is noted that the aforementioned declaration must be provided by the two persons indicated in the norm (President, or equivalent position, and DRI), with the exception of 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 for the identification of the auditors who acted with the company in the last 3 social years, as well as for the services provided by them to the issuer.
In line with the provision of Article 2 of CVM Instruction No. 381/03 and item 2.2 of the Reference Form, which requires the segregated disclosure of expenses incurred with audit services and with any other services provided by the independent auditor, in the description of the 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 that are 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 substitution of the auditor (letter “e”) must be informed even when the change occurred due to the auditor rotation provided for in Article 31 of CVM Instruction No. 308/99. In both this case, as in other cases of change, the issuer's justification for the substitution of the auditor (sub-item “i” of letter “e”) must contain the same content of the communication required in the caput of Article 28 of CVM Instruction No. 308/99. If the auditor did not agree with the justification for its substitution, the information provided in response to sub-item “ii” of letter “e” must reproduce the eventual reasons presented by the auditor, in accordance with the communication provided for in paragraph 2 of Article 28 of CVM Instruction No. 308/99. It is noted that the information regarding the “End of service provision”, 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 be included only 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 social year. In addition to the total amount of remuneration, 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 fee amount from which 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 for each of the services that were reported in letter "d" of item 2.1.
Information regarding the remuneration of independent auditors must be presented in Brazilian Reais (R$). Even when services are provided by the auditor abroad, the issuer must convert the amounts to the national currency as provided in CPC 2 (R2) approved by CVM Deliberation No. 640/2010.
The issuer that did not have an auditor during the period covered by Table 2.1/2 must present, in Table 2.3, the justification for not presenting 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 to present 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: 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 the 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":
net equity; total assets; net revenue; gross result; net result; number of shares, excluding treasury shares; book value per share and net income per share.
When presenting the Reference Form annually, the information must refer to the last 3 financial statements closing the fiscal year. When presenting the reference form due to a request for registration of public distribution of securities, the information must refer to the last 3 financial statements closing the fiscal year and the latest accounting information disclosed by the issuer.
The requirement to disclose information regarding the last three financial statements aims to allow comparison of the issuer's performance during the period.
The information must be provided based on the information contained in the issuer's financial statements or, when it 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 net equity reported in the issuer's latest financial statements be used, so as to allow the investor to reconcile such numbers.
In the case of presenting 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 preparing and reviewing the information presented in this field, the issuer must ensure that the disclosed values are consistent with those disclosed in its financial statements.
b. Non-accounting measurements (item 3.2)
In disclosing non-accounting measurements, the issuer must ensure that the values presented are reconcilable with the data contained in the financial statements and quarterly information it has disclosed, which were used to prepare the measurements.
c. Subsequent events 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 presenting the Reference Form due to a request for registration of public 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) an estimate of its financial effect or a statement that such estimate cannot be made, in the case of significant subsequent events that did not result in adjustments. It is also important to include information regarding the date of authorization for the issuance of the financial statements, as they do not reflect events subsequent to that date.
The issuer must make it clear whether the information provided in this item refers to the individual or consolidated financial statements.
d. Description of the profit distribution policy (item 3.4)
This item aims to consolidate the history of the issuer's profit distribution, including what was approved at the last Ordinary General Meeting.
In it, the issuer must describe the profit distribution policy it has adopted over the last 3 fiscal years, indicating the information required in letters "a" to "d".
To assist user 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 a.i. Values of Profit Retentions b. Rules on dividend distribution
c. Frequency of dividend distributions
d. Any restrictions on dividend distribution imposed by legislation or special regulation applicable to the issuer, as well as contracts, judicial decisions, administrative or arbitral
The description of the policy must be prepared based on the practices adopted by the issuer and the provisions on the subject existing in its Bylaws, and thus should not be limited to 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 whether, in addition to the mandatory reserves provided by legislation, it has other reserves regulated in the bylaws, informing their percentages, whether it carried out retentions based on a capital budget during 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 reported in this item of the Form.
e. Dividend distributions and profit retentions occurring in the last 3 fiscal years (item 3.5)
The information presented in this item must be consistent with corporate resolutions and the individual accounting information disclosed by the issuer.
As adjusted net income (letter "a"), the value of net income that served as the basis for the calculation of distributed dividends must be reported.
Note that the distributed dividend to be reported in letter "d" must be restricted to that calculated based on the income determined in the last fiscal year. Payments of dividends from income determined in previous years will be reported in item 3.6.
The return rate relative to net equity (letter "f") must be calculated based on the division of the value of net income, before the adjustments referred to in letter "a", by the value of net equity in each fiscal year.
As retained net income (letter "g"), the portion of net income not distributed as dividends or interest on equity capital must be considered, that is, the sum of allocations to reserves and profit retention.
It should be clarified that dividends or interest on equity capital attributed as dividends that have been distributed from retained profits or reserves constituted in previous fiscal years must be reported 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 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.
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 believes this index is appropriate for the correct understanding of the issuer's financial situation and indebtedness level.
g. Issuer's obligations according to 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 according to the maturity periods stipulated in letters "a" to "d" of this item.
Although there may be various subdivisions depending on the characteristics of the debts, the information on 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, thereby allowing an understanding of the order of preference of the debts in a potential creditors' contest of the issuer.
Thus, for the categorization of debts in the required manner, the costliness of the guarantee to the issuer must be taken into account, and not to third parties.
Debts with guarantee of suretyship must be classified in one of the three categories set out in item 3.8. Debts without real or floating guarantee, regardless of the fact that they have 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.
In order to facilitate understanding by investors, the issuer must include information in item 3.8 itself regarding the criteria used for the segregation of its debts according to the categories provided in the standard.
The issuer must also make it 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, for example, the existence of provisions regarding cross-default in contracts and securities representing the issuer's debt, including between the issuer and companies of 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 exposed, in order of relevance, in particular, those related to the issuer and its controller, directly or indirectly, or control group, its shareholders, its subsidiaries and affiliates, its suppliers, its customers, with the sectors of the economy in which the issuer operates and its respective regulation, and with foreign countries where the issuer operates.
It should be clarified that the matters contained 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 for in the exemplary list if they are relevant to its activities and capable of influencing the investment decision.
Given that the risk factors must be exposed in order of relevance (from most relevant to least relevant), in presenting the comments, the issuer may modify the order of presentation of the matters cited in letters "a" to "i" of item 4.1. Another alternative is to present, within each sub-item "a" to "i" of item 4.1, the risk factors 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.
With regard to letter "c" (risks related to its shareholders), the issuer must present the risks to which the Company is exposed due to its shareholders, that is, those in which the source of the risk is the shareholder.
Considering the provisions of article 238 of Law No. 6.404/76, item 4.2 must identify and describe the risks related to the possibility that the company may be oriented to meet the public interest that justified its creation.
The 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.
The issuer must avoid generic descriptions of risk factors. Information must be provided, as far as possible, on how a certain risk factor specifically affects the issuer, considering its particularities.
Additionally, it is recommended that, in the annual process of preparing the Reference Form, the risk factors be reviewed and updated.
Companies that do not adopt a risk management policy must make this condition explicit, as well as inform the reasons why they do not adopt such a policy.
b. Comments on the expectation of reduction or increase in exposure to relevant risks (item 4.2)
In this item, the issuer must 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 underpin the opinion issued must be explicit, and the eventual 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, that are not under confidentiality 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 in 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 running under secrecy of justice, administrative procedures that are conducted under confidentiality 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 consideration the capacity that the information would have to influence the investment decision.
In evaluating relevance, the issuer should not focus only on the ability of the process to significantly impact its assets, its financial capacity or its business, or those of its subsidiaries, but must 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 reported.
Proceedings running 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 in the process" (letter "d"), the parties comprising the passive pole and the active pole 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 on public consultation of labor processes via 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. Thus, the main procedural or administrative acts that have occurred must be reported, with their respective dates and summary of decisions, containing their motivations, so that the user of the information can form their own judgment.
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 its 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 reporting the "value provided" (letter "i"), it must maintain coherence with the chance of loss reported in letter "g". For example, if the chance of loss reported in letter "g" is probable, the value provided must be presented in letter "i".
When re-presenting the Form, if there is a change in the "value provided" (letter "i") disclosed in the previous version, the issuer must report 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 Instruction CVM 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, that are not under confidentiality, 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 Instruction CVM 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 in 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 lawsuit
i. provisioned value (if there is a provision)
It is alerted that only judicial proceedings running under secrecy of justice, administrative proceedings conducted under confidentiality by determination of the administrative authority, and arbitral proceedings 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 running simultaneously in the administrative and judicial spheres must be informed 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 proceeding.
As "parties to the proceeding" (letter "d"), the parties comprising the passive pole and the active pole of the proceeding must be identified, except with respect 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 stressed that Resolution of the National Council of Justice No. 121, of 10.05.2010, established restrictions on public consultation of labor proceedings via 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 controlled companies, and the situation in which the proceeding 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 summaries of the decisions, containing their motivations, so that the user of the information can form their own judgment of value.
With respect 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 proceeding, required in letter "h", must be done without omission of relevant information or mitigation, demonstrating the amount of losses related to relevant proceedings and their possible impacts on the financial and asset situation of the issuer or its controlled companies or on their businesses.
When informing the "provisioned value" (letter "i"), consistency must be maintained with the chance of loss informed in letter "g". For example, if the chance of loss informed in letter "g" is probable, the provisioned value must be presented in letter "i".
When resubmitting the Form, if there is a change in the "provisioned value" (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 fall within the information requested in this item, may be cited here by reference.
e. Information on relevant confidential proceedings in which the issuer or its controlled companies 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 controlled companies 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 controlled companies, in case of loss, without mitigation or omission of relevant information on the subject; and (b) disclosure of the values involved in these proceedings.
It is alerted that only judicial proceedings running under secrecy of justice, administrative proceedings conducted under confidentiality by determination of the administrative authority, and arbitral proceedings 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 confidentiality and which are relevant collectively, in which the issuer or its controlled companies are parties (item 4.6)
In this item, the issuer must describe the repetitive or connected judicial, administrative, or arbitral proceedings, based on similar facts and legal causes, which are not under confidentiality and which, when considered collectively, are relevant, in which the issuer or its controlled companies are parties.
It is alerted that only judicial proceedings running under secrecy of justice, administrative proceedings conducted under confidentiality by determination of the administrative authority, and arbitral proceedings that, by the will of the parties, are confidential, are understood as confidential.
Relevance must be assessed by the issuer taking into consideration the capacity that the information would have to influence the investment decision of investors.
In the assessment of relevance, the issuer must not focus only on the capacity of the proceeding to significantly impact its assets, its financial capacity or its businesses, or those of its controlled companies, considering other factors that could influence the decision of the investing public, such as, for example, image risks inherent to a certain practice of the issuer or legal risks related to the discussion of the validity of statutory clauses.
For a better understanding by investors, the information must be organized by nature (administrative, civil, labor, tax, and others) and subdivided by similar causes.
With respect to what is requested in letter "c" of this item, all information necessary for investors to understand the practice of the issuer or its controlled company 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 economic-financial situation of the issuer and the risks inherent to its activities and of the securities issued by it.
This item must be used for the presentation of 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 must be described, quantitatively and qualitatively, in order of relevance and without mitigation or omission of relevant information, including, but not limited to, exchange rate risks, stock and commodity prices, interest rates, among others, that are capable of influencing its operational results, its financial situation, its future perspective, and the decision of investors.
The issuer must also disclose the 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, the 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 fitting or un-fitting of its exposure, for which it 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 respect 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; (b) discriminating the specific responsibilities of each of these bodies, committees, or similar structures, and of their members, in risk management control. Note that the committees or similar structures mentioned here must be informed in items 12.1"a" and 12.7 of the Form; and (c) indicating the hierarchical structure of these bodies. The issuer must also highlight whether it adopts control structures that involve the company as a whole, management bodies, directorates, especially the Compliance Directorate, and other specific bodies and committees, such as Internal Audit and the Audit Committee, according to principles adopted by recognized entities, such as COSO (Committee of Sponsoring Organizations of the Treadway Commission).
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.
9.2.6. Issuer's history (section 6)
a. Brief history of the issuer (item 6.3)
In this item, information about the most important and useful events must be presented in an objective manner so that investors can know and evaluate the evolution and history of the issuer, such as: date of foundation and its founder; changes in name and corporate object; start and end of an expansion program, if relevant; relevant corporate events already occurred, such as alienation or acquisition of control, merger, spin-off, or public offer to buy or sell shares; bankruptcy, reorganization; judicial or extrajudicial recovery, diversification of products; development of new products; creation of a subsidiary of relevant nature; main projects or works executed; relevant accidents or losses, entry of foreign shareholder, etc.
Political decisions that affected the company, directly or indirectly, must also be indicated, such as, for example, sectoral or macroeconomic policies.
b. Main corporate events through which the issuer or any of its controlled or affiliated companies have passed (item 6.5)
In this item, the description of relevant corporate events involving the issuer or any of its controlled or affiliated companies must be presented, 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 its relevance within its competitive, commercial, or operational strategy.
It is stressed that, for the purposes of the information to be provided in this item, the concept of affiliated company existing in CVM Deliberation No. 696/12, which approved Technical Pronouncement CPC 18(R2), must be employed. With respect to the conditions of the business (letter "b"), all elements necessary for investors to understand the main characteristics on the basis of which the corporate event was carried out must be described, such as, for example: price, form and term of payment, eventual existence of suspensive clauses, agreements regulating voting rights, pending approval by regulatory bodies, and possible effects of the decision on the operation.
It is alerted 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 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 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 holding of the assembly in which the operation was approved, with the update of the information provided due to item 6.5, 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 leave this information in item 6.5 itself.
c. Information on bankruptcy petition, since founded on a relevant value, or on judicial or extrajudicial recovery of the issuer, and on the current state of such petitions (item 6.6)
In this item, the existence of bankruptcy petitions of the issuer founded on a relevant value and of petitions for judicial or extrajudicial recovery of the issuer must be informed, presenting all information necessary for investors to know and understand the effects of these events on the issuer, such as, for example: values involved, petitioner, court in which the petition is proceeding and its current state, measures eventually adopted by the issuer.
It is stressed that the decree of bankruptcy, judicial recovery, extrajudicial liquidation, or the 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 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 entail, without prejudice to the provisions of CVM Instruction No. 358/02, the need to update the Reference Form in the manner provided in the legislation, with issuers subsequently in judicial recovery, in bankruptcy, and in liquidation being exempted from delivering the annual Reference Form in the manner provided 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, information useful and necessary for the investor to know the activities developed by the issuer and its controlled companies must be provided to the market, such as the corporate object of the issuer, market of operation, geographic diversification, among others.
The description of activities must cover not only what is in the corporate object, but, if applicable, also what was provided in the law that authorized the creation of the company. In this sense, the company must highlight, in addition to its regular activities, its universalization goals, as applicable, and government programs (public policies) in which it participates, identifying objectives, resources involved, and, whenever possible, the impacts of the programs on its budget.
b. Information on operational segments of the issuer (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 statements of closing of the fiscal year or, if there are any, in the consolidated financial statements.
In the annual presentation of the Form, the information must refer to the last 3 financial statements of closing 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 closing 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 in item 7.2, the statements of closing of the fiscal year or, if there are any, the consolidated financial statements.
Regarding the characteristics of the production process (letter "a"), information necessary for the understanding of the issuer's production process must be provided in an objective manner, including, for example, information relating 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 could generate paralysis of activities, including time destined 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 respect 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 accounts.
d. Information on the effects of state regulation on the issuer's activities (item 7.5)
In this item, specific information on the regulation of the sector in which the issuer operates must be provided, with the description of the norms of greatest impact on its activity, such as for the obtaining of licenses, authorizations, permits, and other administrative acts to which the issuer is subject. Additionally, it is recommended to identify the regulatory agencies to which the issuer's operation is subjected, with the definition of their scopes of operation.
It is also recommended to describe, clearly and objectively, the rules applicable to tariff readjustment or to the formation of the price of the service provided or the good explored or produced.
e. Information on relevant long-term relations of the issuer (item 7.8)
This item must be used to describe long-term relations 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, socio-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), sponsorships and cultural incentives 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 whether 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 computer network 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, characterized by open terms, subject to constant negotiation, which regulate continuous and lasting relations). 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 the
non-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 included (item 8.1)
For the purposes of this item, the Economic Group is understood as the set of companies in which the issuer is included and which present common control. It covers 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 letter “d” requires the participations held by other group companies, which are not direct or indirect controllers, in the issuer. Letter “e”, in turn, refers to companies that have the same controllers as the issuer, but which are not its controlled companies, since these are already requested in letter “b”.
It is emphasized that the change of controlling shareholders of the issuer, 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 may alter the information contained in this item, 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 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 included 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 way in 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, this item must be updated whenever the information in item 8.1 is updated and must include, at a minimum, the shareholders described in items 15.1 and 15.2.
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 of 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) 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 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 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 items relevant to the development of the issuer's activities (item 9.1)
The information regarding companies in which the issuer has a participation (letter “c”) must be provided only in relation to companies understood by the issuer as relevant for the development of its activities, in particular, the data relating to directly and indirectly controlled entities, when relevant. For the purposes of letters “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, net of provision for possible losses in the realization of its value, when this loss is proven to be permanent, in the case of other participations.
With regard to letters “viii” and “x” of letter “c”, for the purpose of calculating the market value of the participation, the closing quotation 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 type and class of the shares subject to the participation.
The information regarding the appreciation or depreciation of the participations required in letters “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 issuer's financial, economic and asset situation, 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, should 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 up to 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 the 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 in particular to companies that act as holding companies.
a. Financial and asset 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 closure 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 closure of the fiscal year and to the latest accounting information disclosed by the issuer.
Furthermore, we inform you that the comments relating to item 10.1.a must focus on financial asset information, while in item 10.2, on result information.
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 asset 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 should not be confused with the disclosure of projections or estimates, subject of section 11 of the Form, or with the disclosure of the sensitivity analysis table provided for in CVM Instruction No. 475/08. At this point, it is important to differentiate the concepts of projection, the disclosure of which is optional, and is informed in section 11 of the reference form, from that of trend. The trend does not confuse with projection because it is not quantified.
While the projection refers to an estimate of reaching 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 management's perspective. In effect, the causes of the detected movement must be commented on, and its perspective of continuity (or not), based on facts that have already occurred, not to occur, as in the case of projections.
It is also worth noting that administrators must weave their comments in the most objective way possible, specifically addressing the theme provided for by the heading. Care must be taken to avoid excessive generality in comments, as this can lead to misinformation.
In the comments relating to the financial conditions (letter “a” of item 10.1), the issuer must present a reasoned analysis based on indicators (of liquidity, indebtedness, etc.).
In the 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 relating 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 make up the financial statements corresponding to the last 3 fiscal years, in view of the order of precedence in any universal creditors' contest.
In addition, the restrictive clauses (covenants) existing in financing contracts signed by the issuer, accompanied by the respective indices, must be informed in item 10.1.f.iv.
The issuer must inform, in letter “g” of item 10.1, the percentages used of the financing already contracted, a situation applicable, for example, to long-term project financings.
In compliance with the provisions of 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 asset and result accounts does not fulfill this purpose. It is worth highlighting that the comments must be restricted to the items that have presented significant changes in the period analyzed.
It is recommended to include comments, in item 10.2.a.ii, regarding the impacts of public policies on the company's results.
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 operating 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 is emphasized that the requested comments must be made regarding events already disclosed by the issuer in the form of CVM Instruction No. 358/02.
Regarding the expected effect, it is worth indicating that here too the information requested should not be confused with the disclosure of projections or estimates, 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 produce on the financial statements and on the issuer's result.
For the purposes of the information provided in item 10.3, the concept of operating segment must be understood as equivalent to the accounting concept of “cash-generating unit”.
c. Significant changes in accounting practices and Reservations and emphases present in the auditor's report (item 10.4)
Directors must comment in this item on all the issues cited in letters “a”, “b” and “c”.
In the comments on the relevant changes in accounting practices (letters “a” and “b”), directors must not limit themselves to the mere transcription of the information provided on the subject in the financial statements or to the simple listing of the CPCs adopted in each fiscal year.
In this item, directors must insert comments that allow investors to understand the reason for the change, the differences of the new practices adopted in relation to the previous model and the significant effects caused in the result of the financial statements.
The comments on the reservations and emphases of the independent auditor (letter “c”) must be made regardless of the directors' judgment on their relevance. They must also not be limited to the mere transcription of the information present in the auditor's report, with directors inserting 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 50.
The mere transcription of the information provided on the subject in explanatory notes of the financial statements does not fulfill the purpose of the standard 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.
e. Internal controls relating 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 regarding the internal controls adopted by the issuer to
50 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. Usually, 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”.
ensure the preparation of the 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 is up to administrators to diligence with independent auditors so that the communication relating to the last fiscal year is made available in a timely manner, and it must be considered, in addition to the provisions of item II of article 25 of CVM Instruction No. 308/99, 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 field must be in conformity with the last written communication of internal control deficiencies sent by the independent auditors to the Company's management. It is worth observing that this field should not be filled with the mere transcription of the auditor's report. Directors must insert their comments, at a 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, the comments relating to significant deficiencies must appear in item 10.6.b of the Reference Form, at a minimum. However, it is important to emphasize that it is up to the directors, 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 relating to other deficiencies identified by the auditors.
This item must adequately reflect the discussions with its independent auditors, due to the 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 the 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 adequate time interval to the object of the projection, which in no case may exceed 1 (one) year.
It should be noted that the alteration of projections or estimates or the disclosure of new projections or estimates is one of the circumstances 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 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 from the date of the alteration or 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 respect 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 submission of the Form and, where applicable, explain why they were abandoned or replaced.
In this way, 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 is provided in its bylaws and internal regulations.
In preparing the description of the duties of the statutory bodies and committees, the issuer must ensure that the information provided is consistent with what is provided in its bylaws.
The description of the duties and individual powers of the members of the board of directors (letter “d”) must be presented by the issuer, even if the individual duties 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 items 12.1”a” and 12.7 of the Form.
We advise companies that have Internal Audit structures to describe them in this item of the reference form, taking into consideration (i) their duties, (ii) date of creation and (iii) evaluation mechanisms. We also recommend that item 12.6 be filled with information regarding the person responsible for the internal audit area, according to the guidance of item 12.7.
b. Description of the rules, policies and practices relating 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”), competences of the meeting (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 differentiated practice relative to the procedures mentioned in letters “a”, “b” and “i” must only: (a) inform that they do not adopt differentiated practice in relation to what is provided in corporate legislation; and (b) include information on the minimum requirements provided in the 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 in the bylaws and the practices adopted by the issuer in the 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 exercise regarding the documents and formalities required to prove the quality of shareholder and participation in the meeting. The information provided must include the indication of the advance deadline for deposit of the document usually applied by the issuer in the last meetings.
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 (ahead), 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 meeting.
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 table form:
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 exercise.
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 Empresas.NET System.
d. Description of the issuer's rules, policies and practices relating 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 may 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 circumstance 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 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 of its filing at the issuer's headquarters, with the update of the information provided as a result of 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 table form, 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, for example, board of directors and board of administration. The same administration member should not be identified twice in cases of accumulation of positions in the issuer's bodies.
It should be remembered that CVM Instruction No. 480/09 included, in item I of paragraph 3 and item I of paragraph 4 of Article 24, as a circumstance 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 result in the need to update the Reference Form within 7 (seven) business days from 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 update must be carried out even in cases of reelection.
If by the deadline for the mandatory update of the information, the alteration of the administrator is pending homologation by a specific regulatory body or has not occurred its taking office, the issuer must proceed to update items 12.6, 12.8 and 12.9 of the Form, leaving in item 12.6 the field “date of taking office” blank and indicate in item 12.12 that the taking office is pending homologation or has not yet occurred. Once the homologation or taking office occurs, the issuer must update, according to its registration category, item 12.6 in order to fill in the field “date of taking office” and remove from item 12.12 the information previously provided regarding the administrator.
f. Identification of the members of the statutory committees and of the audit, risk, financial and remuneration committees (item 12.7)
In this item, the issuer must indicate, in table form, 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 on administrators, members of the fiscal council and audit committee (item 12.8)
The information relating to the curriculum of administrators and members of the fiscal council and audit committee 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 about 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 fiscal council and audit committee of the issuer, 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 on appeal in the Financial System Resources Council; c) any final conviction, in the judicial or administrative sphere, that has suspended or disqualified him from practicing any professional or commercial activity.
h. Relationships of subordination, service provision or control (item 12.10)
In this item, the issuer must indicate the relationships 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 liability insurance premium for 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 respect 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 meeting.
In addition, it is recommended that the issuer describe, based on what is provided in its internal regulations, the duties of the advisory bodies and non-statutory committees of the Board of Directors. The issuer must also indicate the hierarchical relationship between the referred bodies.
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 d) 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 changes implemented in relation to the policies or practices adopted in previous exercises.
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 practiced by it and the objectives of each of them (item 13.1.b.i). It is understood as “remuneration elements” the portions of remuneration described in letter “c” of item 13.2. Thus, the remuneration elements described in item 13.1.b.i must be in line with the information provided in item 13.2 and vice-versa.
The issuer must also describe the direct and indirect benefits, disclosing their components. It is understood by direct or indirect benefits 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 relating to the subject, values related to private pension plans must be included.
In attention to item 13.1.b.ii, the issuer must inform the participation 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 graph or table.
The issuer must also present all the information necessary for understanding the methodology used to establish the value and form of adjustment of the remuneration (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 consideration, for the fixing and adjustment of remuneration, market practices, it must explain in what way the company monitors and verifies these practices, as well as must include detailed information about the comparison criteria used by it (for example, if based on companies of the same size or of different size, of the same sector or of different sectors, etc.).
With regard to the performance indicators taken into consideration for the determination of each element of the remuneration (item 13.1.c), the issuer must, without the need to explicitly state internal goals established, disclose the indicators used by it to assess the performance of the individual or the company, mainly with regard to the variable portions of the remuneration, indicating if these are based, for example, on the result of the sale of products and services, on the operational result of the company, on net revenue, EBITDA, market value of shares, etc.
In attention to item 13.1.f, the issuer must inform if there are portions of the remuneration received by administrators and other persons cited in the caput of item 13.1, due to the exercise of the position in the issuer, that are supported by subsidiaries, controlled or direct and indirect controllers. Such information must also include the identification of the type of remuneration received (considering the portions of remuneration described in letter “c” of item 13.2) and of the society or controller that supported it. In addition, the values must be segregated by administration body. Where applicable, the information must be reconciled with that required in item 13.15.
b. Remuneration of the board of directors, the statutory board of directors and the 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, the statutory board of directors and the 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 of the last three fiscal years, but also to that provided for in the current fiscal year, discriminating the portions of remuneration described in letter “c”. It is understood by benefits
direct or indirect benefits (item 13.2.c.i) the right to medical, dental, life, automobile, 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 the subject, values related to private pension plans must be included.
Arrangements and other instruments that structure remuneration or indemnification mechanisms for the company's administrators in the event of dismissal/resignation from their respective positions are included in benefits motivated by the cessation of the exercise of office (item 13.2.c.iv). It is emphasized that the value of benefits motivated by the cessation of the exercise of office (item 13.2.c.iv) must be integrated into the global amount of remuneration subject to approval by the general meeting, as provided in Article 152 of Law No. 6,404/76. The values of stock-based remuneration (item 13.2.c.v) must be reported in line with the definition of stock-based remuneration, paid in shares or cash, 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 shall be net of social charges that are the employer's burden. The issuer must clearly disclose, in a segregated manner, the value corresponding to contributions to the INSS (National Institute of Social Security), which are the employer's burden, recognized in its results. When 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”) shall 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 shall be calculated as specified below:
| Month | No. of 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 as specified above.
To avoid duplication, remuneration values shall be calculated by body. In cases where the same administrator holds a position in the statutory board of directors 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 statutory board of directors and vice-versa. The value, per body, of remuneration (letter “d”) corresponds to the total annual remuneration of each of the bodies, that is, the sum of all components included in letter “c” that have been attributed to the members of the body during the fiscal year. The total value of the remuneration of the board of directors, the statutory board of directors, and the audit committee (letter “e”) corresponds to the sum of the total remunerations of the three bodies indicated in letter “d”. Information regarding the current fiscal year shall be presented considering the number of members and the annual remuneration forecast by the issuer.
c. Variable remuneration of the board of directors, the statutory board of directors, and the audit committee (item 13.3)
In this item, the issuer must provide, in table form, by body, additional information regarding 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 board of directors, and audit committee.
The information required in letters “a” to “d” shall be provided not only regarding the variable remuneration of the last 3 fiscal years, but also regarding that forecast for the current fiscal year.
Information regarding the current fiscal year shall be presented considering the number of members and the annual variable remuneration forecast by the issuer.
To avoid duplication, annual remuneration values shall be calculated by body. In cases where the same administrator holds a position in the statutory board of directors 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 statutory board of directors and vice-versa. The number of members of each body (letter “b”) shall correspond to the number of directors and councilors to whom variable remuneration recognized in the issuer's results in the fiscal year was attributed. The information required in letters “c” and “d” shall be provided in current currency, even when the remuneration attributed as a 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 for the calculation of 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 to be the amount to be paid if the administrator reaches the minimum expected performance level. The table required in this item shall be presented according to the model below and shall be consistent with the values reported in table 13.2, comprising all components referring to bonuses and profit-sharing recognized in the issuer's results.
Variable remuneration forecast for the current fiscal year (20XX)
| Board of Directors | Statutory Board of Directors | Audit Committee | Total | |
|---|---|---|---|---|
| No. of members | ||||
| Bonus | ||||
| Minimum value provided for in the remuneration plan | ||||
| Maximum value provided for in the remuneration plan | ||||
| Value forecast in the remuneration plan, if targets are met | ||||
| Profit-sharing | ||||
| Minimum value provided for in the remuneration plan | ||||
| Maximum value provided for in the remuneration plan | ||||
| Value forecast in the remuneration plan, if targets are met |
Variable remuneration – fiscal year ended xx/xx/xxxx
| Board of Directors | Statutory Board of Directors | Audit Committee | Total | |
|---|---|---|---|---|
| No. of members | ||||
| Bonus | ||||
| Minimum value provided for in the remuneration plan | ||||
| Maximum value provided for in the remuneration plan | ||||
| Value forecast in the remuneration plan, if targets were met | ||||
| Value actually recognized in the results of the fiscal year | ||||
| Profit-sharing | ||||
| Minimum value provided for in the remuneration plan | ||||
| Maximum value provided for in the remuneration plan | ||||
| Value forecast in the remuneration plan, if targets were met | ||||
| Value actually recognized in the results of the fiscal year |
d. Information, by body, on the shareholdings held by members of the board of directors, the statutory board of directors, and the audit committee (item 13.5) In this item, the issuer must report, in a consolidated manner, by body, without the need to individualize the administrator, the total quantity of the following securities held by members of the board of directors, the statutory board of directors, or the audit committee 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 controlling companies, controlled companies, or companies under common control; and b) other securities convertible into shares or quotas, issued by the issuer, its direct or indirect controlling companies, 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 audit committee to those whose possession or acquisition is linked to the position held by them in the issuer. Therefore, all securities referred to in this item shall be listed by the issuer. In presenting the information, the issuer must identify the issuing company of the reported securities. Information regarding securities issued by the company held by members of the board of directors, the statutory board of directors, or the audit committee shall be consistent with the consolidated information provided by the issuer in the form “Securities Traded and Held (art. 11 of CVM Instruction No. 358)” relating 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 trading transactions carried out through investment funds, provided that such funds are not exclusive, nor can the trading decisions of the fund be influenced by the quota holders. e. Stock-based remuneration of the board of directors and the statutory board of directors (item 13.6) In this item, the issuer must present, in table form, quantitative information regarding stock-based remuneration recognized in the issuer's results for the last 3 fiscal years and forecast for the current fiscal year, of the board of directors and the statutory board of directors, according to the content specified in letters “a” to “e” of this item. To avoid duplication, annual remuneration values shall be calculated by body. In cases where the same administrator holds a position in the statutory board of directors 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 statutory board of directors and vice-versa. The number of members of each body (letter “b”) shall correspond to the number of directors and councilors to whom stock-based remuneration recognized in the issuer's results in the fiscal year was attributed. Regarding all data resulting from evaluations or calculations made by management, such as in the case of the information requested in items “c.vi”, “d” and “e”, the issuer shall inform in item 13.9 the data, models, and assumptions used. The tables required in this item shall be presented according to the models below and
shall be filled out as follows:
Stock-based remuneration forecast for the current fiscal year (20XX)
| Board of Directors | Statutory Board of Directors | |
|---|---|---|
| No. of members | ||
| Weighted average exercise price: | ||
| (a) Of options outstanding at the beginning of the fiscal year | ||
| (b) Of options forfeited during the fiscal year | ||
| (c) Of options exercised during the fiscal year | ||
| (d) Of options expired during the fiscal year | ||
| Potential dilution in the event of exercise of all granted options |
Stock-based remuneration - fiscal year ended xx/xx/xxxx
| Board of Directors | Statutory Board of Directors | |
|---|---|---|
| No. of members | ||
| Weighted average exercise price: | ||
| (a) Of options outstanding at the beginning of the fiscal year | ||
| (b) Of options forfeited during the fiscal year | ||
| (c) Of options exercised during the fiscal year | ||
| (d) Of options expired during the fiscal year | ||
| Potential dilution in the event of exercise of all granted options |
For each grant that is recognized in the results of the last 3 (three) fiscal years and the current fiscal year
| Board of Directors | Statutory Board of Directors | |
|---|---|---|
| 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 | ||
| Fair value of options on the grant date |
f. Options outstanding of the board of directors and the statutory board of directors at the end of the last fiscal year (item 13.7) In this item, the issuer must present, in table form, information regarding options outstanding of the board of directors and the statutory board of directors, 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 shall be calculated by body. In cases where the same administrator holds a position in the statutory board of directors 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 statutory board of directors and vice-versa. The number of members of each body (letter “b”) shall correspond to the number of directors and councilors linked to the options plan. Regarding all data resulting from evaluations or calculations made by management, such as in the case of the information requested in items “c.vi”, “d” and “e”, the issuer shall inform in item 13.9 the data, models, and assumptions used. The table required in this item shall be filled out by grant, regarding the options that remained outstanding at the end of the last fiscal year, according to the model below:
Options outstanding at the end of the fiscal year ended xx/xx/xxxx
| Board of Directors | Statutory Board of Directors | |
|---|---|---|
| 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. Options exercised and shares delivered relating to stock-based remuneration of the board of directors and the statutory board of directors (item 13.8) In this item, the issuer must present, in table form, information regarding options exercised and shares delivered relating to stock-based remuneration of the board of directors and the statutory board of directors, in the last 3 fiscal years, according to the content specified in letters “a” to “d” of this item. The number of members of each body (letter “b”) shall correspond to the number of directors and councilors linked to the options plan. Regarding all data resulting from evaluations or calculations made by management, such as in the case of the information requested in items “c.vi”, “d” and “e”, the issuer shall inform in item 13.9 the data, models, and assumptions used. The table required in this item shall be presented according to the model below.
Options exercised - fiscal year ended xx/xx/xxxx
| Board of Directors | Statutory Board of Directors | |
|---|---|---|
| No. of members | ||
| Options exercised | ||
| Number of shares | ||
| Weighted average exercise price | ||
| Difference between exercise value and market value of shares relating to options exercised | ||
| Shares delivered | ||
| Number of shares delivered | ||
| Weighted average acquisition price | ||
| Difference between acquisition value and market value of shares acquired |
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 reasonably 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 regarding the weighted average price of shares, exercise price, expected volatility, option life, expected dividends, and risk-free interest rate.
i. Pension plans in effect 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 pension plans in effect granted to members of the board of directors and statutory directors, according to the content specified in letters “a” to “h” of this item.
The number of members of each body (letter “b”) shall correspond to the number of directors and councilors linked to the pension plan.
The table required in this item shall be presented according to the model below. If there is more than one pension plan in effect, the information shall be presented by plan.
| Board of Directors | Statutory Board of Directors | |
|---|---|---|
| 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, the statutory board of directors, and the audit committee (item 13.11) In this item, the issuer shall report, in table form, by body, the value of the highest, the lowest, and the average value of the annual individual remuneration of the board of directors, the statutory board of directors, and the audit committee, 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 components of remuneration included therein. To avoid duplication, reported values shall be calculated by body. In cases where the same administrator holds a position in the statutory board of directors 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 statutory board of directors and vice-versa. The number of members of each body shall 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 shall 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 shall continue 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 actually used for the calculation of the average remuneration. The value of the lowest annual individual remuneration of each body shall be calculated excluding all members of the respective body who 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 held the position for less than 12 months, the value of the lowest annual individual remuneration shall be calculated considering the remunerations actually recognized in the results of the fiscal year. The value of the highest annual individual remuneration of each body shall be calculated without any exclusion, considering all remunerations recognized in the results. The issuer must also report, in a note in item 13.11 itself, the number of months in which the respective member exercised his 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 value paid as an insurance premium must be reported.
l. Percentage of the total remuneration of each body attributed to members of the board of directors, the statutory board of directors, or the audit committee who are related parties to the controlling companies of the issuer (item 13.13)
In this item, the issuer must report 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
administration, the statutory board of directors, and the fiscal council who are related parties to the direct and indirect controllers of the issuer.
The information must be provided for the last 3 fiscal years and must 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, the statutory board of directors, or the fiscal council received for any reason other than the position they hold (item 13.14)
In this item, the issuer must inform, in a consolidated manner, by body, of the annual values recognized in its results as remuneration of members of the board of directors, the statutory board of directors, and the fiscal council that have been received for any reason other than the position held, such as commissions and consulting or advisory services provided.
The information must be provided for the last 3 fiscal years.
n. Remuneration of members of the board of directors, the statutory board of directors, or the fiscal council 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 the issuer's subsidiaries, its direct or indirect controllers, and companies under common control, which have been attributed to administrators and members of the fiscal council due to the exercise of their position at the issuer.
In this item, the following must be informed, in a consolidated manner, by body:
a) the portions of remuneration borne by the issuer's subsidiaries, its direct or indirect controllers, and companies under common control, which have been attributed to members of the board of directors, the statutory board of directors, and the fiscal council due to the exercise of their position at the issuer (whose existence must be informed in item 13.1.f); b) other remunerations received by administrators and members of the fiscal council of the issuer, which have been recognized in the results of the issuer's subsidiaries, the issuer's direct or indirect controllers, or companies under common control, even if not related to the exercise of a position at the issuer.
In the calculation, remunerations received under any title, in Brazil or abroad, must 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 must be provided on an annual basis, for the last 3 fiscal years, and must be disclosed in a consolidated manner, by type of body and company (issuer's subsidiaries, 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 must be informed in table form, according to the revised model below:
Fiscal year 20XX – remuneration received due to the exercise of the position at the issuer Board of Directors Statutory Board of Directors Fiscal Council Total Direct and indirect controllers Issuer's subsidiaries Companies under common control
Fiscal year 20XX – other remunerations received, specifying under what title they were attributed Board of Directors Statutory Board of Directors Fiscal Council Total Direct and indirect controllers Issuer's subsidiaries Companies under common control
o. Other information deemed relevant (item 13.16)
CVM Instruction 480/09 does not provide for the mandatory presentation, in section 13 of the Reference Form, of the values related to the remuneration of administrators recognized in the issuer's consolidated results.
However, the disclosure of this information, as additional information in this item, by issuers is considered desirable, as it is useful to allow for 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 for in item 14 must be provided considering 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 for 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.
The information regarding the turnover rate (letter "c") must refer only to the issuer's employees, or, in the case above, to the employees of the issuer 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 must 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, down 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 must be informed.
If the shareholder or participant in the group of controlling shareholders is a legal entity, a list containing the information referred to in letters "a" to "d" of this item must be prepared, identifying its direct and indirect controllers, down to the controllers who are natural persons, regardless of any eventual confidentiality treatment given to the information due to legal transaction or by the legislation of the country in which the partner or controller is incorporated or domiciled.
It is emphasized that, unlike the system adopted in the Annual Information Form (IAN), the information required in letter "h" must 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 RJ2007/9346)
51, when the CVM Deliberation No. 525/07 was reformed, we recall that:
a) there are cases where shareholders do not have shareholders to be identified, such as mixed-economy companies (whose controller is the Union, the State, or the 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 down to the natural person level, the partner who 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 informed in letters "e" and "f" must 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 must be informed.
51 See http://www.cvm.gov.br/port/descol/resp.asp?File=2008-010D18032008.htm.
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 for 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 of knowledge by the issuer, 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 8.1 (if applicable), 15.3 "d" (shares in circulation), and 19.2 (treasury shares) must also be updated.
b. Identification of shareholders, or groups of shareholders who act in concert or who represent 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 who act in concert or who represent the same interest, whose total participation, direct or indirect, is equal to or greater than 5% of the same class or species of shares, which 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) 52, 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 partners, 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 this last share position must be informed.
52 See http://www.cvm.gov.br/port/descol/resp.asp?File=2011-009ED11032011.htm.
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 shareholder list 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 must 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.
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 8.1 (if applicable), 15.3 "d" (shares in circulation), and 19.2 (treasury shares) must 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 meeting of shareholders.
The quantities of natural and legal person shareholders of the issuer (letters "a" and "b") must be calculated without excluding shareholders who have been informed 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 person shareholders, the issuer must also inform the approximate quantity of institutional investors who are 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"), must 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 that are the property of the controller, persons linked to him, the issuer's administrators, and shares held in treasury.
As provided for in paragraph 1 of this 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 must be calculated based on the information contained in the company's corporate books and the information provided by the custodial services institution.
It is also emphasized that:
a) the sum of the number of natural person and legal person 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 and legal person 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" must 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. Organizational chart of the issuer's shareholders (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, must be identified in the organizational chart in any case.
It is emphasized 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 shareholder 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 shareholder agreement that regulates the exercise of voting rights or the transfer of shares issued by the issuer, that:
a) is filed at its headquarters; or b) of which the controller is a party, regardless of its filing 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 promptly provide the issuer with all information necessary to comply with the legislation and regulation of the securities market.
It is also worth remembering that the celebration, alteration, or rescission of a shareholder 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 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 filing 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, must 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 must be informed on an annual basis.
Regarding the provisions of item 16.3, the issuer must identify, by operation or group of operations, in a clear and objective manner, the measures adopted to avoid conflicts of interest, as well as provide all information necessary 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 others, terms and conditions applied in the operation and the existence of eventual guarantees.
The information on the commutative nature of transactions with related parties must be in line with the information provided in item 16.2, particularly with respect to item 16.2.k.i (nature and reasons for the operation) and 16.2.k.ii (interest rate charged), for loan operations.
9.2.17. Share capital (section 17)
The information requested in the items of this section of the Form must be provided even if homologation 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 capital, subscribed capital, and paid-up capital, the date of the last change in the information.
It is worth emphasizing that CVM Instruction No. 480/09 provides, in items II and III of paragraph 3 and 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 subscribed privately, in the case of issuers registered in Category A; b) when there is the issuance of new securities, even if subscribed privately, in the case of issuers registered in Category B; c) when there is the conversion of shares.
Thus, the occurrence of any of these events will require the update of the Reference Form within 7 (seven) business days counted from the respective date of alteration or issuance, with the update of the information affected by these events provided by Category A issuers 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.
Also for the purpose of filling out item 17.1 of the Reference Form, the issuer must base itself on the following definitions:
a) Authorized capital: under Article 168 of Law No. 6,404/76, the bylaws may contain authorization for an increase in share capital without the need for bylaw reform. The authorization must specify the limit of the increase, in terms of capital value or number of shares, and the types and classes of shares that may be issued. These data must appear in item 17.1 as authorized capital. b) Issued capital: is the fraction of the company's capital placed at the disposal of shareholders for subscription. c) Subscribed capital: corresponds to the portion of the issued capital that shareholders have committed to pay, regardless of its actual payment. d) Paid-up capital: corresponds to the portion of the subscribed capital that is not pending effective payment by shareholders.
In this way, the Reference Form must be resubmitted within 7 (seven) business days from the deliberation authorizing the capital increase, in view of item II of paragraph 3 of Article 24 of CVM Instruction No. 480/09, with the update of data referring to authorized capital.
Similarly, in view of item III of paragraph 3 of Article 24 of CVM Instruction No. 480/09, the Reference Form must be resubmitted within 7 business days from the deliberation of capital increase with the update of data referring to issued capital, and within 7 business days from the deliberation of homologation of capital increase, with the update of data referring to subscribed capital and, if applicable, paid-up capital.
9.2.18. Securities (section 18)
a. Description of the rights of each class and species of issued share (item 18.1) In this item, the issuer must describe the rights of each class or species of shares issued by it, 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 in the issuer's bylaws.
It should be remembered that the alteration in the rights and advantages of the issued securities is a scenario that determines the update of the Reference Form by Category A issuers, as provided in item IV of paragraph 3 of Article 24 of CVM Instruction No. 480/09.
Thus, the occurrence of this event will require 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 attention to 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 bylaw 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 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 a specific matter provided in the bylaws; or b) impose a burden on the exercise of voting with respect to a specific matter provided in the bylaws, such as, for example, “entrenched clauses”.
In this item, the issuer must also describe, clearly and objectively, if they exist, bylaw rules that require 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 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 issued by it 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 in the respective legal documents for each security commented on.
In the Empresas.Net system, the information required about 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 the other securities disclosed, judged relevant by the issuer.
It should be remembered that the issuance of new securities, even if privately subscribed, is a scenario that determines the update of the Reference Form by issuers registered in Categories A and B, as provided in item III of paragraph 3 and item II of paragraph 4 of Article 24 of CVM Instruction No. 480/09.
Thus, the occurrence of this event will require 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 judged 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 economic-financial situation of the issuer and the risks inherent to its activities and the securities issued by it.
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, that are applicable.
9.2.19. Share repurchase plans and treasury securities (section 19)
a. Information on share repurchase plans of the issuer (item 19.1) In this item, the issuer must provide information on its share repurchase plans.
The percentage provided in letter “ii” of letter “b” must be calculated by dividing the quantity informed in letter “i” of letter “b” by the total number of shares in circulation after the purchase of the number of shares provided in the share repurchase plan.
With regard to the reserves and profits available for the repurchase operation (letter “iv” of letter “b”), the issuer must also indicate the base date to which the information refers.
With respect to what was requested in letter “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 (letter “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 (letter “viii” of letter “b”) must correspond to the division between the value informed in letters “vi” and “i” of letter “b”.
b. Movement of securities held in treasury (item 19.2) In this item, the issuer must inform, in table form, 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 remembered 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 table form, 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”.
In view of 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 judges 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 judges as important to support the investment decision. It must be informed, for example, if 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 deliberation of the board of directors, 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 that are 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 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.
Information must be provided in the Form not only about 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 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 adopted by it. Therefore, the full text of the issuer's disclosure policy should not be inserted in the items of the section, which may, however, refer to the location on the World Wide 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 in item XII of Article 30 and 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, regarding:
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 about 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.
Chapter 10. General Guidelines for Incentivized Companies
10.1. Registration
According to Article 2 of CVM Instruction No. 265/97, companies benefiting from resources originating from tax incentives provided for in Decree-Law No. 1,376/74 are obliged to register with the Securities and Exchange Commission (CVM).
Therefore, the aforementioned companies must send a request for registration of an incentivized company to the Superintendence of Corporate Relations (SEP), accompanied by the documents listed in the items of Article 3 of CVM Instruction No. 265/97.
We emphasize that the Financial Statements that will serve as the basis for the granting of registration must be audited by an independent auditor registered with CVM and, according to paragraph 2 of Article 3 of CVM Instruction No. 265/97, they may not contain audit reports with a modified opinion on relevant distortions.
10.2. Update of registration
In accordance with Article 7 of CVM Instruction No. 265/97, once the registration of an incentivized company is granted, the companies must send to CVM, the operating bank of the investment funds, and the self-regulatory entity in which their securities are admitted to trading, the periodic and occasional information provided for in Articles 12 and 13 of the aforementioned Instruction, respectively.
Therefore, in accordance with item I of the aforementioned article, incentivized companies must send their periodic and occasional information through the Empresas.NET System, available on the CVM or BM&FBOVESPA website on the World Wide Web.
In this sense, aiming to send documents through this electronic system, the incentivized company must consult chapters 2 (periodic information) and 3 (occasional information) of this Circular Letter, insofar as applicable, as well as the “Manual for Periodic and Occasional Information Disclosure”, available on the CVM website, which presents a list of the categories, types, and species of documents provided for in the Empresas.NET System, classified by the obligation or not of sending, by the periodicity of their disclosure, and by the need or not of publication by the press, as well as bringing guidelines regarding the procedure for accessing the system (sending and cancellation of data).
We emphasize that, with regard specifically to the updated registration data of incentivized companies, whose annual sending is mandatory by virtue of Article 12, VI, of CVM Instruction No. 265/97, and their updates have provision in Article 13, X, of the same Instruction, the category “Registration data of incentivized companies” must be used, and the document must contain, at minimum, the information listed in Article 3, XII, of CVM Instruction No. 265/97. The company must use the model available on the CVM website on the internet, at the link “Document Sending”, “XML File Standards and others”.
We remind you that, as established in Article 16 of CVM Instruction No. 265/97, incentivized companies that do not yet have registration with BM&FBOVESPA must request the admission to trading of the securities issued by them in a self-regulatory entity — stock exchange or organized over-the-counter market — authorized to operate by CVM.
10.3. Suspension of registration
The suspension of the registration of an incentivized company will be carried out by SEP when the company has been for more than 12 (twelve) months with the obligation to provide periodic and/or occasional information to CVM, in accordance with Article 3 of CVM Instruction No. 427/06.
After the suspension of registration, the company may request its reversal, through a request addressed to SEP, which must be accompanied by proof that all documents, periodic and occasional, whose delivery deadlines had already occurred, were delivered to CVM.
10.4. Ex officio cancellation of registration
The ex officio cancellation of the registration of an incentivized company will be carried out by SEP in the scenarios described in Article 2 of CVM Instruction No. 427/06, among which stands out the maintenance of the suspension of registration for a period exceeding 12 (twelve) months.
10.5. Request for voluntary cancellation of registration
The voluntary cancellation of the registration of an incentivized company must be preceded by a Public Offer (OPA) for the acquisition of shares arising from the granting of tax benefits, following the principles exposed in Articles 20 and following of CVM Instruction No. 265/97.
It is worth noting that besides the occurrence of the OPA, as a general rule, it is a condition for the approval of the request for cancellation of registration that the company is up to date with the sending of the periodic and occasional documents to which it is obliged.
10.6. Simplified registration
Companies benefiting from resources originating from tax incentives that were obliged to register with CVM, and that did not register, may obtain simplified registration, when they intend their subsequent and immediate cancellation.
The request for simplified registration must be sent to SEP, accompanied by the documents listed in the sole paragraph of Article 3 of CVM Instruction No. 265/97, remembering that, just as for the granting of common registration, the Financial Statements must be audited by an independent auditor without audit reports with a modified opinion on relevant distortions.
Furthermore, the granting of simplified registration also depends on the sending of a draft of the OPA notice to be carried out aiming at its cancellation, which, in accordance with Article 25 of the aforementioned instruction, must be approved by this agency before its publication in the press.
10.7. Debt remission
The granting of debt remission provided for in Article 31 of Law 10.522/02 depends on the fulfillment of two requirements, namely: (i) the company must have Net Equity lower than R$ 10,000,000.00 (ten million Reais), to be proven through the sending of the Financial Statements of the last fiscal year, audited by an independent auditor registered with this Agency and published in the press; and (ii) the company must provide for the cancellation of its registration as an incentivized company maintained at CVM, through the realization of a Public Offer (OPA) for the purchase of incentivized shares.
It is important to emphasize that ex officio cancellation is not sufficient to support the request for debt remission; the company must promote the cancellation of its registration, common or simplified, voluntarily through the realization of a Public Share Offer.
As occurs in the granting of common registration and in the voluntary cancellation of registration, the Financial Statements that will serve as the basis for the granting of simplified registration must be audited by an independent auditor registered with CVM and, according to paragraph 2 of Article 3 of CVM Instruction No. 265/97, may not contain audit reports with a modified opinion on relevant distortions.
Chapter 11. Risk-Based Supervision Plan – SBR
Since 2009, CVM has been carrying out preventive monitoring activities of the markets and entities under its jurisdiction according to a Risk-Based Supervision model – SBR.
With this mode of action, established by CMN Resolution No. 3,427/06 and regulated by CVM Deliberation No. 521/07, the regulator focuses its actions on the risks to the performance of its legal duties, seeking a more preventive than reactive approach.
To fulfill the legal mandates of protecting investors against irregular acts, ensuring access to adequate information, and monitoring and punishing irregular acts, the SEP, in its activity of monitoring and inspecting companies, carries out two major general actions:
a) Monitoring of periodic and occasional information disclosed to the market by companies, verifying their timely availability and quality, in order to enable investors to make informed decisions. b) Monitoring the performance of administrators and controlling shareholders of companies, verifying compliance with corporate laws and regulations and shareholders' rights, in order to strengthen investor confidence in the market.
Regarding the Biennial Plan for the 2015-2016 period, it is worth highlighting the thematic supervision regarding the analysis of transactions carried out during the blackout period – ITR and DFP (article 13, paragraph 4, of CVM Instruction No. 358/02).
Article 13, paragraph 4, of CVM Instruction No. 358/02 establishes the prohibition of trading in securities issued by the company by administrators, controlling shareholders, and the company itself, during the 15-day period preceding the disclosure of the company's quarterly (ITR) and annual (DFP) information.
The reason for such prohibition lies in the fact that the company's financial information represents relevant information and, for this reason, trading using this information before its disclosure to the market would constitute insider trading.
Since 2014, the SEP has been analyzing 100% of the transactions carried out by administrators, direct controlling shareholders, and the company itself that occurred during the 15-day period preceding the disclosure of the company's quarterly (ITR) and annual (DFP) information.
More information about the Risk-Based Supervision – SBR plan can be found on the CVM website:
http://www.cvm.gov.br/port/public/publ/revista/menu_SUPERVISAO_BASEADA_EM_RISCO.asp
Chapter 12. Good Practices to be Adopted by Public Companies
This Chapter consolidates good practices recommended by the Superintendence of Corporate Relations (SEP) in the other Chapters of this Circular-Office.
12.1. Disclosure Policy
By virtue of article 16 of CVM Instruction No. 358/02, the public company must adopt a policy for the disclosure of material acts or facts (see items 3.11 and 9.2.21), encompassing, at a minimum, the communication channels it uses to disseminate information about material acts and facts and the procedures related to maintaining confidentiality regarding undisclosed material information.
It is recommended that this disclosure policy be drafted clearly, objectively, and in detail, bringing specific procedures on the following subjects:
- Objective criteria to distinguish, when possible, cases of disclosure of information to the market through Material Fact or Market Communication;
- Obligations of the Investor Relations Director (DRI) to disclose information to the market, as well as to supervise any information leaks in the media and/or atypical fluctuations related to the trading of the company's securities;
- Timing of disclosure of material facts, which should preferably occur after the closing of trading (in Brazil and in any foreign markets where the company's securities are traded);
- Procedures to be adopted when the disclosure of a Material Fact must occur during trading, addressing any request for suspension of trading of the company's securities until the material information is adequately disseminated;
- Contingency plan in case of leakage of material information, in order to accelerate the disclosure of the information through official channels and avoid the persistence of a situation of information asymmetry;
- Maintenance of controls identifying persons who have knowledge of material facts not yet disclosed to the market;
- Obligations of controlling shareholders, administrators, and other persons linked to the company to promptly notify the DRI in case of having knowledge of material information;
- Procedures to be adopted when there is doubt about the relevance of certain information;
- Procedures to ensure compliance with the duty of confidentiality;
- Cases of exceptions to the obligation to disclose; and
- Liability in cases of non-compliance with the disclosure policy.
It is also recommended that the Information Disclosure Policy provide for adequate internal controls for each type of information to be treated, such as, for example, by creating a classification by order of relevance, and access controls for each type of information.
Furthermore, it is advisable that the Disclosure Policy establish objective criteria for determining the timing, form, and means of disclosure of information, and for identifying exceptional cases that would justify the exception to the rule of immediate disclosure.
12.2. Trading Policy
Although companies are not required to have a trading policy, its voluntary adoption is recommended, as stated in item 3.10.
The trading policy, provided for in article 15 of CVM Instruction No. 358/02 (see items 3.10 and 9.2.20 of this Circular-Office), should not represent a mere repetition of the text of said Instruction, but contain a detailed description of the procedures and measures effectively adopted by the company to avoid violations of the norms dealing with trading in the company's shares by the company itself, controlling shareholders, administrators, members of the statutory audit committee or other bodies created by statutory provision.
Although there is no obligation for companies registered in Category B to send the Trading Policy, it is recommended that they voluntarily send it via the Empresas.NET System.
12.3. Risk Management Policy
It is recommended that companies draft, disclose, and observe formal policies to manage the risks to which they are exposed, described in items 4.1 and 5.1 of the Reference Form.
Companies that do not adopt a risk management policy must, in the respective items of the Reference Form, make this condition explicit, as well as inform the reasons why they do not adopt such a policy.
12.4. Policy on contracting transactions between related parties
It is recommended that companies draft, disclose, and observe formal policies regarding contracting between related parties (see item 3.15 of this Circular-Office). These policies must be described in item 16.1 of the Reference Form (see item 9.2.16).
12.5. Corporate Calendar
In the mold of the regulations of the special listing segments of BM&FBOVESPA, it is recommended that public companies draft and disclose, by the end of January of each year, or up to one month after the closing of their fiscal year, an annual calendar containing the dates of the main corporate events. The objective of this annual calendar is to facilitate the monitoring of the company's activities by investors and other interested parties.
Any subsequent changes regarding the events contained in the already presented Annual Calendar must be communicated to the market and to the stock exchange or organized over-the-counter market where the company's securities are traded, with at least 5 (five) days' advance notice of the scheduled date for the event. If the change cannot be disclosed within this period, in addition to the change in the annual calendar of corporate events, the company must disclose a market communication, before the event takes place, informing the causes that motivated the change in the annual calendar.
12.6. Preparation of the Reference Form
It is recommended that the Reference Form, a document provided for in article 24 of CVM Instruction No. 480/09 (see Chapter 9 of this Circular-Office), be prepared by the company itself, and not by third parties hired for this purpose. It is also advisable that the preparation of this document involve representatives from all areas of the company, and not just the Investor Relations Department.
12.7. Timing of disclosure of material information
Article 5 of CVM Instruction No. 358/02 provides that the disclosure of a material act or fact should occur, whenever possible, before the start or after the closing of trading on stock exchanges and entities of the organized over-the-counter market where the company's securities are admitted to trading (see item 3.1).
Paragraph 1 of the same article determines that, if the company's securities are admitted to trading simultaneously in markets of different countries, the disclosure of the material act or fact should be made, whenever possible, before the start or after the closing of trading in both countries, prevailing, in case of incompatibility, the business hours of the Brazilian market.
Although the Instruction provides for the possibility of disclosing a material fact before the start of trading in a market, it is understood as a good practice that the disclosure occurs preferably after the closing of trading in all countries where the securities are traded, allowing a longer period for investors to analyze the effects resulting from the disclosed information. If disclosure before the opening of trading is necessary, it must be made at least 1 (one) hour in advance, in order to avoid delays in the start of trading.
When it is not possible for the company to disclose a material fact outside of trading hours, the Investor Relations Director may request, always simultaneously with the stock exchanges and entities of the organized over-the-counter market, national and foreign, where the company's securities are admitted to trading, the suspension of trading of the public company's securities for the time necessary for the adequate dissemination of the material information, in accordance with paragraph 2 of article 5 of CVM Instruction No. 358/02. It is noted that the request for suspension of trading is not mandatory, but optional, in these cases.
This recommendation also applies, among others, to financial statements and ITR, DFP, FRE, and Securitization Company Reports forms.
12.8. Deadline for convening a general shareholders' meeting
Article 124, paragraph 1, item II, of Law No. 6.404/76 establishes that, in the public company, the advance notice period for the first convening of the general shareholders' meeting shall be 15 (fifteen) days (see items 2.4.3 and 3.2.1).
It is advisable, however, that companies adopt, whenever possible, the minimum period of 30 (thirty) days for the convening of the general shareholders' meeting, whether EGM, EGA, EGAEP, or EGAEB, as already required by article 9 of CVM Instruction No. 481/09 for the Management Proposal of the EGM, so that shareholders have sufficient time to analyze the deliberations to be taken and, eventually, to articulate to participate in the meeting.
12.9. Adoption of CVM Opinion No. 35/08
CVM Opinion No. 35/08 deals with the observation, by administrators of public companies, of their fiduciary duties in merger, incorporation, and share incorporation operations involving the controlling company and its subsidiaries or companies under common control (see item 6.2).
The aforementioned Opinion describes certain procedures to be observed during the negotiation of such operations. The alternative procedure to which the operation is conditioned to the approval of the majority of non-controlling shareholders, including holders of shares without voting rights or with restricted voting rights, is the constitution of a special independent committee to negotiate the operation and submit its recommendations to the company's board of directors.
The Opinion cites three alternatives for the composition of this special independent committee:
i) Committee composed exclusively of company administrators, the majority of whom are independent; ii) Committee composed of non-administrators of the company, all independent and with notable technical capacity, provided that the committee is provided for in the bylaws, for the purposes of article 160 of Law No. 6.404/76; or iii) Committee composed of: (a) an administrator chosen by the majority of the board of directors; (b) a councilor elected by non-controlling shareholders; and (c) a third party, administrator or not, chosen jointly by the other two members.
Although any of the above alternatives is acceptable to characterize compliance with CVM Opinion No. 35/08, in the understanding of the SEP, the presence of members elected by non-controlling shareholders in the special independent committee is recommended.
12.10. Audit Committee Report
If the public company has an audit committee, even if this committee has not been structured as the Statutory Audit Committee – SAC, in accordance with arts. 31-A to 31-F of CVM Instruction No. 308/99, with the changes introduced by CVM Instructions No. 509/11 and 545/14, it is advisable that the audit committee produce an annual report, to be presented together with the financial statements, containing the description of (i) its activities, the results and conclusions reached and the recommendations made; and (ii) any situations in which there is significant divergence between the company's management, the independent auditors, and the audit committee regarding the company's financial statements.
12.11. Inclusion of candidates for members of the administration presented by non-controlling shareholders in the Management Proposal to shareholders' meetings
It is advisable that companies adopt, in their Bylaws, the possibility for non-controlling shareholders to present candidates for the Board of Directors, provided that these shareholders present information about the candidates up to a certain deadline before the date scheduled for the meeting.
This practice, however, should be regarded as a right granted to shareholders to facilitate their articulation and the exercise of rights granted by Law No. 6.404/76. According to 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 Statutory Audit Committee at the moment of the meeting itself.
12.12. Periodic submission of the form for traded and held securities values provided for in article 11 of CVM Instruction No. 358/02
With the objective of having complete and reliable information, it is recommended that Companies, as an example of what many issuers already do, voluntarily submit the forms, even in months when no movements or changes in the positions of administrators and related persons have been verified. In this case, the forms must be filled out with the information that, in that period, there was no trading in the company's securities, its controlled, its controlling, or its affiliated company, repeating the initial balance values in the final balance.
It should be emphasized that this norm aims at the disclosure of all movements carried out by administrators and related persons, with securities issued by the Company and its controlled or controlling societies. Thus, any business carried out by the mentioned 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. It is advisable that both the persons mentioned in the caput of article 11 of CVM Instruction No. 358/02 and the DRI keep archived the proof of sending and receiving of messages exchanged regarding the movements carried out.
Some companies disclose in the form the motivation of relevant transactions carried out by administrators, which is a recommended practice.
See item 3.8.
12.13. Communication regarding the alienation or extinction of relevant shareholding (article 12, paragraph 4, of CVM Instruction No. 358/02)
It is recommended that, in the communication regarding the alienation or extinction of relevant participations, the following information be included:
a) name and qualification of the acquirer, indicating the registration number in the National Registry of Legal Entities or the Personal Taxpayer Registry; b) number of shares, subscription bonuses, as well as subscription rights for shares and options to purchase shares, by species and class, already held, directly or indirectly, by the acquirer or a person linked to him; c) number of debentures convertible into shares, already held, directly or indirectly, by the acquirer or a person linked to him, specifying the quantity of shares subject to possible conversion, by species and class; and d) indication of any agreement or contract regulating the exercise of voting rights or the purchase and sale of securities issued by the company. See item 3.9.
12.14. Public companies' page on the worldwide computer network
Although not mandatory, it is recommended that companies registered in Category B place and maintain the periodic and occasional information provided in compliance with articles 21 and 31 of CVM Instruction No. 480/09 on their own page on the worldwide computer network, as an example of what is required for companies registered in Category A by article 13, paragraph 2, of said Instruction.
12.15. Manual of accounting policies
As highlighted in CIRCULAR-OFFICE/CVM/SNC/SEP/No. 01/2013, in Technical Pronouncement CPC 23 (Accounting Policies, Changes in Estimates and Correction of Errors), the list of Accounting Policies includes specific principles, specific bases, specific conventions, specific rules, and specific practices applied by an Entity when preparing and presenting its accounting statements.
Furthermore, as highlighted in Technical Pronouncement CPC 26 (R1) – Presentation of Financial Statements, in the process of applying the entity's accounting policies, management exercises various judgments that can significantly affect the amounts recognized in the financial statements.
The prior definition of the parameters that should underlie these judgments must, whenever possible, be duly formalized, notably with regard to the policies mentioned in item 9.2.10.d of this Circular-Office, being submitted to the scrutiny of independent auditors in the planning phase of their work.
It is up to the company's management, based on a broad set of information, to evaluate the appropriate accounting treatment for a certain event, analyzing all relevant facts and circumstances that may influence its judgment. Notwithstanding, the performance of the administrators of the public company, in the exercise of the fiduciary duties provided for in corporate legislation, must seek, diligently, to eliminate or mitigate the risk of questioning the neutrality of the information produced, through the prior formal definition of applicable accounting practices.
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