SEC Division of Corporation Finance no-action letter: Brazilian Foreign Private Issuers

Cleary Gottlieb Steen & Hamilton LLP Simpson Thacher & Bartlett LLP New York New York Sao Paulo Sao Paulo October 30, 2018 Office of International Corporate Finance Division of Corporation Finance U.S. Securities and Exchange Commission 100 F St., NE Washington, DC 20549 Re: Compliance with Rule lOA-3 by Brazilian Foreign Private Issuers - Request for Interpretation Ladies and Gentlemen:
Rule l0A-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), adopted in 2003 pursuant to Section 301 ofthe Sarbanes-Oxley Act of2002, sets forth audit committee requirements that apply, pursuant to rules of each national sec).lrities exchange, to an issuer ofsecurities that are listed on any such exchange. Cleary Gottlieb Steen & Hamilton LLP and Simpson Thacher & Bartlett LLP have drawn the attention of the staff ofthe Division of Corporation Finance (the "Staff') to questions about how Rule I0A-3 applies to Brazilian issuers with equity securities listed in both Brazil and the United States. (We refer to such issuers below as "dual-listed Brazilian issuers.") In particular, developments in Brazilian regulation and listing rules have established a high-quality, well￾developed Brazilian regime governing audit committees for listed issuers, and under this regime an audit committee may include a combination of members ofthe board of directors and other persons who are not members of the board of directors. (We refer to this practice below as "mixed composition.") As discussed below, a foreign private issuer that has a board of auditors ( or similar body) established pursuant to its home country legal regime or listing rules may rely on an exemption set forth in paragraph (c)(3) of Rule l0A-3. 1 One ofthe requirements for the paragraph (c)(3) exemption, set forth in sub-paragraph (ii) of paragraph (c)(3), is that this body be "required under home country legal or listing requirements to be either: (A) [s]eparate from the board of directors; or (B) [c]omposed of one or more members ofthe board of directors and one or more members that are not also members ofthe board of directors" (emphasis added).2 The purpose of this letter is to request that the Staff concur with our interpretation that, under the circumstances described in this letter, an audit committee with mixed composition at a dual￾17 CFR 240 .IOA-3(c)(3). 17 CFR 240.1 0A-3(c)(3)(ii).