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COVID-19 | Corporate - CVM regulates virtual meetings for Brazilian publicly-held corporations

April 22, 2020

COVID-19 | Corporate - CVM regulates virtual meetings for Brazilian publicly-held corporations

Corporate - updated on Apr 22 at 18:02 pm

CVM regulates virtual meetings for Brazilian publicly-held corporations

On April 17, 2020, the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) issued the Instruction (ICVM) No. 622, which regulates the Provisional Measure (PM) No. 931, enacted by the Federal Government on March 30, 2020. PM No. 931 aimed at easing a number of the requirements applicable to publicly-held corporations. Among the legal changes set forth by PM No. 931 is the possibility of conducting shareholders’ meetings entirely through electronic means, similarly to the rules applicable to in-person meetings. Partially virtual meetings are already permitted by Law No. 12,431/2015, regulated by ICVM No. 561/2015, authorizing the shareholders to use a proxy-voting system or to participate remotely.

ICVM No. 622 brought the following specific changes:

  1. In both forms (partially or fully virtual meetings), shareholders may participate remotely, whether or not using the proxy-voting system, or participate and vote after duly identifying themselves, therefore disregarding a prior vote casted through a proxy system;
  1. The call notice for the meeting must contain the following additional information: (i) where the meeting will take place, which may be other than the corporation’s head offices, if, as a consequence of force majeure (with due applicable justification), it may not occur at the corporation’s head offices (which remains the rule, being the second best choice a place within the boundaries of the same city, if so necessary); (ii) the form of the meeting, if it will be partially or fully virtual; (iii) operational details about how the shareholders may remotely participate and cast their votes (more details may be provided through a specific Internet link); and (iv) for meetings with the purpose of appointing board members, the agenda must indicate the minimum equity interest percentage for adopting the multiple-voting (voto múltiplo) system;
  1. The corporation may require previous presentation of the documents listed in the call notice for the meeting, which must be presented within two days before the date of the meeting;
  1. Shareholders may file documents in a digital form both to legitimate their participation and to exercise their rights (e.g. to cast a dissident vote or to present any other pertinent statement);
  1. The corporation must endeavor to adopt a technological tool that fulfills the following minimum requirements:  (i) possibility of participants to express their opinions and to access all documents presented during the meeting and not previously made available to them; (ii) full recording of the meeting, which may also be broadcasted in open-access communication means (e.g. Internet); and (iii) possibility of communication among shareholders;
  1. Officers and board members, authorized third parties, and those whose presence is legally required may also participate remotely;
  1. Shareholders participating remotely must be considered as signatories of the minutes of the respective meeting;
  1. The minutes of the meeting must expressly state that the meeting was either partially or fully virtual, informing how the participation and voting occurred. President and secretary of the meeting must sign the minutes using a digital certification or any other form assuring his or her authorship and integrity; and
  1. Meetings already scheduled before the issuance of ICVM No. 622 and not yet held may also take place in partial or full digital form, provided that this is informed through a “Material Release” (Fato Relevante), including all the information required by ICVM No. 622. If the meeting is expected to be held by April 30, 2020, the Material Release must be published at least one day before the meeting. In all other cases (i.e., meetings occurring after April 30, 2020) the Material Release must be published at least five days before the scheduled dates.

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