April 22, 2020
COVID-19 | Corporate - Provisional Measure No. 931 (MP)
Corporate - updated on Abr 22 at 18:20 am
Brazilian Government issues provisional measure extending the deadline for annual shareholders’ or quotaholders’ meetings
As part of the measures for mitigating the impact of the COVID-19 pandemic, the Brazilian Government published Provisional Measure (MP) No. 931, which amended Law No. 10,406/2002 (Brazilian Civil Code) and Law No. 6,404/1976 (Corporation Law) extending the legal 4-month term for companies to hold their annual meetings for corporations and limited liability companies (for approval of financial statements, election of management, etc.). The MP also extends the terms in office of the current management until the date of such meeting is held.
See below a summary of the five main changes brought by the MP:
- Annual meetings of companies with fiscal years ending between December 31, 2019 and March 31, 2020 may occur within seven months from the end of the fiscal year. Thus, for most companies, until July 31, 2020. This extension is to be adopted at the discretion of each company, and, if the company chooses to hold the meeting during the COVID-19 pandemic, remote voting will be allowed, by a mechanism known as Remote Voting Form;
- Limited liability companies and corporations may adopt the Remote Voting Form, which is usually afforded only to publicly-held companies and now is permitted for limited liability companies, closely held corporations, and cooperatives by Normative Instruction of the National Department of Registry of Commerce (DREI) No. 79, dated as of April 14, 2020;
- According to the law in force, corporate acts comprising resolutions intended to produce effects against third parties must be filed with the Board of Trade within 30 days counted as of the date of their execution, so that their effects can retroact and become enforceable against third parties from the execution date. However, for as long as the restrictions imposed to the operation of the Boards of Trade due to the COVID-19 pandemic continues, all corporate acts subject to filing and executed as of February 16, 2020, will have their registration term suspended, i.e. the term of 30 days mentioned above will be counted from the date on which the Board of Trade restores the regular provision of its services;
- The MP sets forth that it will be up to the Brazilian Securities and Exchange Commission (CVM) to decide upon a new deadline for presentation of financial statements by publicly-held companies, which was set forth by CVM Ruling No. 849, dated as of March 31, 2020. CVM has also expressed its opinion through the Circular Letter SNC/SEP 02/2020, recommending that the financial statements and management proposals must highlight the potential economic and financial impacts arising from COVID-19, if any;
- The MP authorized the board of directors or, if there is no board, the officers, to declare dividends, with no need to make any amendment to the bylaws.
The provisions of the MP also apply to state-owned and state-controlled companies, cooperatives and entities representing cooperatives.
Also on March 30, 2020, a bill of law covering almost exactly the same matters of the MP was proposed at the Senate. Therefore, there may be further changes in some of these aspects.