On September 20, 2022, the Brazilian Securities and Exchange Commission (CVM) issued CVM Resolution No. 168, regulating the legal changes introduced into the Brazilian Corporations Law (LSA) by Law No. 14,195/2021, known as “Business Enabling Environment Law”. This norm will become effective as of October 3, 2022, and in summary:
- waives the prohibition on the seat accumulation of chief executive officer and the chair of the board of directors in small-sized publicly-held companies, according to the criteria established in Article 294-B of the LSA;
- provides that the multiple voting system may not be exercised at General Shareholders´ Meetings to decide on related party transactions that have to be disclosed pursuant to Annex F of CVM Resolution No. 80;
- requires the participation of independent directors on the board of directors of publicly-held corporations in all listing segments of the Brazilian stock exchange (B3) that: (i) are registered under “A” class; (ii) have securities negotiated by the managing entity of organized market; and (iii) hold traded shares or share deposit certificates;
- establishes criteria for classifying, loss of independence, and characterization of independent directors; and
- sets the 20 minimum percentage of independent members in the formation of the board of directors of publicly-held corporations without establishing an absolute minimum number and rounding rules.
The aforementioned regulatory changes aim to align Brazil with the international best practices of corporate governance, contributing to a greater perception of trust and legitimacy of decision-making processes in publicly-held corporations, which is essential for strengthening the national capital market.
