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Publicly Traded Companies Newsletter No. 02 – February 2023
March 21st, 2023
The Publicly Traded Companies Newsletter aims to provide information on the main media news, trends, cases and legislation concerning Traded Companies matters, in Brazil and abroad. This material is for informational purposes and should not be used for decision making. Specific legal advice can be provided by our lawyers.
BEGGINING OF THE ANNUAL GENERAL MEETINGS SEASON
Companies whose fiscal year ends on December 31 can hold ordinary general meetings until the end of April
Under the terms of article 132 of Law No. 6,404, of December 15, 1975 (the “Brazilian Corporation Law”), publicly traded companies must hold an annual general meeting (“AGM”) within the four months following the end of the fiscal year in order to
(i) audit management accounts, analyze, discuss and vote on the financial statements;
(ii) deliberate on the allocation of net income for the year and the distribution of dividends;
(iii) elect the managers and the members of the audit committee, when applicable; and
(iv) approve the currency adjustment of the capital stock.
It is important to highlight that companies must, at least 30 days prior to the date scheduled for carrying out the AGM, convene and provide their shareholders with all management documents related to the matters included in the agenda of the AGM, which includes, among others, the following documents:
(i) management’s report on the corporate business and the main administrative facts of the fiscal year just ended;
(ii) copy of the financial statements;
(iii) opinion of the independent auditors, if any;
(iv) opinion of the audit committee, including any dissenting votes; and
(v) remote voting form, exclusively in the case of publicly traded companies that choose to use this option as a means to exercise voting rights, under the terms of CVM Resolution No. 81, dated March 29, 2022.
In addition to the above documents, publicly traded companies must also provide, within 30 days in advance, the following documents, as applicable:
(i) standard financial statements form (“DFP”);
(ii) proposal for allocation of net income for the year containing, at least, the information indicated in Annex A, pursuant to CVM Resolution 81; and
(iii) opinion of the independent auditors, if any.
In case the AGM is called to elect managers or members of the audit committee, the company must provide:
(i) the information indicated in items 7.3 to 7.6 of the Reference Form, related to the candidates appointed by the management or by the controlling shareholders;
(ii) whether the candidate needs to obtain the waiver referred to in art. 147, paragraph 3, of the Brazilian Corporation Law, including a statement on the reasons why the meeting should grant such waiver; and
(iii) the remote voting form.
In addition, it is important to point out that publicly traded companies listed in the “Novo Mercado” segment of B3 must submit documents to confirm that the individual appointed to the board of directors is an independent director.
Finally, in case the general meeting is called to address extraordinary matters (for example, amendments to the articles of organization, capital increase, among other matters), compliance with the information provided for in CVM Resolution 81 is necessary.
BRAZILIAN SECURITIES AND EXCHANGE COMMISSION (“CVM”)
LETTERS
CVM/SEP Annual Circular Letter 2023
On February 28, 2023, CVM published the Annual Circular Letter 2023-CVM-SEP (“Letter”), which contains general guidelines on procedures to be followed by publicly traded, foreign and incentive companies.
On the same date, CVM, together with B3, carried out a presentation explaining the main points and guidelines contained in the Letter, especially in regard to the format of the new Reference Form, legislative news, Integrated Reporting, Financial Information, Issuer Registration, among other topics.
Among the considerations pointed out by the Superintendence of Company Relations (“SEP”) during the presentation, it is worth mentioning the news about issuer registrations. In cases of initial registration requests without concomitant public offering registration for companies with fiscal years ending on dates other than December 31, 2022, the issuer registration must be accompanied by a statement signed by the Investor Relations Director (“IRD”). This statement must inform the company’s net worth as of December 31, together with other documents relating to the initial registration. Exception made only to issuers who have already filed the Quarterly Financial Statements (“ITR”) Form for December 31.
As for the DFP Form, SEP has established that it must always be dratted based on the last fiscal year. Moreover, companies are exempted from submitting the form if the issuer has been incorporated within the current fiscal year, as well as in cases of statements especially drafted for registration purposes containing a base date subsequent to the end of the last fiscal year.
In addition, according to the new rules, when the financial information to be submitted to the market is disclosed in advance, the issuer’s Disclosure Policy must comply with the following requirements:
(i) data or metrics to be disclosed, including the proper definition of the indicator;
(ii) frequency of disclosure; and
(iii) disclosure date or period.
Additionally, if there is any kind of change in the Disclosure Policy, such policy must be preceded by the disclosure of a Material Fact.
Regarding the new Reference Form, initially introduced by CVM Resolution 59/22, SEP establishes that the main changes in the new structure provide for, without limitation, environmental, social and governmental factors (ESG) and compliance costs. In item 1.9 of the new Reference Form, companies can find the requirement to provide ESG information, and the “practice or explain” model was adopted for the disclosure of such information, that is, if the company does not adopt ESG practices, it must explain the reason for not adopting such practices.
It is important to highlight that, in compliance with CVM Resolutions 160 and 173, in the case of automatic registration of offerings, the submission of a Reference Form is not necessary.
READ THE ANNUAL CIRCULAR LETTER 2023 IN FULL
READ THE ANNUAL CIRCULAR LETTER 2023 PRESENTATION IN FULL
CVM introduces new guidelines to use the Offering Registration System
On February 08, 2023, the Superintendence of Securities Registration (“SRE”) of CVM published CVM/SRE Circular Letter 3/2023.
The identification of offerors must be carefully submitted, as it determines the nature of the offering (primary, secondary or mixed).
READ THE OFFICIAL LETTER IN FULL
CVM publishes Circular Letter on drafting of financial statements for the fiscal year ending December 31, 2022
On February 08, 2023, the Federal Supreme Court (“STF”) unanimously decided for the cancellation of final decisions due to a change in the court’s position on tax matters.
Thus, if a court decision had previously exempted a taxpayer from the payment of a tax and, subsequently, the STF understands that such payment is due, the exemption will be canceled and the taxpayer will be required to pay the tax.
The STF Plenary unanimously decided that a final and unappealable decision loses its effects if the Court rules otherwise. The decision established the loss of effects of a final and unappealable decision on taxes paid on a recurrent basis, that is, taxes whose collection is renewed periodically, as is the case of the Social Contribution on Net Profits (“CSLL”).
Therefore, the decision applies only to taxes collected on a recurrent basis, so in the case of taxes collected on a one-time basis, for example, the Real Estate Transfer Tax, considering that such relationship is unique, if there is a final decision, it must remain, even after a contrary decision by the STF on the matter.
The reversal of res judicata was decided due to general repercussion. Thus, the decision will be valid for all similar cases in other courts. According to the decision, the collection of taxes that are considered constitutional will only be carried out in the following year. As for contribution taxes, the collection will be carried out three months after the decision. In CSLL cases, after a decision that judged the tax as due, the STF now understands that the taxes are due and that there should be no modulation of effects – that is, effective only as of the moment of the decision – and has determined the collection of past amounts, provided the statute of limitations is respected.
By means of Circular Letter No. 1/2023/CVM/SNC/SEP (“Letter”), the technical areas of CVM advise on the importance of informing the Investor Relations Director of publicly traded companies, as well as their auditors, about the regulatory provisions that must be followed on the drafting and publication of financial statements for the fiscal year ending December 31, 2022 or in their spontaneous resubmission, if they have already been disclosed to the market.
Finally, through the Letter, the CVM’s technical areas also expressed that, without prejudice to the application of CVM Resolution 44, the decision of the STF implies detailed compliance with CPC Technical Statements 24 and 25, when drafting Financial Statements for December 31, 2022, in particular item 9, letter ‘a’, of CPC 24[1], and item 16, letters ‘a’ and ‘b’, of CPC 25[2].
READ THE OFFICIAL LETTER IN FULL
NOTE
Information update related to recent facts within the scope of the publicly traded company Americanas S.A.
CVM announces the opening of new administrative proceeding
On February 08, 2023, CVM announced that, following CVM’s task force within the scope of recent facts related to the publicly traded company Americanas S.A. – under Court-Supervised Judicial Reorganization (Americanas S.A.), four new administrative proceedings were opened:
(i) CVM Administrative Proceeding No. 19957.001119/2023-23: opened on January 31, 2023, by the Superintendence for Investor Protection and Guidance (“SOI”), to investigate a complaint received by the CVM’s service channels.
(ii) CVM Administrative Proceeding No. 19957.001120/2023-58: opened on January 31, 2023, by SOI, to investigate a complaint received through the CVM service channels.
(iii) CVM Administrative Proceeding No. 19957.001192/2023-03: opened on February 02, 2023, by the Superintendence of Accounting and Auditing Rules (“SNC”), to investigate possible irregularities in the activities of KPMG Independent Auditors, as the auditor of Americanas S.A., for the fiscal years of 2017 and 2018.
(iv) CVM Administrative Proceeding No. 19957.001194/2023-94: opened on February 02, 2023, by SNC, to investigate possible irregularities in the activities of PricewaterhouseCoopers Independent Auditors, as the auditor of Americanas S.A., for the fiscal years of 2019, 2020, 2021 and 2022.
In addition to the proceedings above, there are six other administrative proceedings and two administrative investigations in progress to analyze the case of Americanas S.A. and CVM announced that it is adopting all appropriate measures for the timely, adequate and careful clarification of all acts, facts and events related to the case at issue.
READ THE CVM ANNOUNCEMENT IN FULL
SANCTIONING PROCEEDINGS
CVM accepts proposal for Settlement Agreement with CEO of Clear Sale S.A.
On February 01, 2023, the CVM’s Board of Commissioners analyzed Settlement Agreement proposals for the following administrative proceedings (“PA”):
- PA CVM 19957.004386/2022-71, in which Bernardo Carvalho Lustosa, in the capacity of CEO of Clear Sale S.A., submitted a Settlement Agreement proposal to end the legal action prior to the filing of a sanctioning administrative proceeding (“PAS”).
- PA CVM 19957.002627/2022-48, in which Charmant Empreendimento – Sociedade de Propósito Específico (SPE) Ltda. (a Specific Purpose Company), in the capacity of developer, and Osvaldo Ottan Soares de Souza, in the capacity of the director in charge of the developer, jointly proposed a settlement agreement to terminate the administrative proceeding prior to the filing of a PAS.
Within the scope of PA CVM 19957.004386/2022-71, an alleged insider trading in shares (CLSA3) was being investigated on March 08 and 09, 2022, prior to the disclosure of the financial statements for the fiscal year ending December 2021.
The proposed Settlement Agreement of Mr. Bernardo Lustosa, after negotiations with the Settlement Agreement Committee (“CTC”), the proponent committed to pay the amount of BRL 400,329.60, to CVM, adjusted by the IPCA index, from March 09, 2022, until the effective payment date. The CVM’s Board of Commissioners accepted the Settlement Agreement with Bernardo Carvalho Lustosa.
PA CVM 19957.002627/2022-48 was opened to investigate an alleged irregular public distribution of hotel Collective Investment Agreements (“CICs”) of the N.F.S. project, between January 2013 and March 2021, which is a possible violation of article 2 of CVM Instruction 400, in force at the time of the facts, CVM Resolution 734, and Law No. 6,385.
The joint Settlement Agreement proposal submitted by the developer and the officer in charge was accepted by the CVM’s Board of Commissioners, in which the proponents committed to pay the amount of BRL 172,500 to CVM, divided as follows: (i) Chairmant Empreendimento will pay BRL 115,000.00 and (ii) Osvaldo Ottan Soares de Souza will pay BRL 57,500.00.
READ THE OPINION ON THE SETTLEMENT AGREEMENT
READ THE OPINION ON THE SETTLEMENT AGREEMENT
CVM accepts Settlement Agreement with controlling shareholder of car rental company
On February 07, 2023, the CVM’s Board of Commissioners analyzed proposals of Settlement Agreement for (i) PAS CVM 19957.004982/2021-71; and (ii) PA CVM 19957.008706/2018-86.
- PAS CVM 19957.004982/2021-71 was opened by the Securitization Supervision Department (SSE) to investigate an alleged violation, in thesis, of art. 90, X, c/c art. 92, I, both of CVM Instruction 555.
Singulare Corretora de Títulos e Valores Mobiliários S.A. (Singulare), in the capacity of fiduciary Manager of R.B. Fundo de Investimento em Direitos Creditórios Multisetorial and Mr. Daniel Doll Lemos, in the capacity of director in charge of Singulare, presented a joint settlement agreement proposal to terminate the legal action.
However, there was no agreement on the adjustment amounts for the consensual termination of the PAS, and the Settlement Agreement Committee (“CTC”) dismissed the proposal, as did the CVM’s Board of Commissioners.
- PA CVM 19957. 008706/2018-86 was opened by the Superintendence of Company Relations (“SEP”) and is currently being carried out by the Superintendence of Strategic Risk Oversight (“SSR”), to investigate the alleged use of the Company as an instrument to participate in bidding procedures and contracts with the government, in order to achieve a purpose not protected by the Brazilian legal system and in damage to the community, acting with dishonesty and misuse of power, violating, in theory, its duties before the Company, its debenture holders and the society (possible infraction, in theory, to articles 154 and 155 of Law No. 6,404).
Within the scope of PA CVM 19957.008706/2018-86, Celso Antônio Frare, as administrator and controlling shareholder of Ouro Verde Locação e Serviços S.A., submitted a settlement agreement proposal committing to pay BRL 850,000.00, to CVM, which was accepted by the CVM’s Board of Commissioners.
READ THE OPINION ON THE SETTLEMENT AGREEMENT 19957.004982/ 2021- 71
READ THE OPINION ON THE SETTLEMENT AGREEMENT 19957.004982/ 2021- 71
NOTICE TO THE MARKET
CVM rejects the registration request of the public offering for acquisition of shares of Centro de Imagem Diagnósticos S.A.
On February 24, 2023, the Superintendence of Securities Registration (“SRE”) rejected the registration request of the Public Offering for Acquisition of Shares (“OPA”) by sale of stock control of Centro de Imagem Diagnósticos S.A., to be held by Fonte Saúde FIP Multiestratégia.
The rejection was due to a failure to submit documents in compliance with item 3 of Official Letter CVM/SRE/GER-1 656/2022 within the established time limit, namely the duly executed OPA intermediation agreement, along with documents supporting the company’s ability to provide the Offering’s net financial guarantee.
Since the registration request was not granted, the sale of stock control of Centro de Imagem Diagnósticos S.A. was not authorized.
OFFERINGS
BESA, formerly known as Banco Econômico, announces OPA notice after acquisition by BTG
On February 08, 2023, through Official Letter No. 37/2023/CVM/SRE/GER-1, CVM’s Superintendence of Securities Registration (“SRE”) approved the registration request for a unified public offering for acquisition of common and preferred shares (“OPA”) of Banco Besa S.A. by Banco BTG Pactual Corretora de Títulos e Valores Mobiliários S.A.
The OPA’s public notice has been released by Banco Besa S.A.
READ THE MATERIAL FACT OF BANCO BESA
READ THE EVALUATION REPORT AND THE OPA’S PUBLIC NOTICE
VOTES
CVM expresses opinion on filing and extinction of civil liability lawsuit filed by a minority shareholder
On February 28, 2023, the CVM’s Board of Commissioners submitted its vote to the inquiry raised by SPS I Fundo de Investimentos de Ações – Investimento no Exterior, about two specific points (“Inquiry”):
(i) According to article 246 of Law No. 6,404/1976, is a prior resolution from the general shareholders’ meeting necessary before the minority shareholder files a civil liability action against the controlling shareholder for damages caused to the controlled company?
(ii) Does the filing of a civil liability action by the company against its controlling shareholder, after the filing of a liability action brought by minority shareholders, based on and pursuant to the strict terms of article 246 of Law No. 6,404/1976, cause the automatic termination of the liability action brought and carried out by the minority shareholders?
The CVM’s Board of Commissioners recognized its authority to express an opinion on the Inquiry based on article 13 of Law No. 6,385/1976, which attributes to CVM the authority to “carry out advisory or guidance activities with agents of the securities market or any investor”, and on article 4, paragraph 8, of CVM Resolution 45/2021, which establishes that “the CVM’s Board of Commissioners may, on its own initiative or at the request of the superintendence, examine the subject of an appeal in the form of an inquiry, in which case it must express its opinion on the matter.”
In summary, the CVM’s Board of Commissioners, by means of a systematic and literal interpretation of Law No. 6,404/1976, understands that:
(i) The filing of a liability action by minority shareholders against the controlling shareholders, pursuant to article 246 of Law No. 6.404/1976, does not require a previous general meeting.
(ii) The filing, by the company, of a liability action against its controlling shareholder after the filing of a liability action by minority shareholders, based on and in strict compliance with article 246 of Law No. 6,404/1976, should not, in principle, cause the automatic termination of the liability action filed and conducted by the minority shareholders.
The President of CVM, João Pedro Barroso do Nascimento, reiterated in his vote that the opinion is “based solely on the analysis of the matter from the standpoint of article 246 of Law No. 6,404/1976, and does not address matters of civil and arbitral procedural nature, which are beyond the authority of CVM and should certainly be taken into consideration in the decision of concrete cases related to the matter.”
[1] CPC 24.9. “The following are examples of events subsequent to the accounting period to which the financial statements relate, that require the entity to adjust amounts recognized in its statements or to recognize items not previously recognized: (a) decision or payment in a lawsuit after the end of the accounting period to which the financial statements relate, confirming that the entity already had a present obligation at the end of that accounting period. The entity must adjust any provision related to the lawsuit previously recognized according to CPC 25 – Provisions, Contingent Liabilities and Contingent Assets or record a new provision. The entity does not merely disclose a contingent liability because the decision provides additional evidence that would be considered according to item 16 of CPC 25; (…)” (emphasis added)
[2] CPC 25.16. “In almost all cases it will be clear whether a past event gave rise to a present obligation. In rare cases – as in a lawsuit, for example – it may be disputed both whether certain events have occurred and whether those events have resulted in a present obligation. In this case, the entity must determine whether the present obligation exists at the balance sheet date by considering all available evidence including, for example, expert opinion. The evidence considered includes any additional evidence provided by events after the balance sheet date. Based on such evidence: (a) where it is more likely than not that a present obligation exists at the balance sheet date, the entity will recognize the provision (if all recognition criteria are met); and (b) where it is more likely than not that a present obligation does not exist at the balance sheet date, the entity will disclose a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote (…)” (emphasis added).
B3 updates free float rules for special listing segments
On February 01, 2023, B3 announced that it will change the minimum percentages of free float shares that listed companies must maintain in order to participate in Level 1 and Level 2 of Novo Mercado special listing segments.
The new percentages entered into force on January 31, 2023, and are the result of a public hearing held by B3 with the market.
Under the new rules, the minimum level of free float for special listing segments will decrease from 25% to 20% of a company’s capital stock, as is already the case in some international markets, such as Canada. This means that, of all shares issued by the company, at least 20% must be free to be traded in the market by investors.
In addition to the general rule, trading percentages may vary, for example, when the company carries out an initial public offering (“IPO”), according to the volume of the offering and trading.
Previously, there was a single threshold that allowed a free float of 15% for offerings that reached a volume of BRL 3 billion. Now, the company can maintain a minimum free float of 15% of the capital stock during the first 18 months, for offerings with a volume of BRL 2 billion. In addition, when the offering is less than BRL 2 billion, the company must also present governance compensations.
In addition to companies listed on the Novo Mercado, companies on Level 2 and Level 1 may also use the 15% free float threshold for IPOs and when the minimum Average Daily Trading Volume (ADTV) is reached.
B3 opens public consultation on proposal to change the methodology of the Stock Indexes Calculated by B3, in order to include BDRs as Eligible Assets
On February 09, 2023, B3 opened for public consultation, for comments and contributions from market participants and other interested parties, a proposal for changing the methodology of share indexes calculated by B3, in order to include Brazilian Depositary Receipts (“BDRs”), sponsored and unsponsored, as eligible assets.
The inclusion of certain BDRs in B3 Indexes aims to maintain the representation of indexes and their alignment with the evolution of capital markets, ensuring exposure to the dynamics and risk of the Brazilian economy in the development of B3 Indexes.
In short, the purpose of the Public Consultation is to:
(i) assess the impact of such methodology for local investors and indexed funds; and
(ii) analyze how the B3 Indexes will continue to represent the Brazilian economy, considering that some companies choose to initially list their shares abroad.
The proposed change is expected to be implemented as of January 2024.
The Public Consultation was closed on March 10, 2023.
READ THE B3 PUBLIC CONSULTATION IN FULL
Brazilian Financial and Capital Markets Association (“ANBIMA”)
ANBIMA lança curso sobre investimentos ESG
On February 28, 2023, ANBIMA launched a new course, focused on ESG Investments. The course content contains a practical overview of how the Brazilian capital and financial markets have been incorporating the ESG agenda into their investment decisions and explores topics that can still generate doubts among investors.
The course seeks to answer investors’ main questions when the topic is sustainability, with the participation of experts in the field.
READ THE ANBIMA ARTICLE IN FULL
M&A TRANSACTIONS INVOLVING
PUBLICLY TRADED COMPANIES
Minerva (BEEF3) buys Uruguayan meatpacker for USD 40 million
On January 31, 2023, Minerva S.A. signed a binding agreement for the acquisition of Breeders and Packers Uruguay, a subsidiary of NH Foods Group.
The total investment of approximately USD 40 million is subject to compliance with precedent conditions that are customary for this type of transaction, including approval by the appropriate competition authorities.
Through this acquisition, Minerva Foods becomes the leader in beef production in Uruguay, with a total slaughtering capacity of 3,700 heads/day, distributed among 4 slaughtering units: Pul, Carrasco, Canelones and, now, BPU. Minerva S.A. reportedly believes that “the consolidation of our operations in Uruguay must enable significant operational and commercial synergies, thus expanding arbitration opportunities in the international beef market.”
READ THE MATERIAL FACT IN FULL
Oncoclínicas (ONCO3) buys pediatric oncology clinic
Oncoclínicas do Brasil Serviços Médicos S.A. (ONCO3) (“Oncoclínicas”) concluded, on February 01, 2023, the acquisition of 100% of the capital stock of Unidade de Oncologia Clínica e Pediátrica LTDA. (“UOCP”), through its subsidiary Centro Paulista de Oncologia S.A. (“Transaction”).
Oncoclínicas announced that the conclusion of the Transaction is not subject to the provisions of article 256 of the Brazilian Corporation Law and, therefore, does not depend on approval by the company’s General Meeting.
On February 02, considering that the Transaction involved the acquisition of 100% of the target company and the principle of full and fair disclosure, CVM issued Official Letter No. 34/2023/CVM/SEP/GEA-2, through which it requested Oncoclínicas to complement the notice to the market dated February 01, 2023. Accordingly, Oncoclínicas published a new notice to the market, on February 02, 2023, reporting that the total amount of the Transaction was BRL 6.5 million, paid in cash.
READ THE NOTICE TO THE MARKET IN FULL
READ THE ADDITIONAL NOTICE TO THE MARKET IN FULL.
Viveo (VVEO3) buys all shares of Farm.me pharmacy
On February 03, 2023, CM Hospitalar S.A. (“Viveo”) entered into a Share Purchase Agreement and Other Covenants for the acquisition of all the shares representing the capital stock of Far.me Farmacoterapia Otimizada S.A. (“Far.me”).
Viveo first invested in Far.me in 2020. Now, through the acquisition of the entire company, together with the acquisition of Boxifarma, in 2022, Viveo will strengthen its strategy and operations in the direct-to-patient segment.
In order to acquire the remaining equity interest in Far.Me, Viveo paid in loans carried out in 2021 and 2022, with an updated amount of approximately BRL 20.6 million. Viveo will pay an additional amount of BRL 4.0 million, of which BRL 2.7 million was paid on February 06, 2022. All precedent conditions were met for the execution of the agreement, and the closing of the acquisition of Far.me took place on February 03, 2023.
READ THE NOTICE TO THE MARKET IN FULL
Vittia (VITT3) acquires Agro21
On February 13, 2023, Vittia Fertilizantes e Biológicos S.A. (“Vittia”) entered into a Share Purchase and Sale Agreement, through which it acquired 90% of the capital stock of Agro 21 Soluções Aéreas e Agronômicas Ltda. (“Agro21”) for BRL 3.4 million (“Transaction”).
The Transaction is not subject to price adjustments, nor to the fulfillment of precedent conditions. Within the context of the Transaction, Mr. Anderson Gallo de Sá, founder of Agro21, will remain as manager and minority partner of the acquired company. In addition, Vittia announced that the Transaction would not be subject to the terms of articles 247 and 256, item I, of the Brazilian Corporations Law.
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