CVM approves a Resolution that regulates the provisions of the Brazilian Corporations law regarding plural voting and the composition of the management bodies of Publicly-Held Companies

On September 20, 2022, the Securities and Exchange Commission of Brazil (“CVM”) approved CVM Resolution No.º 168, which came into effect on October 3, 2022, and it basically brings new provisions to be observed (i) in the composition of the management bodies of publicly-held companies and (ii) in the plural voting guidelines.

CVM Resolution No. 168 is the result of the SDM Public Hearing No. 09/2021 and, with the aid of public contributions, amends specific provisions of CVM Resolutions Nos. 59 and 80, in order to regulate legal provisions introduced into Law 6,404/76 ("LSA") by Law 14,195/21 ("Business Environment Law"). Such changes boil down to:

(i)          Exemption from the prohibition of accumulation of positions between the chief executive officer and the chairman of the board of directors for publicly-held companies considered smaller-sized, which are those with annual gross revenues of less than R$ 500,000,000.00, under the terms of art. 294 of the LSA;

(ii)         Establishing the mandatory participation of independent board members, whose participation must correspond to, at least, 20% of the total number of board members, in the Board of Directors of publicly-held companies that meet, cumulatively, the following requirements: (a) are registered in category A; (b) have securities admitted for trading on the stock exchange market by an entity that manages an organized market; and (c) have outstanding shares or depository receipts; and

(iii)        Provision that plurality voting will not be applied in general meetings of shareholders that resolve on transactions with related parties that must be disclosed, under the terms of WExhibit F of Resolution 80/2022, which includes the mandatory disclosure of certain related-party transactions by securities issuers.
It is important to mention that the approval of CVM Resolution 168 relates to measures aimed at improving the business environment in the country, which are inspired by the methodology used by the World Bank.


By Bruno Salama

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