COVID-19 – Provisional Measure changes the rules related to shareholders’ meetings and partners’ meetings, changes deadlines related to the commercial registry, among other matters

1 . April . 2020 |

On March 30, 2020, the Provisional Measure No. 931 was published in an extraordinary edition of the Official Gazette (“PM 931”). The PM 931 ruled, among other matters, the extension of the deadline for holding the annual shareholders’ general meetings of public held companies and closed companies (“SHM”), and the partners’ meetings of limited liability companies for the approval of accounts and appointment of officers (“Annual Meetings”) as a result of the COVID-19 pandemic.

Pursuant to the PM 931, public held companies, closed companies, and limited liability companies which fiscal year ended on December 31, 2019 or on March 31, 2020 may hold their SHM or Annual Meetings within 7 months, counted as from the end of the fiscal year, even in cases where the by-laws or articles of association expressly rule otherwise. Therefore, public held companies, closed companies, and limited liability companies, which fiscal year ended on December 31, 2019, may hold their SHM or Annual Meetings up to July 31, 2020.

In the context of such extension, the PM 931 also authorized the extension of the terms of office of the directors, officers, members of the fiscal council, and members of the statutory committees up to the next, in case of limited liability companies, Annual Meeting and, in case of public held companies and closed companies, AGO or meeting of the Board of Directors, as applicable. For public held companies and closed companies, the PM 931 also set forth that: (i) except if otherwise provided for in the by-laws, the Board of Directors shall resolve, ad referendum, on urgent matters incumbent upon the Shareholders’ Meeting; and (ii) regardless of any amendment to the by-laws, the Board of Directors, if any, or the Board of Officers shall declare dividends, pursuant to article 204 of Law No. 6,404/76 (“Brazilian Corporate Law”).

Other important amendment, which at a certain degree already existed for public held companies by means of remote ballot papers, was the possibility of remotely attending and voting in meetings of certain corporate entities. In order to complement the rules for remote voting by public held companies, the rules issued by the Brazilian Securities and Exchange Commission (“CVM”) shall be observed. For closed companies and limited liability companies, the rules to be issued by the National Department of Corporate Registration and Integration (DREI) shall be observed.

Moreover, the PM 931 included a provision in the Brazilian Corporate Law pursuant to which, even though shareholders’ meetings shall be preferably held in the head offices of the companies, such meetings may, upon the occurrence of a force majeure, be held somewhere else, provided that expressly indicated in the call notice and within the same County of the head offices. For public held companies, CVM may determine certain exceptions to such rule, including in order to authorize virtual meetings.

CVM Regulation

With the edition of PM 931, CVM issued, on March 31, 2020, the Resolution No. 849 (“Resolution 849”), which, among other measures, extended the submission deadline, by public held companies, of information with maturity date in 2020.

Besides, Resolution 849 suspended, for a period of 4 months, the effectiveness of article 13 of CVM Instruction 476, of January 16, 2009, allowing the trading of securities subscribed under the restricted effort regime, provided that the acquirer is also a professional investor or in cases where the securities are issued by a public held company.

It is worth mentioning that, with respect to public held companies, CVM has not yet commented on the possibility of holding general meetings fully virtual. We expect that CVM issues another rule on this specific point in the coming days.

Regarding Investment Funds, CVM also adopted some measures, which will be addressed in a separate newsletter.

Registration of Corporate Acts:

Finally, but not less important, the PM 931 provided some additional clarifications regarding the registration of corporate acts, given the several restrictions imposed on the ordinary business of the Commercial Registries. As such, the PM 931 set forth that:

  • the deadline for submitting corporate documents signed as from February 16, 2020 shall now be counted as from the date the relevant Commercial Registry regularly operates again. Therefore, the effectiveness of such corporate documents shall retroact to the date such documents were signed, provided that they are submitted to the Commercial Registry within 30 days, counted as from the day the Commercial Registry regularly operates again; and
  • the requirement for the prior registration of corporate documents for the issuance of securities and other similar legal transactions has been suspended as of March 1, 2020. 

However, the relevant registration shall be carried out with the relevant Commercial Registry within 30 days, counted as of the day the Commercial Registry regularly operates again.

In order to access the full text of the PM 931, click here.

In order to access the full text of the Resolution 849, click here.

For additional information, please contact our Corporate, Finance and Capital Markets, and Listed Companies teams.

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