Main corporate measures to attenuate the effects of the pandemic
In view of the impacts of the new coronavirus pandemic in companies’ daily business, government, agencies and parastate entities have been taking measures to enable – or at least facilitate – companies to maintain their business and corporate routines. The main recently issued measures regarding corporate matters are described below:
Annual meetings
Provisional Measure 931, published on March 30, 2020 (“MP 931”), determines that ordinary annual meetings related to companies’ fiscal year ended between December 31, 2019, and March 31, 2020, can be held in up to seven months after the end of the fiscal year – instead of the four-month usual term. The same Provisional Measure also establishes that the term of officers, directors and members of the board of auditors must be extended until the ordinary annual meeting is held. Such rules apply to publicly and privately held companies, limited liability companies and cooperatives, as well as to public companies and mixed-capital companies and their subsidiaries.
Possibility of remote meetings
MP 931 also determines that shareholders’ meetings can be remotely held (totally or partially), and Normative Instruction 79, issued by the National Department of Registration and Integration of Business on April 15, 2020, details the rules for remote meetings of privately held companies, limited liability companies and cooperatives. Basically, meetings must be held through a system that registers shareholders’ votes and allows the event to be recorded, subject to some communication and voting requests. The Brazilian Securities Commission (“CVM”), by means of Instruction 622, determines similar requests and restrictions for remote meetings of publicly held companies, and by virtue of Instruction 849 authorizes investment funds to hold virtual meetings.
Registration of corporate acts
The thirty-day term for corporate acts to be filed with the commercial registry to ensure retroactive effect before third parties must be counted as of the date in which the competent registry re-establishes its regular operation. The same rule applies to the registration of corporate acts related to the issuance of securities, which is suspended since March 1st.
Officers’ powers during the pandemic
For corporations, until the annual meeting is effectively held, the board of directors will be able to decide on urgent matters which authority was originally attributed to the general meeting, subject to ratification by the shareholders – unless otherwise established in companies’ by-laws. Also, the board will be able to declare dividends.
Publicly held companies’ obligations
CVM, by means of Resolution 848 – in force since March 27 – extended the terms related to publicly held companies’ obligations. Among other measures, it suspended the term of administrative proceedings during the state of public calamity, the obligation to record corporate acts that authorize the issue of promissory notes, and the four-month interval between public offers of securities distributed with restricted efforts (aiming to facilitate funding). The Resolution also determines the postponement of administrative terms, including the maturity of unsettled Instruments of Commitment obligations which due date has not yet occurred (120 days), the term for companies to send audited financial statements of regulated investment funds and of separate assets of Receivables (30 days), the deadline for regulated funds to hold annual meetings (three months), among others.
CVM Resolutions 849 and 852 also extend other relevant terms, among which the terms for the presentation of financial statements related to unregistered issuers with offers in organized and non-organized trading desks (regulated by CVM Instruction 476), and the original term or certain requirements of CVM Instruction 480/2009, such as: (i) for issuing companies, to send reports prepared by the fiduciary agent, (ii) for companies, to present relevant financial forms (ITR form, DFP, updated Reference Form and Registration Form), and (iii) for national issuers, to present their financial statements. Most of the extensions were of 45 days or two months.
Further, Resolution 849: (i) extends in two months the term for presentation of the annual report published by the fiduciary agent listing the material facts of the fiscal year to debenture holders; and (ii) postpones until the last business day of July the deadline for presentation of the report of the previous calendar year as assessment of internal controls and recommendations delivered to companies’ directive bodies of companies which are either part of the distribution system or securities consultants. Moreover, it extends to 4 months the term for the trading of securities distributed with restricted efforts issued in accordance with CVM Instruction 476.
CVM Instruction 849 also allows the automatic approval of investment funds’ financial statements of fiscal years ended between December 31, 2019, and March 31, 2020, in case of impossibility to hold the meeting to approve such statements due to the absence of investors, and provided that the auditor’s report does not modify its previous opinion.
Another relevant change is that, as a result of the revocation of CVM Resolution 846 (dated March 16, 2020) by Resolution 852, requests for the suspension of terms for both the analysis of public offers for the distribution of securities subject to registration and for registration of issuers must observe the terms set forth on article 10 of CVM Instruction 400/03 and article 6 of Instruction 480.
Based on all the above, the measures issued up to the end of April, regarding corporate aspects, intend to allow the continuity of businesses by extending the powers of companies’ administrative bodies, and postponing important terms for corporate acts. With the extension of the pandemic and its effects on the economy, it is possible that new regulatory acts may be issued by the authorities, including rules that may be applicable after the end of the pandemic period, also important for the economic recovery.
This article was published in May 2020 (https://www.ahkbrasilien.com.br/publicacoes/newsletter-recht-steuern)