Alteration of the term and forms for general meetings and their registration with the commercial registries
Provisional Measure No. 931, dated March 30, 2020 (“Provisional Measure”), amends several provisions of the Brazilian Civil Code and the Corporation Law, with the aim of adapting Brazilian corporate law to the current context of COVID-19 and, consequently, the insulation determinations recommended by public authorities.
The main points addressed by the Provisional Measure are as follows:
i. Approval of Accounts
A company whose fiscal year has ended on December 31, 2019, may hold its ordinary general meeting or shareholders’ meeting for the approval of its accounts until July 31, 2020, instead of March 31, 2020.
For publicly traded companies, it will be up to CVM – Comissão de Valores Mobiliários (the Brazilian Securities and Exchange Commission) to define the date for the presentation of financial statements.
ii. Administration
The terms of office of the members of management (directors, officers, members of the board of directors) are extended, as the case may be, until the companies hold their respective ordinary general meetings and shareholders’ meetings or the respective meeting of the board of directors.
With regard to joint stock companies, unless otherwise provided for in the bylaws and as applicable, the board of directors will be responsible for deciding, ad referendum, on urgent matters that fall under the competence of the general meeting.
iii. Dividends in Corporations
In the case of joint stock companies, the board of directors, if any, or the executive board may, regardless of changes to the bylaws, declare dividends until an ordinary general meeting is held by the company.
iv. Publicly Traded Companies
The CVM may, exceptionally during the 2020 fiscal year, extend the deadlines established in the Brazilian Corporation Law for publicly traded companies.
v. Virtual assemblies and remote participation
An important measure foreseen in the Provisional Measure involves holding virtual general meetings in publicly-held companies, as well as authorizing partners to participate remotely in general meetings and partners’ meetings, in closely-held companies.
In relation to closed companies, the Provisional Measure alters the Brazilian Civil Code and the Corporations Law, in order to authorize the shareholder/partner to participate remotely in assemblies or meetings, in corporations, limited liability companies, and associations. However, this provision is subject to further regulation by the National Department of Business Registration and Integration of the Special Secretariat for Debureaucratization, Management, and Digital Government of the Ministry of the Economy. Note that such a provision already exists for publicly traded companies (listed on the stock exchange).
The great innovation of the Provisional Measure is the authorization of digital meetings for publicly traded companies, i.e. meetings held entirely digitally. Nevertheless, such a forecast must be regulated and authorized by CVM.
vi. Boards of Trade
During the COVID-19 period, in particular of the measures restricting the operation of the commercial boards:
(i) acts subject to filing and signed after February 16, 2020 will retroact to the date of the document if filed with the respective commercial registry within 30 (thirty) days of the date on which the respective commercial registry normalizes the regular provision of its services. It is noted that some commercial registries, which have digital form registrations, continue to function normally.
(ii) the requirement of prior filing for securities issuance and other legal transactions is suspended as of March 1, 2020. The filing of such acts must be made with the respective commercial registry within thirty days, as of the date on which the commercial registry resumes its regular services.
The corporate team of DDSA – De Luca, Derenusson, Schuttoff & Advogados is at your disposal to clarify any doubts or to assist you in any question involving corporate aspects.