Publications

Category: Litigation

Administrative law has been going through an accelerated change in its paradigms. Once centered on classic (though not always tangible) concepts, such as the supremacy and inalienability of the public interest, the area has been bending to reality: there are facts of life, such as environmental crises and social dynamics, that directly impact on the lives of the entire community. The issues that arise from these facts demand complex answers, which cannot be solved by state impositions, but must be agreed upon among the most diverse segments of society, such as companies, civil society, and third sector entities, among others. This is the case with recent practices related to administrative consensus, whose limits and possibilities are still being defined by public-private interaction.

The concept of a "risk society", whose greatest exponent was the German sociologist Ulrich Beck, is a possible theoretical matrix to explain the change in the classic paradigms of administrative law. For this author, the accelerated technological development that marks our times brings, on one hand, improvements in the quality of life of citizens, but, on the other, it generates risks (especially environmental ones) whose consequences can assume a global scale. The capabilities for mitigating these risks go beyond the traditional attributions of institutions, such as the State, and conventional mechanisms for solving problems, such as the exercise of externalized power by the Public Administration. The production of large-scale consumer goods, the exploitation of nuclear energy, or mining activities deliver goods that are essential to life in society, but they carry potential or actual risks that can equally affect everyone, and with consequences that are not always properly addressed.

In this sense, it is increasingly common for the interests of the State and private parties to be concerted, with the loosening of principles such as the inalienability and supremacy of the public interest, which are classically used as grounds for submission of private parties to the interests held by the State, in order to (in an apparent paradox) maximize the pursuit of the public interest, whether in the prevention of damage (risk management), or in the search for solutions in the event such damage actually occurs (crisis management). The Public Administration loosens its inspection and sanctioning position in search of more participative and managerial roles in the effective solution of problems, especially for phenomena with great environmental and social repercussions.

Consensual action, characterized especially by the signing of bilateral or multilateral agreements that contemplate both the specific interests vested in the Public Administration and the legitimate individual interests protected by the legal system, has been present in the legal system for years, as in the case of Decree Law 3,365/41 (expropriation settlement), Decree 94,714/87 (execution of consent orders), and the micro-system of diffuse and collective rights (consent decrees), but has only recently reached its inflection point.

One example is Law 13,140/2015, which creates a legal framework on the voluntary settlement of conflicts within the Public Administration. It provides for the possibility for the Federal Government and states establishing chambers for the prevention and administrative resolution of disputes between agencies and entities of the Administration or between the Administration and private parties.

In the wake of this development in standards, recent changes to the text of the Law of Introduction to the Norms of Brazilian Law (Decree Law 4,657/42) consolidated the model of consensual control of the Public Administration, through the creation of bilateral mechanisms, such as the signing of "commitments with the interested parties", aimed at legal solutions that are proportional, equitable, efficient, and compatible with the general interests. The conclusion of these settlements has also proven to be an innovative tool in risk management and crisis management, as opposed to traditional litigation measures.

The legal discipline and the adoption of consensual mechanisms in administrative practices show the loosening of a rigidly hierarchical relationship between the Administration and the recipients. The consensual mechanisms for dispute resolution in the repair of major events create a locus for dialogue and the definition of attributions to the private parties responsible for repairing the damage, the needs of the Administration, and the public interest. An interesting example of these practices are the industry agreements for the reverse logistics of solid waste, such as plastic packaging for storing lubricating oil and fluorescent lamps, waste that contaminate water tables, and put the health of the entire community at risk. These agreement modalities reveal the importance of the State's role in defining and monitoring and evaluating the targets, as well as disseminating the settlement and practices to other sectors of society.

The management of large-scale risks demands close and transparent dialog with the other segments involved, in which the negotiation of bold solutions is an effective environmental policy instrument. And for operators of administrative law, whether in the public or private sector, it is essential to develop skills in reading and building dispute resolution scenarios and negotiation techniques in more cooperative and horizontal environments.

Category: Litigation

A pilot project designed to create a cooperation center to reduce the number of bankruptcy and judicial reorganization proceedings in Minas Gerais has been running since February. The initiative will enable greater specialization of judges and public servants and, with this, has the potential to increase productivity and speed up the review of cases in progress in the state,^[1] especially in the processing of business claims, which are admittedly complex.

The project was implemented by Judge Gilson Soares Lemes, chief judge of the Court of Appeals of Minas Gerais (TJMG), and shall be implemented, in a first moment, by the judges of the 1st and 2nd Business Courts in the Judicial District of Belo Horizonte, who will work together in the examination of bankruptcy and reorganization proceedings in progress in the judicial districts of the state. Other matters involving business law will be reviewed by auxiliary judges appointed by the court.

In the second stage, the bankruptcy and judicial reorganization proceedings filed in the state's judicial districts will be transferred to specialized judicial units in Minas Gerais. According to data gathered, there are currently about three thousand bankruptcy and court-supervised reorganization proceedings^[2] awaiting judgment in the 296 judicial districts of the state.

The Judiciary of Minas Gerais had already been implementing measures to make the provision of judicial services more efficient, effective, and accessible to society. Among them is Resolution 977/21, issued by the TJMG on November 16, 2021. The resolution approved the instatement of the 21st Civil Chamber which, together with the 16th Civil Chamber, will be responsible for processing and judging, on an exclusive basis, appeals and incidental proceedings related to:

• business law;
• public records;
• social security law in which the INSS is a party; and
• other matters described in Exhibit II of the aforementioned resolution.^[3]

The measures are in line with the assumptions established in the Justice 4.0 Program, launched by the National Council of Justice (CNJ) in January of 2021. The CNJ's goal is to promote the improvement of judicial policies, including implementation of technological innovations and increase of governance and transparency in the Judiciary.

The creation of courts and chambers specialized in business law has been a practice adopted for years by the Court of Appeals of the State of São Paulo (TJSP) and has helped to make the Judiciary more agile.

An important jurimetric study on the business courts of the judicial district of São Paulo^[4] done by the Brazilian Association of Jurimetrics (ABJ) analyzed more than 300,000 cases filed over three years (2013 to 2015) in the 44 civil courts and two bankruptcy courts of the Central Courts of São Paulo.^[5] In the study, the number of completed cases and the time spent by judges in reaching decisions were surveyed. It was found that bankruptcy and reorganization proceedings demand three times more time for review by the judges than ordinary civil proceedings. Other business claims, such as corporate litigation, demand more than twice as much work time.^[6] This data was used by the TJSP to justify the creation of regional courts specialized in business law in Greater São Paulo.^[7]

The changes promoted by the TJMG also show a willingness to foster the stability of business case law, which is positive and commendable. The increase in legal security and improvement in judicial decisions are intrinsically linked to increase in confidence of citizens, businessmen, and investors, determining factors to boost the local economy.

For all the proposed changes to be implemented, it will be necessary to carefully delimit the matters to be decided by the specialized courts and to determine as clearly as possible the jurisdiction of these bodies. This will avoid the annulment of decisions handed down by incompetent judges and the filing of conflicts of jurisdiction, which would unnecessarily overload the Judiciary.

The TJMG's initiative should be valued because, in the medium and long term, it will meet the constitutional guarantees related to the reasonable duration of the proceeding and the principle of efficiency, provided in article 5, LXXVIII, of the Federal Constitution (FC). We emphasize, however, that for the measure to be more effective, a review of the matters set out in article 3, subsection II, of TJMG Resolution 977/21 should be carried out in order to make some of its provisions clearer and, if necessary, further delimit the jurisdiction of the 16th and 21st Civil Chambers.

^[1] According to the CNJ, 67.5% of Brazilian judicial districts have only one court with no specialization. Furthermore, approximately 65% of the judicial units are courts of general jurisdiction or have exclusive civil or criminal jurisdiction. Source: https://www.cnj.jus.br/wp-content/uploads/2021/11/relatorio-justica-em-numeros2021-221121.pdf – p. 222. Accessed on February 21, 2022.

^[2] Source: https://www.tjmg.jus.br/portal-tjmg/noticias/tjmg-apresenta-projeto-para-dar-celeridade-a-tramitacao-processual.htm#; accessed on February 21, 2022

^[3] As per article 3, subsection II, of the Resolution. Full content: http://www8.tjmg.jus.br/institucional/at/pdf/re09772021.pdf; accessed on February 21, 2022

^[4] Source: https://abj.org.br/cases/varas-empresariais/ Accessed on February 21, 2022.

^[5] Although there is no news of a jurimetry study in the State of Minas Gerais similar to the one developed by ABJ in São Paulo, it can be noted that the productivity indicators of the judges and public servants in TJMG were lower than the national average in 2021. According to the CNJ, the TJMG had 1,471 cases cleared in 2021, while the national average was 1,672. Source: https://www.cnj.jus.br/wp-content/uploads/2021/11/relatorio-justica-em-numeros2021-221121.pdf - pp. 121 and 125. Accessed on February 22, 2022.

^[6] Source: https://abj.org.br/pdf/ABJ_varas_empresariais_tjsp.pdf Accessed on February 21, 2022.

^[7] Source: https://www.conjur.com.br/2019-dez-03/tj-sp-inaugura-varas-empresariais-regionais-grande-sao-paulo Accessed on February 23, 2022.

Category: Capital markets

The Securities and Exchange Commission of Brazil (CVM), in line with the movement to update, consolidate, and simplify the regulatory framework governing the Brazilian capital market that began in 2020, issued, on March 29, 2022, CVM Resolution 80, "which provides for the registration and provision of periodic and one-off  information from issuers of securities admitted for trading in regulated securities markets.” The resolution repeals several previous instructions, the most relevant of which are CVM Instruction 480 (which provides for the registration of securities issuers) and CVM Instruction 367 (which provides for the declaration to be provided by managers of publicly-traded companies upon their election).

With the revocation of ten prior instructions, CVM Resolution 80, in practice, consolidated in a single rule the rules relating to registration and the provision and disclosure of periodic information by issuers of securities, without significant changes to existing obligations. The exception was the institution of a new obligation applicable to publicly-traded companies registered in category "A", concerning the disclosure of information on corporate lawsuits involving the companies themselves, their shareholders, or their officers and directors, as parties.

The creation of this obligation is not new to participants, since the topic was put up for public hearing by the CVM in 2021, in which the agency highlighted the purpose of improving protection mechanisms for investors and minority shareholders, based, among other issues, on OECD recommendations in its report Private Enforcement of Shareholder Rights: A Comparison of Selected Jurisdictions and Policy Alternatives for Brazil, published in November of 2020.

In the reasons set out in the public hearing notice, the CVM contends that the communication duties existing today are not sufficient to give investors in publicly-traded companies adequate visibility on demands involving invested company, which often refer to discussions on issues that may, directly or indirectly, relate to rights dear to shareholders.

The corporate lawsuits that must be disclosed by publicly-traded companies registered in category A are all legal or arbitral proceedings whose prayers for relief are, in whole or in part, based on the corporate or securities market legislation, or on the rules issued by the CVM, provided that such lawsuits involve the companies themselves, their shareholders, or officers and directors and that, alternatively, involve diffuse, collective, or homogeneous individual rights or interests; or in which a decision may be handed down whose effects affect the company's legal sphere or other holders of securities issued by the issuer who are not parties to the lawsuit, such as a lawsuit for the annulment of a corporate resolution, a liability action against an officer or director, and a liability action against a controlling shareholder.

Annex I of CVM Resolution 80 establishes the minimum content that must be disclosed. It comes very close to the content that was already required in relation to material lawsuits, in items 4.3 to 4.7 of the reference form, which include parties to the lawsuit, the amounts, assets, or rights involved, and the main facts.

In addition to the information that would usually already be disclosed, the standard now requires that the following be expressly stated:

• In the case of lawsuits - claims or relief sought, decisions on requests for urgent relief and production of evidence, decisions on jurisdiction and competence, decisions on inclusion or exclusion of parties and judgments on the merits or extinguishing the case without a judgment on the merits, at any level of appeal; and
• In the case of arbitration - submission of an answer, execution of an arbitration agreement, or equivalent document that represents stabilization of the claim, decisions on interim or urgent measures, decisions on jurisdiction of arbitrators, decisions on inclusion or exclusion of parties, and partial or final arbitral awards. In relation to both types of corporate claims, the new obligation requires disclosure regarding the execution of any agreements made in such claims.

The new disclosure obligation does not interfere with the company's analysis regarding the need to disclose the same information by means of a material fact, under the terms of the applicable standard. In other words, regardless of the disclosure provided for in CVM Resolution 80, companies must make their own analysis to assess whether it is necessary to disclose the information by means of a material fact, being exempted from presenting the report, provided that the material fact contains all the information required by the resolution.

CVM Resolution 80 also establishes that the confidentiality obligations provided for in the arbitration chambers' rules should not override compliance with the new regulatory obligation, subject to the legally established rules regarding the confidentiality of such claims.

The disclosure of this kind of information is a controversial topic in itself. On several occasions, this type of claim is dealt with in institutional arbitration bodies that have strict rules regarding the confidentiality of claims. This can even be considered one of the reasons that lead companies to prefer this type of means to manage and solve corporate disputes, given the potential damage that a corporate lawsuit has to the companies' image.

In this regard, the CVM itself took care to include its arguments on the issue of secrecy in the public hearing notice, emphasizing that "the regulations of the clearinghouses cannot contradict legal and regulatory provisions" and "that the disclosure obligations reflect central concerns of the capital market regulations and cannot be set aside by arbitration agreements, rules of arbitration chambers, or by any other convention, subject to the applicable confidentiality limits provided for by law.

Regarding the topic, the statements of the participants, contained in the report of the public hearing which resulted in the creation of the obligation (in the sense that the confidentiality of arbitration also has legal support and that a smaller set of information should be required in confidential claims), already set the tone of the possible discussions regarding the normative conflict between the rules that establish the confidentiality of arbitration claims and the new obligation established by the CVM.

Despite the polemics surrounding the topic, which will certainly still give rise to discussions, CVM Resolution 80 will come into effect on May 2. The application of the new obligation to disclose corporate claims will be compulsory for corporate claims filed as of this date and optional for those initiated before the rule went into effect.

Category: Tax

The federal government published last March 22 three measures to encourage the production of biogas and biomethane, entered into jointly by the Ministry of Environment (MMA) and the Ministry of Mines and Energy (MME).

Decree 11,003/22 instituted the Federal Strategy to Encourage the Sustainable Use of Biogas and Biomethane, with the objective of encouraging programs to reduce methane emissions and promote the use of biogas and biomethane, establishing various guidelines for the sector, such as stimulating the preparation of plans and signing industry agreements; promoting the implementation of technologies that allow the use of biogas and biomethane as sources of energy and renewable fuel; and promoting the implementation of biodigesters, biogas purification systems, and biomethane production and compression systems.

These measures depend on specific regulations by the MMA and MME, but they already open the way for private sector negotiations with the federal government for the structuring of new projects.

Decree 627/GM/MME, of March 17, 2022, included non-associated natural gas and biomethane production projects as eligible for the Special Arrangement of Incentives for Infrastructure Development (Reidi), in accordance with Ordinance 19/GM/MME, of August 16, 2021.

This arrangement has the potential to stimulate new investments and implementation of new projects in the sector, ending the legal uncertainty regarding the application of Reidi and discussions regarding the need to equate operations with biomethane to those promoted with natural gas, already contemplated in the incentive.

The MMA has also instituted the National Program for the Reduction of Methane Emission (Zero Methane), which has among its guidelines fomentation of industry plans and agreements; the incentive to the carbon credit market; and the stimulus to the use of biogas and biomethane.

The program will be coordinated by the Environmental Quality Bureau, in coordination with the MMA's Climate and International Relations Bureau, aiming to develop partnerships with other governmental bodies, the private sector, and civil society for the implementation of its strategic objectives.

The measures are based on Law 14,134/21 (Gas Law), which also included biogas as part of the strategic plan for promoting the natural gas sector. The new Gas Law has authorized regulatory standards that encourage the development of natural gas-related projects to also apply to other types of gas, including biogas arising from the biological decomposition of organic matter.

In this sense, Decree 10,712/21, which regulated the new Gas Law, determines that, for all purposes, biomethane and other gases interchangeable with natural gas should have regulatory treatment equivalent to natural gas.

Category: Institutional

In an unprecedented decision, the 6th Panel of the Superior Court of Justice (STJ) decided, on April 5, that the Maria da Penha Law (Law 11.340/06) applies to cases in which the victims are transgender women. The decision was rendered in the trial of Special Appeal 1,977,124, referring to the case of a trans woman beaten by her own father, who did not accept the fact that she identified with another gender. The woman requested protective measures provided for in the Maria da Penha Law, including the removal of the aggressor from their home.

Although the appeal is not under Repetitive Regimen and, therefore, the understanding is valid only for the case in question, the position of the Supreme Court represents an important advance of the Judiciary System consolidating a more inclusive society.

The Maria da Penha Law came into force in August 2006 aiming at preventing and reducing domestic and family violence against women. Its creation is linked to the emblematic case of a pharmacist from Ceará called Maria da Penha, victim of a double attempt at feminicide by her ex-husband in 1983. Due to the assaults, Maria da Penha ended up becoming quadriplegic. Although her husband was convicted in two trials (in 1991 and 1996), the sentence was not executed due to procedural reasons.

Considering the Brazilian Justice’s neglect, the Inter-American Court of Human Rights convicted Brazil in 2001 of omission and negligence in relation to domestic violence committed against its female citizens. Under pressure,  the arrest of Maria da Penha's husband was finally ordered in 2002, 19 years after the crime was committed, and close to statute of limitations.

Since then, the scope of the Maria da Penha Law has been determined by the state courts of justice, which, as a rule, had been denying transgender women the possibility of using the prerogatives of the law for their protection, claiming that the legislation would not apply to them due to their biological sex.

In the present case, in the first instance, the judge denied the protective measures required because in his interpretation, the expression "gender" would only include female biological sex, and, therefore, it would not apply to the case. In judging the appeal filed by the Public Prosecutor's Office of São Paulo, the Court of Justice of São Paulo upheld the sentence, justifying that "woman" and "man" would be scientific and biological concepts, thus making it impossible to apply the Maria da Penha Law to trans women.

The Public Prosecutor's Office appealed to the STJ arguing that the Maria da Penha Law itself determines that it applies to the female gender and not to the female biological sex. It would therefore be up to the mere literal application of the law, in respect of its article 5, which constitutes as domestic and family violence against women any action or omission based on their gender that causes their death, injury, physical, sexual or psychological suffering and moral or property damage.

In an extremely well-reasoned vote, containing case laws, doctrines, statistical data and explanatory tables, the minister rapporteur of the appeal, Rogério Schietti, discusses the difference between gender, sex and gender identity, establishing as a premise: "a trans woman is in fact a woman".

The minister stressed the existence of transphobia in Brazilian society, emphasizing that Brazil is the record-breaking country in the rates of murders of trans people in the world. The information is confirmed by a study conducted by the National Association of Transvestites and Transsexuals (Antra), according to which at least 140 trans people were murdered last year in Brazil, 135 of them transvestites, numbers that make it the country where the most trans people are murdered in the world for the 13th consecutive year.

In his explanation, the rapporteur also explained that the trial dealt with the "vulnerability of a category of human beings", that cannot be summed up to the objectivity of an exact science. Human existence and relationships are complex, and the Law should not be based on shallow, simplistic and reductionist statements, especially in these times of naturalization of hate speeches against minorities".

To conclude, the Minister stressed that " the preponderance of a purely biological factor is unreasonable in light of what really matters for the incidence of the Maria da Penha Law, with all its protective framework, including jurisdiction to prosecute criminal proceedings arising from crimes perpetrated in situations of domestic, family or affective violence against women".

Following the rapporteur's understanding, the 6th Panel welcomed the appeal of the Public Prosecutor's Office, extending to trans women the application of the Maria da Penha Law and, therefore, its protective measures.

The Decision of the Supreme Court corroborates the constitutional principle of isonomy. It is an example of inclusion and gives new focus to the positioning of Justice in relation to violence against women and trans people. It is expected that this trial will serve as a reference for similar cases and allow trans women to effectively count on the protection of our legal system and Brazil will no longer occupy the shameful leadership among the countries that kill trans people the most in the world.

Sources:

Site Legal Advisor – Conjur: Vote of Minister Rogerio Schietti REsp 1,977,124

STJ website - Maria da Penha Law is applicable to violence against trans women, decides Sixth Class

Dossier Murders and violence against Transvestites and Transsexuals Brazilian in 2021

Law 11,340

Maria da Penha Institute website

Crumbs website: STJ: Maria da Penha Law can be applied for transgender women

Category: Capital markets

The Securities and Exchange Commission of Brazil (CVM) published, on February 24 of this year, the Annual Circular Letter 2022 CVM/SEP, which consolidates the guidelines of the Company Relations Bureau (SEP) to be observed by listed, foreign, and incentivized companies in complying with their regulatory obligations.

With the purpose of clarifying important issues regarding the procedures adopted in the day to day of the companies and in view of the recent changes in the law and regulations in force, the circular brings in updates on topics related to:

• Changing rules for mandatory publications required by Law 6,404/76, as amended (Brazilian Corporations Law);
• Call notices for general meetings;
• Proof of uninterrupted ownership of shares for separate election of board members;
• Explanatory notes and management report;
• Completing the reference form;
• Collection of inspection fee;
• Appeal and payment of punitive fines;
• Digital signature; and
• Queries

Changing rules for mandatory publications

On January 1st of this year, Law 13,818/19, which amended the Brazilian Corporations Law, came into effect. The changes exempt companies from mandatory publication in the Official Gazette and allow corporate acts and financial statements to be published in summary form.

Since the exclusion of the need for publication in the Official Gazette is a disclosure change resulting from a change in the law itself, the SEP believes it is not necessary to observe paragraph 3 of article 289 of the Brazilian Corporations Law, which provides that any change of newspaper must be preceded by a notice to shareholders in the excerpt of the minutes of the ordinary general meeting. Companies need only update their registration form and issue a notice to shareholders to communicate the decision.

Regarding summarized publications, we point out that the financial statements have a minimum content determined in subsection II of article 289 of the Brazilian Corporations Law. In addition, it is important that companies observe CVM Guidance Opinion 39, of December 20, 2021, which details the minimum content of summarized financial statements and indicates the warnings that must be included in the publication.

As far as the other publications, such as the management report, public notices, and minutes are concerned, there is no minimum mandatory content. SEP warns that companies must be careful not to omit or disclose incomplete or inaccurate material information, so as not to mislead investors. The summarized publications must contain a notice that the information provided has been summarized, in addition to indicating the electronic addresses where the documents can be accessed in full (website of a large circulation newspaper, of the CVM, and of B3, if the company is listed).

For more information about the new rules on publications required by the Brazilian Corporations Law, including for privately-held companies, and the guidelines set out in the circular in this regard, we suggest reading this article  published in our Legal Intelligence portal.

Call notices for general meetings

Although the change in the Brazilian Corporations Law allows for general meetings to be called at least 21 days in advance for first call, and 8 days in advance for second call, SEP advises companies to continue to adopt the 30-day advance notice, in order to encourage investor participation.

With this same purpose and with special attention to foreign investors, the SEP recommended that call notices highlight the importance of multiple vote requests being made in advance by shareholders; it also recommended, for companies with significant participation of foreign investors, that documents and information that will serve as support for the meetings be disclosed simultaneously in Portuguese and English.

Proof of uninterrupted ownership of shares for separate election of board members

Under the terms of article 141, paragraph 6, of the Brazilian Corporations Law, only those shareholders who prove uninterrupted ownership of the required shareholding during the minimum period of three months prior to the general meeting may exercise the right to elect a separate member of the board of directors.

Although it is not an obligation attributable to the shareholder by the Brazilian Corporations Law, the SEP, aiming to have companies encourage the participation of shareholders in their meetings and not create formalities that may burden or hinder the exercise of rights by shareholders, believes that:

• the best practice is that companies include in the set of services provided by the bookkeeping agents the control of the confirmation of the uninterrupted ownership of the shares in relation to all items involving the matter (request of separate election and choice of candidates), for the bookkeeping agent to forward to the issuer the information that includes an evaluation of this eligibility requirement;

• in the case of sending a remote voting ballot to the bookkeeper or custodian, the requirement to send documentation to prove uninterrupted ownership of the shares seems to create an unnecessary and onerous formality for the shareholder; and

• as to ballot papers sent directly to the company, in compliance with the provisions of article 21-F, paragraph 1, subsection IV, of CVM Instruction 481, it is incumbent on management to define procedures and formalities that are indispensable to guarantee the integrity of the voting process via ballot paper; any document requirements should not represent unnecessary obstacles to the shareholders' participation in the meetings.

Explanatory notes and management report

In this version of the circular letter, the SEP presented a study on financial statement requirements in applications for publicly-held company registration. The most common requirements were as follows:

• deficient disclosure of accounting policies applied to the company, mainly when it is found that the company mostly stopped at transcribing or paraphrasing the accounting standards, without observing CPC 23 and OCPC 07;
• disclosure of information regarding the relationship with the independent auditors, according to the provisions of article 31 of CVM Instruction 308/99 (currently CVM Resolution 23/21), in the management report;
• aspects concerning the loss of recoverable value of assets ( impairment test), pursuant to item 134 of CPC 01 (R1) and guidelines of item 3 of Circular Letter/CVM/SNC/SEP/No. 01/20);
• disclosure of the reconciliation of information of a non-accounting nature (Ebitda or adjusted Ebitda) in accordance with CVM Instruction 527/12; and taxes on profits, under the terms provided for in CVM Instruction 371/02.

SEP warns already registered companies and issuers in the process of registration to be attentive to correctly disclose the above items in the explanatory notes of their financial statements and management report, as the case may be.

Completing the reference form

Regarding the filing of the FY 2021 reference form, the main additional guidelines are:

• Item 12.6 "e” - Participation of members of the board of directors and the audit committee in meetings held by the respective body: in this item, the information must refer to the participation of officers and directors in meetings held after taking office in their respective positions. Thus, this information should be filled in based on their participation in the meetings that took place after their last election.

• Item 15 - It is not necessary to update the reference form in the event of a change in the number of treasury shares resulting from the execution of a buyback program. However, should the number of shares acquired during the program represent a change in the shareholding levels of 5%, 10%, 15%, and so on, due to the possibility of variation in the percentage of shareholders, we recommend that item 15.1/2 (treasury shares) of the reference form be updated.

• Item 16.2 - Related party transactions: the SEP has reinforced the need to make clear the purpose of related party transactions and the company's interest in maintaining them. In addition, the technical area clarified that, regarding the existing balance of the transactions with related parties (letter "g"), the value stated in this field must correspond to the remainder of the contract (the part that belongs to the related party). The completion of the field "Amount corresponding to the interest of such related party in the deal, if it can be gauged" should take into account that, generally, if the deal is entered directly with the related party, its interest in the deal is 100% of the amount involved, so that this value is repeated. In some cases, the related party may be a "co-interested party" if, for example, it owns part of the leased property. In this case, they should only enter the amount of their interest in the transaction.

Due to the enactment of CVM Resolution 59, which comes into effect in early 2023, the reference form will undergo several changes in its format and structure. We suggest, as a way of preparing for what is to come, reading this article  published in our Legal Intelligence portal.

Collection of inspection fee

Another important point dealt with in the circular concerns the CVM inspection fees, which underwent changes with the enactment of Executive Order 1,072/21.

In general terms, there was an increase in the number of events in which the fee is due, such as when an issuer applies for initial registration and when restricted efforts offerings are carried out without CVM registration. The frequency of the payment of the issuer registration fee, which was due quarterly, has been changed, as has the cap on the fee charged for public offerings of securities.

Below is a summary of the fees:

* Due only when there is no concomitant public offering.

Appeal and payment of punitive fines

Article 16 of CVM Resolution 47/21 states that the decision to impose punitive fines may be appealed to the review board, through the CVMWeb system, within ten days from the date of acknowledgement of receipt of the letter communicating the fine.

The due date of the fine, however, does not change due to the filing of an appeal, since it does not operate as supersedeas. Therefore, the company may choose to: (i) pay the fine on the due date and, if the appeal is granted, request reimbursement from the CVM; or (ii) not pay the fine and, if the appeal is not granted, pay the fine plus charges due to the delay in payment.

On this topic, the SEP also clarified that, as the punitive fines are not to be confused with the penalties provided for in the head paragraph and subsections I to VIII of article 11 of Law 6,385/76, as amended, it is not possible to transform a punitive fine into a warning.

Digital signature

In line with Decree 10,543/20, the circular also contains guidelines regarding the electronic signature of documents that must be forwarded by the CVM's digital filing, which must have an advanced or qualified signature (silver or gold level in the Digital Citizenship Platform.GOV.BR) in the following cases:

• application for registration as a securities issuer, in category A, under CVM Resolution 809/19;

• filing of an appeal from a fine;

• request for confidential treatment of information/documents provided in order to meet requirements made under CVM Instruction 480/09, as amended (article 56, paragraph 3);

• consultations with requests for confidential treatment;

• request for exception to the immediate disclosure of a material fact (article 7 of CVM Resolution 44/21); and

• execution of a consent order with the CVM.

For clarification purposes, advanced signature requires the signatory to use a digital certificate, but this does not necessarily need to be issued by ICP-Brasil (Brazilian Public Keys Infrastructure). An advanced electronic signature may be issued by another means of proving authorship and integrity of documents in electronic form, provided that it is admitted by the parties as valid or accepted by the person to against whom the document is submitted, with the following features:

• be uniquely associated with the signer;
• use data for the creation of electronic signatures whose signatory can, with a high level of confidence, operate under its exclusive control; and
• be related to the data associated with it so that any subsequent modification is detectable. Qualified signatures, on the other hand, necessarily involve the use of a digital certificate issued by ICP-Brasil.

More information about the use of signatures in the federal public administration can be found at the CVM’s website .

Queries

The CVM reinforces in the circular letter that queries from issuers forwarded directly to the e-mail addresses of management or the SEP will only be answered by e-mail if they involve low complexity issues that do not require the involvement of the managers or the superintendent. Other queries must be forwarded via digital protocol so that a specific administrative proceeding can be opened on the subject.