Corporate Governance Practices for Publicly Traded Companies – ICVM 586

On June 8th, 2017, the Brazilian Securities and Exchange Commission“CVM”) published the Normative Ruling No. 586“ICVM 586”), which provides that publicly-held companies – category “A”i.e. authorized to offer shares and securities convertible into shares) shall periodically present to CVM a new form, indicating its adoption of the corporate governance practices set forth in the Brazilian Corporate Governance Code for publicly-held companiesCódigo Brasileiro de Governança Corporativa – Companhias Abertas)“Code”), as published by the Brazilian Institute of Corporate Governance – IBGC.
The ICVM 586 adopts the approach “comply or explain”, which means that the issuer entity is not compelled to adopt the practices suggested by the Code. However, in case it does not comply with them, the company must explain such decision.
The new form becomes mandatoryi) as from January 1st, 2018, to all publicly-held companies that on June 8th, 2017, have at least one type or class of shares listed in IBrX-100 or IBOVESPA indexes; orii) as from January 1st, 2019, to the other issuer entities registered as category “A” and listed in the stock exchange.
Finally, we highlight that ICVM 586 provided two other matters not directly related to corporate governance. It clarified that the obligation to disclose the audit committee’s opinion on the issuer’s financial statementsanother periodic obligation) is applied to both the audit committees set forth in the company’s bylaws and the audit committees created upon decision of the board of directors. Additionally, securities issued by a company listed as category “A” that is currently in pre-operational stage shall only be negotiated in regulated markets for qualified investors.
Candido Martins Advogados is at your disposal in case you need any further information on this matter.