Covid-19: Extension for holding annual general meetings and connected obligations
On March 30, 2020, Provisional Measure No. 931 (“MP 931”) was published, which amends provisions of Law No. 10,406, of January 10, 2002, as amended (“Brazilian Civil Code”), of Law No. 6,404, of December 15, 1976, as amended (“Brazilian Corporate Law”) and Law No. 5,764, of December 16, 1971, as amended (“Law 5,764/71”), due to new coronavirus pandemic (“Covid-19”).
Pursuant to MP 931, the following provisions apply to companies (sociedades anônimas) (including government-owned corporations, semi-public companies or its subsidiaries):
(i) the annual shareholders’ meeting may be held within the term of seven (7) months, counting from the end of its fiscal year, for companies which fiscal year ends between December 31, 2019 and March 31, 2020;
(ii) the extension, until the annual shareholders’ meeting to be held in 2020, of the terms of the management, members of the board of auditors and statutory committees to manage or act on behalf of the companies;
(iii) the contractual provisions that require the annual shareholders’ meeting to be held in a period shorter than that determined by MP 931 will be considered to be null and void in the fiscal year of 2020;
(iv) except if otherwise set forth in the bylaws, the board of directors will be responsible for resolving, ad referendum, urgent matters within the competence of the shareholders’ meeting;
(v) the possibility of the board of directors or the officers to declare dividends, until the annual shareholders’ meeting is held;
(vi) the possibility of holding the meeting in a location other than the company’s head offices, provided that it is in the same Municipality and clearly indicated in the call notices; and
(vii) the possibility of participation and remote voting by the shareholder in a shareholders’ meeting.
The following provisions apply to limited liability companies (sociedades limitadas):
(i) the annual meeting may be held within the term of seven (7) months, counting from the end of its fiscal year, for companies which fiscal year ends between December 31, 2019 and March 31, 2020;
(ii) the extension, until the annual meeting to be held in 2020, of the terms of the management and members of the board of auditors to manage or act on behalf of the companies;
(iii) the contractual provisions that require the annual meeting to be held in a period shorter than that determined by MP 931 will be considered to null and void in the fiscal year of 2020;
(iv) the possibility of participation and remote voting by the members in a annual meeting;
The following provisions apply to cooperatives and cooperative representation entities:
(i) the general meeting may be held within the term of seven (7) months, counting from the end of its fiscal year, for cooperatives which fiscal year ends between December 31, 2019 and March 31, 2020;
(ii) the extension, until the general meeting, of the terms of the members of management and supervisory bodies and other statutory bodies;
(iii) the possibility of participation and remote voting by the associate in a general meeting.
MP 931 also contains provisions related to measures restricting the regular operations of the Commercial Boards, due to the Covid-19 pandemic. The corporate documents that were signed as of February 16, 2020 will have a term of thirty (30) days to be filed counted as from the reopening of the Commercial Board correspondent to said documents.
In addition, as of March 1, 2020, the requirement of prior registration with the Commercial Board for the issuance of securities was suspended, and said filing shall be made within thirty (30) days after the reopening of the commercial board correspondent to the document.
Finally, the MP 931:
(i) included article 1080-A in the Brazilian Civil Code, to allow remote participation and resolution within the scope of meetings of limited liability companies, under the terms of the regulations of the National Department of Business Registration and Integration of the Special Secretariat for Digital Debureaucratization, Management and Government of the Ministry of Economy (“DREI”);
(ii) included article 43-A in Law 5.764/71, to allow remote participation and resolution within the scope of meetings of cooperatives and cooperative representation entities, under the terms of the provisions of the DREI regulation;
(iii) amended articles 121 and 124 of the Brazilian Corporate Law to (a) allow participation and resolution, remotely, within the scope of shareholders’ meeting of companies (publicly or privately-held), under the terms of the provisions of the DREI regulation (for privately-held companies) or the CVM regulation (for publicly-held companies) and (b) provide that the annual shareholders’ meeting should be held, preferably, at the company’s head offices building or, for reasons of force majeure, elsewhere, as long as it is in the same Municipality of the head office and if clearly indicated in the call notices, the CVM being able to exception the obligation to held the annual shareholders’ meeting in the same Municipality of the head office, including authorizing the holding of digital meetings.
Likewise, the CVM issued, today, CVM Resolution No. 849, which provides the following measures applicable to publicly-held companies:
(i) extension of the deadline for presentation of the financial statements by up to five (5) months from the end of the fiscal years ended between December 31, 2019 and March 31, 2020;
(ii) extension of the deadline for presentation of the annual report prepared by a trustee, pursuant to article 68, 1st paragraph, item “b” of the Brazilian Corporate Law, for companies that have issued debentures, for six (6) months after the end of the fiscal years ended between December 31, 2019 and March 31, 2020;
(iii) extension, for two (2) months, the deadlines listed below that end or start in the year of 2020:
a. deadline for submission of the registration form;
b. deadline for submission of the annual update of the reference form;
c. deadline for presentation of financial statements, in relation to national issuers;
d. deadline for submission of the standardized financial statements form – demonstrações financeiras padronizadas – DFP; and
e. deadline for presentation of the report on the Brazilian Corporate Governance Code – Publicly-held Companies (Informe de Governança Corporativa).
(iv) extension, for forty-five (45) days, the deadline for presentation of the quarterly information’s form – formulário de informações trimestrais – ITR for the first quarter of the fiscal year of companies with fiscal year ended on December 31, 2019 .
It is worth mentioning that CVM Resolution No. 849 is valid and will only be effective for the year of 2020.
MP 931 is automatically valid and will remain valid for sixty (60) days, which may be extended only once for the same period. After that period, if the MP 931 is not converted into Law, it will cease to have effect and the previous Law will come back into force.
Trench Rossi and Watanabe is available to discuss and help to better understand the regulatory changes underway.
