Arbitration To Solve Corporate Disputes In Brazil

Law No. 13,129, of May 26, 2015 amends Law No. 9,307, of November 23, 1996 (the Arbitration Law) and Law No. 6,404, of December 15, 1976 (the Brazilian Corporation Law - BCL) and adds a new article 136-A to the BCL to expressly allow the inclusion of an arbitration clause or arbitral convention (convenção de arbitragem) in the by-laws of a company (sociedade anônima) and to make such clause binding upon all shareholders, including those who voted against the inclusion of the arbitration clause, granting the dissenting shareholders the right to withdraw from the company.

The quorum for this type of resolution, which approves the inclusion of an arbitration clause in the company's by-laws, is the one required by article 136 of the BCL, i.e. the approval of shareholders representing at least one-half of the voting shares. A larger quorum may be needed, if this possibility is contemplated in the by-laws, in the case of a company whose shares are not admitted for trading in the stock exchange or in the over-the-counter market.

Pursuant to the provisions of paragraph 2 of article 136 of the BCL, the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM)may authorize a reduction of this quorum in the case of a publicly-held corporation whose shares are widely held and whose last three general shareholders' meetings were attended by shareholders representing less than one-half of the voting shares. In such event, the CVM authorization must be mentioned in the call notices and the reduced quorum resolution may only be passed on the third call.

The withdrawal right (direito de retirada) or refund (reembolso) is regulated by article 45 and respective paragraphs of the BCL. These rules are outlined below.

The refund is an operation whereby, in the cases provided for by law, a company pays a shareholder the value of his/her/its shares, if he/she/it dissents from a decision of a general shareholders' meeting.

The by-laws may establish rules to determine the amount of a refund, which may be less than the net worth of the shares stated in the last balance sheet approved by the general shareholders' meeting, only if the refund value is calculated in accordance with the economic value of the company, which will be determined by proceeding to its evaluation.

If the decision of the general shareholders' meeting is taken more than 60 days after the date of the last approved balance sheet, the dissenting shareholder may demand...