Participation And Remote Voting In General Shareholders’ meetings In Brazil

On April 4, 2015 the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM) issued CVM Instruction No. 561 (CVM Instr. 561/2015), that regulates the participation and remote voting in general shareholders' meetings of publicly-held corporations.1

CVM Instr. 561/2105 aims to facilitate the participation of shareholders in general meetings either through the vote or through the submission of proposals, as well as to enhance the corporate governance instruments available in the Brazilian market. The facilitation of the process of voting was a strong demand on the part of both non-resident shareholders (foreign investors) and Brazilian residents (individuals). With the admission of the remote electronic voting CVM answered the questions addressed by these two audiences, finding a relatively simple solution.

For this purpose, this new regulation provides the following:

(a) the creation of a remote voting bulletin through which shareholders may exercise their right to vote prior to the date the general meeting is held;

(b) the possibility of inclusion of candidates and proposals of deliberation of minority shareholders in that bulletin, with due observance of certain percentages of equity interest, in order to facilitate the shareholders' participation in general meetings; and

(c) the deadlines, procedures and ways of sending this bulletin, which may be forwarded by the shareholder: (i) directly to the company; or (ii) to the custodian (if the shares held by the shareholder are kept at a centralized deposit) or to the book-entry agent of the shares issued by the company (if such shares are not kept at a centralized deposit).

The bulletin will have to be available to the shareholders until one month before the date scheduled for the general meeting and the receipt of the bulletin by the company must occur with a maximum of seven days in advance of the meeting.

Initially the bulletin system may only be used in ordinary meetings, both for the vote on the topics on the agenda as to the prior presentation of proposals from shareholders, and also for meetings in which there is election of members of the Audit Committee (Conselho Fiscal) and in certain cases of the Board (Conselho de Administração).

These cases comprise the following situations: (i) when the election is needed by vacancy of most of the offices of the Board; (ii) for vacancy of the office of the Board when the member has been elected for multiple voting; or...