The Use Of The Internet In Brazil To Disclose Material Events

On February 5, 2014, the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM) issued CVM Instruction No. 547 (CVM Instr. 547/2104), amending CVM Instruction No. 358, of January 3, 2002, that deals with the dissemination and use of information about relevant acts or facts (CVM Instr. 358/2002), and CVM Instruction No. 480, of December 7, 2009, that governs the registry of issuers of securities admitted to trading on regulated securities markets (CVM Instr. 480/2009).

CVM Instr. 547/2014 modernizes the regime for disclosure of information about relevant acts or facts (material events), adapting it to the current days, in which the Internet presents itself as an efficient and affordable means of disseminating news. In summary, the publicly-held corporations are exempted from publishing information about material events in newspapers of mass circulation, provided that such information is disclosed through news portals available on the World Wide Web.

The definition of material events is contained in article 2 of CVM Instr. 358/2002. Material events are any decisions taken by majority shareholders, general shareholders' meetings, or by officers of publicly-held corporations, as well as any other acts or facts of a political-administrative, technical, business or financial nature related to the relevant business that may significantly influence: (a) the market price of the securities issued by the relevant corporation or backed on them; (b) investors' decisions as to buy, sell, or preserve those securities; and (c) investors' decision as to exercise any rights inherent to titleholders of securities issued by the relevant corporation or backed on them.

According to the aforesaid definition, material events may include, but are not limited to: (i) signature of agreements or contracts regarding the transfer of the control of the company, even if under conditional provisions; (ii) changes in the control of the company, including entering into shareholders agreements and any amendment or cancellation thereof; (iii) signature, amendment, or cancellation of a shareholder agreement in which the company takes part in or is an intervenient party, or if such shareholder agreement has been registered in the appropriate book maintained by the corporation; (iv) admission or departure of shareholders maintaining contracts or operational collaboration regarding financial, technological or administrative issues with the company; (v) authorization for listing securities issued by the company in any domestic or foreign market; (vi) decision to go private; decision to promote the cancellation of the publicly-held corporation's register; (vii) amalgamation, merger or split-up involving...