Put Andre Jerusalem and Fernanda Lazzarini – 31/03/2020

At the end of March 30, in an extra edition of the Official Gazette, the President of the Republic sanctioned Provisional Measure No. 931 (“MP”), which extends the holding of Ordinary General Assemblies (“AUG”) within 7 (seven) months from the end of the fiscal year of joint stock companies (SA), thus changing the provisions of article 132 of Law 6,404/1976 (“Corporation Law”), which required the approval of accounts within 4 months after the end of the financial year.

As mentioned in a previous alert called “Shareholders Consult CVM About Postponement of Account Approvals”, the change in question is the result of pressure from the business community, which demanded measures with the aim of alleviating the impacts that the COVID-19 pandemic has caused to the corporate world, since companies that had their financial years ended between December 31, 2019 and March 31, 2020 would not have enough time to obtain the necessary documents to hold the meetings, and in some cases the holding of the meeting itself would be hampered due to the imposition of restrictions on the movement of people.

With this change, the terms of management or performance of the administrators, members of the fiscal council and statutory committees are also extended until the AGM is held or until a meeting of the board of directors is held, as applicable and in accordance with the provisions of the articles of association. In addition, except in the event of a different provision in the articles of association, the board of directors will be responsible for deliberating, subject to subsequent acceptance by the assembly, on urgent matters that would be the responsibility of the AGM, and it will also be possible for the board to declare the dividends provided for in article 204 of the Corporations Law, regardless of any amendment to the articles of association.

With regard to publicly traded corporations, the Securities and Exchange Commission (“CVM”) may extend the deadlines established in the Corporations Law, thus defining the date for submitting the financial statements. In this sense, the CVM also took a position on the matter through the publication of CVM Instructions 848, published on March 25, 2020, and 849, published today, both of which deal with the extension of deadlines provided for in the autarchy's legislation.

The measure to extend the deadlines for meetings by 7 months also extends to limited companies, cooperative societies and entities representing cooperatives, under the same criteria: having the financial year ended between December 31, 2019 and March 31, 2020, with the term being counted from the closing date.

In all cases, there was an exceptional change to their respective laws allowing partners and shareholders to participate and vote remotely, and the CVM may regulate authorization for publicly traded corporations to hold meetings digitally.

It should be noted that the minutes of the meetings must be taken in person to their respective Commercial Boards for archiving. However, due to the shutdowns caused by the coronavirus, many are operating with reduced functions or only remotely. Therefore, the Provisional Measure established that, for the acts subject to archiving signed as of February 16, 2020, the term referred to in art. 36 of Law No. 8,934/1994 will be counted from the date on which the respective commercial board reestablishes the regular provision of its services.

Furthermore, the requirement for prior filing of an act for issuing securities and for other legal transactions is suspended as of March 1, 2020 and the filing must be done at the respective commercial board within thirty days, counting from the date on which the commercial board reestablishes the regular provision of its services.

Measures such as those presented above may reduce the negative impact caused by the shutdown imposed on several sectors due to COVID-19. We are monitoring the measures announced by the government and are available to assist our clients in finding options that benefit their businesses.