Publications

Bill amending the Corporations and CVM Law is sent to the Chamber

July 11, 2023

By Moema Giovanella

On June 2, the Ministry of Finance submitted to the National Congress for deliberation the text of Bill 2,925/23, which aims to amend both Law 6,404/76 (Corporation Law) and Law 6,385/76 (Securities Market Law and the Securities and Exchange Commission – CVM), aiming to bring transparency to arbitration proceedings and the system of private protection of the rights of investors in the securities market, with the main innovation being the possibility of minority shareholders and debenture holders who may be harmed by unlawful acts of controlling shareholders and administrators having the right to file a collective civil liability action.

The main changes include:

I. Amendments to Law 6,385/76 (Securities Market Law and the Securities and Exchange Commission – CVM)
i. Expansion of supervision: expansion of the CVM's range of powers, with the creation of more instruments for the CVM to instruct processes, including the power of the agency:

ii request a search and seizure warrant from the Judiciary in the interest of an investigation or administrative process;

i.ii. request access to and copies of inquiries and proceedings initiated by other federative entities; and

i.iii. share with monetary and tax authorities access to information subject to confidentiality.

ii. Civil liability: civil liability for losses suffered by investors as a result of action or omission by issuers in violation of the legislation and regulations of the securities market, if fault or intent is proven, will be applicable to:

ii.i. administrators of securities issuers;

ii.ii. controlling shareholders of the issuer, when legislation or regulation directly imposes on them the duty to comply with the rule infringed or when they contribute to the practice of the illicit act;

ii.iii. offerors and coordinators of public offerings for the distribution of securities, as well as offerors and intermediaries of public offerings for the acquisition of securities.

iii. Class actions: change in the criteria for legitimizing investors to file a collective civil action for liability for damages resulting from violations of securities laws or regulations, as well as individual compensation actions.

iv. Advertising in arbitration proceedings: possibility of the statutes, regulations, deeds and instruments of issuance of securities providing that the liability action be decided by arbitration, except that the arbitration proceedings must be public.

II. Amendments to the Corporation Law
i. Publicity in arbitration proceedings: obligation to publicly disclose arbitration proceedings relating to publicly held companies.

ii. Closing of liability actions: expansion of the list of matters exclusive to the general assembly, aiming to include as a competence of the assembly the authorization of transactions aimed at closing liability actions.

iii. Prohibition on voting by administrators: in deliberations on the exemption of administrators and inspectors from liability and on the filing of liability action.

iv. Limitation of the dismissal of administrators and inspectors: change in the rules for dismissal of administrators and inspectors, due to liability in relation to events that occurred during the exercise of their management, eliminating automatic dismissal upon approval of the annual financial statements.

v. Filing of liability actions: change in the criteria for legitimizing shareholders to file liability actions, as well as prohibiting the company from filing an independent liability action, in the event of a liability action filed by a shareholder.

I saw. Rebalancing of economic incentives in liability actions: change in the premium due to the plaintiff by the convicted administrator or controlling shareholder, from 5% to 20% of the compensation amount.

If you have any questions about the topics covered in this publication, please contact any of the lawyers listed below or your usual Mazzucco&Mello contact.

Moema Giovanella

+55 11 3090-9195

moema.giovanella@br-mm.com

This communication, which we believe may be of interest to our customers and friends of the company, is intended for general information only. It is not a complete analysis of the matters presented and should not be considered legal advice. In some jurisdictions, this may be considered lawyer advertising. Please see the company's privacy notice for more details.

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