27/01/2021

By André Jerusalem 

In the first half of December 2020, the Brazilian Securities and Exchange Commission (CVM) published a public hearing on the draft of a reform of Instruction 480, of December 7, 2009 (Instruction 480), which is the main normative instruction applicable to publicly-held companies.

Although Instruction 480 has already been subject to several changes and improvements, this instruction is also the focus of criticism, since some requirements make the process of opening up companies' capital extremely costly and bureaucratic, making the capital market accessible only to a few companies.

Thus, the CVM published the public hearing with the aim of reducing such costs and obstacles, since greater access for companies to the capital market is a long-standing demand of the business community and the market as a whole, as well as being part of the CVM's strategic plan, as published from time to time.

One of the main aspects of change suggested in the public hearing is the alteration of the content of the reference form (FR). Currently, this document is the subject of criticism, since the various information required by it is what makes maintaining a company so expensive. Therefore, the CVM's proposal is that some of this information be eliminated, since it is already presented in other public documents, such as those that are already part of the financial statements.

Additionally, another proposal to simplify Instruction 480 is that some of the information will no longer be presented quarterly, as is currently required, and will instead be presented only once during the fiscal year. In addition, a rearrangement of the fields in the reference form was also proposed, with the aim of making the sequence of information more intuitive.

The public hearing also included some aspects related to the provision of information related to environmental, social and governance (ESG) issues, since greater emphasis will be given to (i) the risks related to these issues, as well as companies being required to take a formal position regarding sustainable development objectives in the context of their business, and (ii) presentation of information on diversity in management positions and among employees.

The public hearing is open to comments and suggestions, which should be sent by 3/8/2021 to the email audpublicaSDM0920@cvm.gov.br.