The Brazilian Securities Commission (CVM) has submitted to public hearing a draft regulation on the registration of listed companies in Brazil. As proposed, the new regulation would replace rules in place for more than 15 years. Key developments focus on: (i) enhancing the level and quality of disclosure; (ii) creating three different categories for listed companies (there's one at present); (iii) establishing different levels of disclosure for the different categories of listed companies; and (iv) harmonising the rules applicable to listed companies. Investment funds would still be under specific regulation and not be affected by this new development.
The proposed regulation was construed based on the shelf registration system as defined by the International Organisation of Securities Commissions (Iosco) whereby all information regarding the securities issuer will be disclosed through a single document (shelf document), which will be registered with the CVM and updated either on an annual basis or whenever a public offering takes place. In turn, the document presented to investors in order to disclose conditions of securities offerings will be shorter and simpler (offering note).
The three categories of listed companies under the proposed new regulation are: (i) equity issuers/stock exchange; (ii) equity issuers/over-the-counter; and (iii) debt issuers.
Some additional developments are being introduced in accordance with the proposed regulation, such as: (i) disclosure of individual earnings of directors and officers of equity issuers/stock exchange; (ii) automatic registration of public offerings of well-known seasoned issuers; and (iii) prohibition of issue of Brazilian depositary receipts by companies with more than 50% of their income generated in Brazil.
Comments and suggestions can be presented to the CVM before March 30 2009.
José Eduardo Carneiro Queiroz and Alexei Santana Bonamin