Corporate Governance

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Regulation of Brazil´s Securities Market

Brazil’s securities markets are governed by the Securities Market Law and the Brazilian Corporation Law, as well as by the rules issued by the Securities and Exchange Commission of Brazil (CVM), the National Monetary Council (CMN) and by Brazil’s Central Bank (BACEN). These laws and regulations provide for, among other things, disclosure requirements, restrictions on insider trading and price manipulation and protection of minority shareholder interests. It is worth noting, however, that the Brazilian securities markets are not as highly regulated and supervised as U.S. securities markets.

In accordance with Brazilian regulations, CVM has authority to oversee and edit general rules concerning the discipline and management of stock exchanges and financial institutions that are part of the Brazilian securities markets, as well as authority over the CMN and BACEN, which have, among other powers, licensing authority over brokerage firms and regulate foreign investment and foreign exchange transactions.

Under the Brazilian Corporation Law, corporations may be (i) publicly-held, with its shares admitted for trading on stock exchange or OTC market, in which case the company must be (and have its securities) registered with CVM, being subject to reporting and regulatory requirements, or (ii) privately-held, with its shares not traded on public exchanges. A company that is registered with CVM is authorized to have its securities negotiated with the public in stock exchanges or OTC market. It is necessary to request registration with B3 S.A. - Brasil, Bolsa, Balcão and CVM in order for a company to have its shares traded on B3. Shares of companies listed on B3 may not be simultaneously trade on the OTC market, but may be traded privately, subject to several limitations.

Both the organized and unorganized over-the-counter markets consist of trades between investors through a financial institution registered with the CVM and authorized to trade in Brazil’s capital markets. No special application other than registration with the CVM is necessary for the securities of a public company to be traded in the unorganized over-the-counter market. The CVM must be notified of all trades carried out on the Brazilian over-the-counter market by the respective intermediaries.

Trading of securities on B3 may be suspended at the request of a company before publishing a material fact. Trading may also be suspended at the discretion of B3 or CVM due to, among other reasons, indications that a company has provided inadequate information regarding a material event or has provided inadequate responses to inquiries by the CVM or B3.

Novo Mercado listing segment of B3

Novo Mercado of B3 is the special listing segment with highest standards of corporate governance in Brazil, comprised solely by issuers of common shares (ON), assuring voting rights for all theirs shareholders.

The Novo Mercado Listing Rules of B3 establish the adoption of corporate governance practices in addition to those required by Brazilian law, including the right of all shareholders to sell their shares for the same price as the controlling shareholders in case of transfer of control, the publication of annual financial reports in accordance with internationally accepted standards, at least 02 or 20% of the members of the Board of Directors must be independent, whichever higher, with unified term of office of up to two years, among others.

Rights of Via Varejo’s Common Shares

Each common share entitles its holder to one (1) vote on resolutions at Annual or Extraordinary Shareholders’ Meetings. In addition, in accordance with the Bylaws and the Brazilian Corporation Law, the holders of common shares are entitled to receiving full dividends or other distributions made in connection with the Company’s common shares proportionally to their ownership interests in the capital stock.

In the event of the Company’s winding-up, Via Varejo’s shareholders are entitled to receive payments proportional to their ownership interest in the Company’s share capital after settlement of all of the Company’s obligations. Shareholders are not obligated to subscribe to future capital increases; however, they enjoy preemptive rights in the subscription of new shares in the proportion of their ownership interests in the capital stock, pursuant to Brazilian Corporation Law.

Disclosure and Use of Information

CVM Instruction 358, which regulates the disclosure and use of information pertaining to material acts of facts of publicly held companies, contains provisions which:
  • establish the concept of a material fact, being included in this definition any decisions made by the controlling shareholders, resolutions of the shareholders’ meeting or of the management bodies of publicly-held company, or any other acts or facts relating to the policy, administration, and technical, business, economical or financial issues related to the company’s business and which may notably influence the (i) price of its securities, or (ii) the decision of investors to trade such securities or (iii) investors’ decisions to exercise any underlying rights of such securities;
  • specify examples of acts or facts that are considered to be material, which include, among others, the signing of agreements for transfer of shareholding control, entry or withdrawal of shareholder having any operational, financial, technological, administrative agreement or collaboration or of amalgamation, fusion or split-off involving the Company and related companies;
  • oblige the investor relations officer, controlling shareholders, other executive officers, members of its board of directors, members of the fiscal council and other advisory boards to disclose material facts to the CVM;
  • require simultaneous disclosure of material facts in all the markets in which the company’s securities are listed;
  • require the acquirer of a controlling stake in the company to publish material facts, including its intentions as to whether or not to de-list the company’s shares within one year of the acquisition;
  • establish rules regarding disclosure of the acquisition or sale of a significant shareholding interest in a publicly-held company; and
  • restrict the use of insider information.


Last Update on December 07, 2018

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