Provisional Measure No. 931/2020 was converted into Law No. 14,030/2020, effective since 29th July 2020, and introduces important provisions for listed and non-listed corporations, limited liability companies, cooperatives, cooperative representation entities, and private legal entities, as further explained below.
It is important to note that certain provisions of Law No. 14,030/2020 are only of temporary application, since they derive from the Covid-19 pandemic, however, others will remain effective even after the end of the pandemic.
Due to the Covid-19 pandemic and pursuant to Law No. 14,030/2020, corporations:
(i) may exceptionally hold their annual general shareholders’ meeting within seven (7) months from the end of their financial year (instead of four months, as provided in the Brazilian Law of Corporations), provided that their financial year ended between 31st December 2019 and 31st March 2020;
(ii) will have the mandates terms of acting management, inspection committee members and other corporate bodies extended until the annual general shareholders’ meeting mentioned in item (i) above is held or until the meeting of the board of directors is held, as may be the case;
(iii) the board of directors will have to deliberate, ad referendum, on urgent matters under the authority of the general shareholders’ meeting, which will be subject to resolution at the first general shareholders’ meeting, except as otherwise provided for in the company’s by-laws.
(iv) the board of directors, if any, or the executive committee, may, regardless of amendment to the company’s by-laws being implemented, deliberate on interim dividends, until the annual general shareholders’ meeting mentioned in item (i) above is held.
With respect to limited liability companies, those whose with financial years ended between 31st December 2020 and 31st March 2020 may exceptionally hold their annual general meeting within 7 (seven) months from the end of the financial year, as well as extend the mandate of members of management and the inspection committee (if one exists), until the annual quotaholders’ meeting is held.
In turn, cooperative companies and cooperative representation entities may exceptionally hold their annual general meeting within 9 (nine) months from the end of their financial year, as well as extend the mandate terms of member of management and supervisory bodies and of other corporate bodies until the first general meeting is held.
The Brazilian Securities Commission (Comissão de Valores Mobiliários – CVM) may exceptionally extend the terms established by the Brazilian Law of Corporations for listed corporations within the 2020 financial year, as well as establish the deadline for listed corporations to submit their financial statements.
Another important change which will remain in effect even after the end of the COVID-19 pandemic, is the possibility of listed and non-listed corporations to hold digital/remote general meetings, as regulated, and that quotaholders of limited liability companies may attend and vote remotely at general meetings, as regulated, pursuant to the established legal rights of attendance and voting and other regulatory requirements.
If in person, the general meeting must be preferably held at the building where the company is headquartered or, for reasons of force majeure, at another venue, provided it is in the same municipality of the company’s headquarters and is clearly indicated in the call notices.
Associations, foundations, and other companies must observe the restrictions to hold physical meetings up to 31st December 2020, pursuant to health regulations of local authorities.
Finally, the extension of up to 7 (seven) months will apply to private legal entities (associations, foundations and other companies not previously mentioned) for them to hold their general meeting and establish the mandate of their members of management by 30th October 2020, including the removal of the members of management and the amendment to their by-laws, by electronic means, regardless of being established in the incorporation acts of legal entities, and expression of participants may occur by any electronic mean indicated by the administrator that ensures identification of participants and voting security and will produce legal effects of a physical signing.