Launched in 2000, the Novo Mercado has established a highly differentiated corporate governance standard since its inception, becoming the transparency and governance standard required by investors for new IPOs, being recommended for companies that intend to carry out large offerings aimed at any type of investor (institutional investors, individuals, foreigners, etc.).
The Novo Mercado was established as a segment dedicated to the trading of shares of companies that voluntarily adopt corporate governance practices in addition to those required by Brazilian legislation. Listing in this special segment implies the adoption of a set of corporate rules that expand the rights of shareholders, in addition to the disclosure of policies and the existence of inspection and control structures.
The Novo Mercado leads companies to the highest standard of corporate governance. Companies listed in this segment can only issue shares with voting rights, the so-called common shares (ON).
The main rules related to the governance structure and shareholder rights are:
- The capital must consist exclusively of common shares with voting rights;
- In case of sale of control, all shareholders are entitled to sell their shares at the same price (100% tag along) attributed to the shares held by the controller;
- Installation of the Internal Audit area, Compliance function and Audit Committee (statutory or non-statutory);
- In the event of the company’s exit from the Novo Mercado, a public offering for the acquisition of shares (OPA) at fair value, with at least 1/3 of the holders of outstanding shares having to accept the OPA or agree to the exit of the segment;
- The board of directors must include at least 2 or 20% of independent directors, whichever is greater, with a unified term of office of a maximum of two years;
- The company undertakes to maintain, at least, 25% of the shares in circulation (free float), or 15%, in case of ADTV (average daily trading volume) greater than R$ 25 million;
- Structuring and publicizing the evaluation process for the board of directors, its committees and the executive board;
- Elaboration and disclosure of (i) compensation policies; (ii) appointment of members of the board of directors, its advisory committees and statutory board; (iii) risk management; (iv) related party transactions; and (v) trading of securities, with minimal content (except for the compensation policy);
- Simultaneous disclosure, in English and Portuguese, of material facts, information on earnings and press releases of results;
- Monthly disclosure of negotiations with securities issued by the company by the controlling shareholders
Nexpe shares guarantee their shareholders the following rights:
(a) the right to vote at the General Meetings, with each share corresponding to one vote;
(b) the right to the minimum mandatory dividend for each year, not less than 25% of the net income for the period, adjusted according to the terms of Article 202 of the Brazilian Corporate Law;
(c) all other rights guaranteed to shareholders, according to the terms set forth in the B3 Novo Mercado Listing Rules, the Company’s by-laws and the Brazilian Corporate Law, including the payment of full dividends and all other benefits declared by the company from the Date of Liquidation.
The Brazilian securities markets are regulated by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM), which has regulatory authority over the stock exchanges and securities markets registered with it, by the National Monetary Council and by the Central Bank, which have, among other powers, licensing authority over brokerage firms and regulate foreign investment and foreign exchange transactions.
The Brazilian securities markets are governed by the Lei do Mercado de Valores Mobiliários governing the Brazilian securities markets, by the Brazilian Corporate Law (Lei das Sociedades por Ações), and by regulations issued by the CVM, the CMN and the Central Bank. These laws and regulations provide for, among other things, disclosure requirements, restrictions on insider trading and price manipulation and protection of minority shareholder interests. However, the Brazilian securities markets are not as highly regulated and supervised as U.S. securities markets.
Under the Brazilian Corporate Law, a company is publicly held (companhia aberta) if its securities are listed for trading on the stock exchanges, or privately held (companhia fechada), if its securities are not publicly traded. All listed companies must be registered with the CVM and are subject to reporting and regulatory requirements.
A company registered with the CVM may trade its securities either on the Brazilian exchange markets, including the Bovespa, or in the Brazilian over-the-counter market. To be listed on the Bovespa, a company must apply for registration with the Bovespa and the CVM. Shares of companies listed on the Bovespa may not simultaneously be traded at the Brazilian over-the-counter market. The shares of a listed company may also be traded privately, subject to several restrictions.
The Brazilian over-the-counter market, whether or not organized, consists of trades between investors through a financial institution registered with the CVM, and authorized to trade in the Brazilian capital market. No special application, other than registration with the CVM, is necessary for securities of a public company to be traded in the non-organized over-the-counter market. The CVM must be informed by the respective intermediaries of all the trades carried out in the Brazilian over-the-counter market.
Trading of securities on the Bovespa may be suspended at the request of a company before publishing a material fact. Trading may also be suspended on the initiative of the Bovespa or the CVM, among other reasons, based on or due to a belief that a company has provided inadequate information regarding a significant event or has provided inadequate responses to inquiries by the CVM or the Bovespa.
CVM Resolution 44/2021 provides for the disclosure of information about a material act or fact, the trading of securities pending an undisclosed material act or fact and the disclosure of information about the trading of securities:
- establishes the concept of material fact, including any decision of the controlling shareholder, resolution of the general meeting or of the management bodies of the publicly-held company, or any other act or fact of a political-administrative, technical, business or economic-financial nature occurred or related to its business that could significantly influence the (i) price of securities; (ii) investors’ decision to buy, sell or hold such securities; and (iii) investors’ decision to exercise any rights inherent to the condition of holder of securities issued by the Company;
- gives examples of a potentially material act or fact;
- establishes that it is incumbent upon the Investor Relations Officer to submit to the CVM any material act or fact that has occurred or is related to its business and to ensure that it is widely disseminated simultaneously in the markets where the securities are admitted;
- obliges the company to inform by the tenth day of each month the ownership and trades carried out with securities issued by it, by its parent companies or subsidiaries, carried out by its managers and any bodies with technical or advisory functions created by statutory provision;
- stipulates the levels and information that must be informed to the company when acquiring or selling a material stockholding stake;
- obliges the acquirer of controlling interest in a publicly-held company to disclose a material fact, including its intention to deregister as a publicly-held company within one year of the acquisition;
- restricts the use of privileged information.
Pursuant to Article 37 of the Company’s Bylaws, the Company, its shareholders, management and members of the Fiscal Council hereby undertake to resolve by means of arbitration, any and every dispute or controversy that may arise among them, related to or deriving from, and specially due to the application, validity, effectiveness, construal, infringement and its effects of the provisions of the Novo Mercado Listing Rules, the Company’s Bylaws, Law 6,404/76, rules issued by the Brazilian Monetary Council (CMN), the Brazilian Central Bank (Bacen) and the Brazilian Securities and Exchange Commission (CVM), as well as other rules applicable to the operation of the capital markets in general, in addition to those provided for in the Novo Mercado Listing Agreement, and the Market Arbitration Panel Rules, which shall be conducted with the Market Arbitration Chamber provided by the B3, in compliance with the regulations of said Chamber.
Last update: June 21, 2022