BM&FBOVESPA presents the final proposals on the listing regulation of the Novo Mercado and Level 2 segments to be submitted to the Closed Hearing
The Brazilian Stock Exchange – BM&FBOVESPA – has presented the final proposals on the Listing Regulation of BM&FBOVESPA’s Special Segments (Novo Mercado and Level 2), to be submitted to the Closed Hearing. During this first stage, that ends on May 31st, 2017, listed companies will be able to evaluate and clear up doubts about the new proposals on the respective listing rules; the second stage, called voting period, will take place from June 1st, 2017 to June 23rd, 2017. The 131 companies listed in BM&FBOVESPA’s Novo Mercado segment and the 19 ones listed in the Level 2 segment will be participating in the voting process of the Closed Hearing.
The main topics of the Novo Mercado Listing Regulation to be submitted to the evaluation of the companies are:
- Free float: the Stock Exchange suggests that the company must keep the minimum free float of 25% or 15%, depending on the average daily trading volume or the public offer; in addition to increasing, from 6 to 18 months, the period to restore the free float if the percentage is lower than the minimum set forth in the regulation and if a voluntary tender offer is held, at a fair price, through the transfer of control or acquisition of a significant equity interest;
- Pre-operational: inclusion of a rule that establishes that retail investors are allowed to participate in trading only after that the company discloses a financial statement including its operating income;
- Independent Board members: the company must establish that its Board of Directors is formed by at least 20% or 2 (two) – whichever is greater – independent members, always adopting the roundup method, and also a process to check the independence level of the nominees to become independent members;
- Audit Committee: inclusion of a Statutory Committee in compliance with the CVM Instruction 308, comprised of 1 (one) independent member and 1 (one) expert, with the disclosure of an annual report or, alternatively, a non-Statutory Committee subject to the same rules that apply to the Statutory Audit Committee, with the disclosure of quarterly reports to the Board of Directors; and ban the participation of directors of the company, subsidiaries, controlling company or other companies pertaining to the same business group;
- Corporate Restructuring: in case of transfer of the ownership basis, the resulting companies must request their listing in the Novo Mercado or Level 2 segment (if the restructuring involves resulting companies that do not intend to request their listing in the Novo Mercado or Level 2, the decision about the structure must be taken by the majority of the free float shareholders);
- Delisting: the voluntary delisting from the Novo Mercado segment must be preceded by a tender offer at a fair price; to be approved by 1/3 of the free float shareholders, except when the company’s bylaws establish a quorum above that; in addition, the voluntary delisting procedures must comply with the CVM Instruction 361 (including the possibility of a second appraisal report).
- Acquisition of Significant Share Interest: the company’s bylaws must establish that, when from 20% to 30% (at the company’s discretion) of the share interest is reached, it’s compulsory to make a tender offer based on the highest price paid by the acquirer in the past 6 (six) to 12 (twelve) months (at the company’s discretion). Companies with bylaws that already include protective measures against share dilution or poison pill provisions are exempt from this requirement.
About the Voting Process of the Closed Hearing
The companies listed in the Novo Mercado and Level 2 segments can submit their opinions, via electronic voting, from June 1st, 2017 to June 23rd, 2017, in two parts:
- Part 1 – Voting on the basic listing regulation of the Novo Mercado/Level 2 segment, which includes the rules related to the Free Float, Share Dilution, Board of Directors, Delisting from Novo Mercado/Level 2, Corporate Restructuring, Supervision and Controls, Pre-Operational, Transparency and Simplifications; and
- Part 2 – Opinion about specific rules that, if approved, will become part of the basic listing regulation. The part 2 includes rules related to the Assessment by the Board of Directors, the Environmental and Social Report, 30% mandatory tender offer, and an increase to 50% of the threshold to delist from the Novo Mercado (up from the proposed 1/3 in the basic block).
The changes will be implemented only if no more than one third of the companies listed in the respective segments are contrary to them.
The proposals on the changes to the Novo Mercado and Level 2 Listing Regulation to be submitted to the Closed Hearing, as well as the voting ballot for the listed companies, are available in the Stock Exchange’s website:
Check here the workshop about the proposals on the changes to the Novo Mercado and Level 2 Listing Regulation that are part of the evolution process of the Special Segments
Check here BM&FBOVESPA’s proposal on the evolution of the Special Segments
Evolution Process of the Special Segments
In March, 2016, BM&FBOVESPA started a broad discussion with listed companies and market’s participants about the evolution process of the Special Segments (Novo Mercado and Level 2).
|March 15th to May 16th, 2016
Questionnaire in the Stock Exchange’s website about corporate governance practices.
Open to all stakeholders.
The public hearing will support new discussions and the Stock Exchange’s proposal to the next stage
|June 27th to September 9th, 2016
Proposal on changes to the rules of the Special Segments based on the information collected during the first stage of the debates.
All stakeholders are allowed to participate.
The public hearing will support the final proposal on the changes to the rules.
|Second Stage of the Public Hearing|
|November 7th, 2016 to January 6th, 2017
Proposal on changes to the rules of the Special Segments based on the information collected during the previous stages.
All stakeholders are allowed to participate.
The second stage of the public hearing will support the final proposal on the changes to the rules.
|1st stage – March 15th to May 31st, 2017
Final proposals prepared based on the information collected in the Public Consultation and Public Hearing.
Only the companies listed in the Special Segments participate and express their opinions about the changes to the respective listing rules.
|2nd stage – Voting Period|
|June 1st to June 23rd, 2017|
Amec discussed the topic during the meeting of its Technical Commission held on March 15th, 2017, and will be analyzing it once again during the meeting of its Board of Directors to take place on March 23rd, 2017, to define its public position about it.