BM&FBOVESPA promotes new workshops on the reform of Novo Mercado

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In addition to the Public Hearing about the reform of Novo Mercado, to be closed on September 9th, 2016, the Brazilian Stock Exchange – BM&FBOVESPA – has been promoting workshops about the topic with the market’s agents. In the edition held in Rio de Janeiro on July 26th, the Association of Capital Market Investors – Amec – was represented by its member Pedro Rudge. In the edition to be held in Sao Paulo on September 2nd, Amec will be represented by its CEO, Mauro Rodrigues da Cunha, and by the association’s vice president Guilherme Vicente.
In the workshop organized by BM&FBOVESPA in Rio de Janeiro, Pedro Rudge had the opportunity to share experiences and opinions about important topics that affect minority shareholders. “It was clear that BM&FBOVESPA is seeking a way to balance the shareholders’ and the companies’ expectations, although the regulator is aware that some issues should be promptly addressed,” Rudge explains. To avoid what happened in 2010, when the proposals on the reform were vetoed by the companies, the Stock Exchange is now focusing on a more comprehensive and consensual debate.
The proposal to change the rule to delist from Novo Mercado is a reflection of that. According to Rudge and based on the debates, the approval by majority votes in shareholders’ meetings is likely to be adopted for the delisting.
The evaluation of board members is another sensitive issue under discussion. Initially, it seems that the topic will be dealt with on a self-evaluation basis as only board members themselves would have access to the contents. The access of shareholders to the evaluations has been discussed and is likely to take place in the future.
Yet about Boards of Directors, Rudge explains that BM&FBOVESPA intends to define the concept of board members with voting rights attached to shares to make the difference between independent and non independent members official.
“It was also clear the intention that all companies listed in Novo Mercado are to formalize a policy on the nomination of board members and make it public,” he explains.
Rudge also reports the Stock Exchange’s intention of including the hypothesis of tender offers when there is an increase in the participation, to be triggered when a shareholder reaches 30% of the company’s capital. In this case, a tender offer would have to be made to the remaining shareholders. “BM&FBOVESPA suggested to consider the highest price paid in the previous 12 months. Representatives of other entities argued that the market’s volatility can eventually distort the values and suggested that the previous 6 months are considered”, Rudge states.
Check out here the explanatory presentation, the notice on the public hearing and the full proposal on the new Rules for the Special Segments.
Find below the stages in the evolving process of Novo Mercado and Level 2:

Public Consultation: 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.
Public Hearing: June 27th to September 9th, 2016
  • Proposal on the change of the Special Segments rules prepared 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.
Restrict Hearing: November 7th 2016 to February 6th, 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.