In Brazil, CVM justifies positions questioned by Amec related to Oi case

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Amec has received a letter from CVM – the Brazilian Securities and Exchange Commission – this month in which the regulator analyses some of the issues questioned by the association in the President Letters 16/2013 and 03/2014. In brief, CVM reports the work developed and that the complaints were not supported by the commission’s decisions. The main points claimed were the following:

  1. Private benefits – CVM reports that SEP – CVM’s Office of the Superintendent of Companies – considered that there was a private benefit, but the regulator rejected the hypothesis;
  2. The actual purpose of the operation was to offset Portugal Telecom for the settlement of Oi controlling shareholders’ debts – CVM claims that “there are not enough elements” for such statement;
  3. Unjustified dilution of minority shareholders – CVM states that “it’s not possible to affirm that such economic dilution [is] unjustified;”
  4. Loss Recovery Policy regarding Executives – Investigations are underway. However, CVM highlights that the policy does not apply “to cases in which the officer does not act according to the company’s interests.” But it did not explain who decides whether directors’ actions are in accordance to company’s interest;
  5. Dividend Payment Policy – CVM says that “it was not possible to identify elements that could corroborate the hypothesis of vote against Oi’s interest”, in view of the payment of excessive dividends to meet the controlling shareholder’s needs;
  6. Withdrawal right – The thesis was supported by SEP, but the regulator decided that the liquidity and dilution of shares concepts applied on the date of the Shareholders’ Meeting that decided on the merger, and not only on the date of the material fact;
  7. Disclosure of information – CVM has established that the wording of the document should be changed, with no punishment to offering shareholders.

CVM highlights that the CVM RJ 2013 10549 process, dealing with some aspects of the screen transaction, is underway.
Click here to read CVM’s answer.
Click here to read the President Letter 16/2013.
Click here to read the President Letter 03/2014.