In 2000, the B3 introduced three special trading segments, called Level 1, Level 2 and Novo Mercado, to stimulate companies to follow best practices of corporate governance and to disclosure an additional level of information in relation to that required by legislation in force.
Novo Mercado is a special segment of the B3 stock market, which is a section dedicated to the trading of shares of companies that voluntarily adopt additional corporate governance practices from those required by Brazilian law. The listing in this special segment implies adopting a set of corporate rules that broaden shareholder rights, as well as adopting a more transparent and comprehensive disclosure policy. Below are some Novo Mercado rules related to the governance structure and shareholders’ rights:
- The capital must be composed exclusively of common shares with voting rights;
- In the event of sale of the control, all shareholders are entitled to sell their shares at the same price (100% tag along);
- In the event of de-listing or cancellation of the contract with B3, the company must make a public tender offer to repurchase the shares of all shareholders for the minimum economic value;
- The board of directors must be composed of at least five members, with 20% of independent directors, with a maximum term of two years;
- The company also undertakes to maintain at least 25% of free float;
- Dissemination of more complete financial data, including quarterly reports with cash flow statements and consolidated reports reviewed by an independent auditor;
- The company must make annual financial reports available to an internationally accepted standard;
- Monthly disclosure of negotiations with securities of the company by directors, executives and controlling shareholders;
- Hold a public meeting with analysts and other interested parties, at least once a year, to disclose information about their respective economic and financial situation, projects and perspectives.
Critical analysis by the Board of Directors on defense measures in the Company’s Bylaws
The Company, despite having a controlling group of shareholders, at the time of its follow-on in December 2019, chose to keep the poison pill in its Bylaws, so that the shareholder that acquired 15% or more of participation would make a public offering of shares, as a form of comfort to the Company and shareholders in general that there would be no changes in shareholding control and that, if it happened, the shareholder would not be harmed.
It is worth mentioning that the Company is not insensitive to any criticism of the poison pill and, in particular, to its trigger of 15% of the total capital, which claim that this percentage could be increased, encouraging institutional shareholders, who believe in the Company, to increase its shareholding. Such matter may be discussed again by the Company’s Board of Directors, should there be any interest on the part of any shareholder. However, the objective is to maintain greater liquidity of the Company’s shares.
Thus, until now, the opinion of this Board is to seek to maintain the current status, for the reasons already mentioned, ensuring greater liquidity of shares.
More information on: https://www.b3.com.br/en_us/products-and-services/solutions-for-issuers/listing-segments/novo-mercado/
Marisa’s shares guarantee their holders the following rights:
- The right to vote in Shareholders’ Meetings;
- The right to the minimum mandatory dividend for each fiscal year, equivalent to 25.0% of adjusted net income in accordance with Article 202 of the Corporation Law;
- In the event of sale of the control, all shareholders are entitled to sell their shares at the same price (100% tag along);
- In case of cancellation of company registration or cancellation of listing on the Novo Mercado of B3, the right to sell their shares in a public offer to be made by the Controlling Shareholders, for their respective economic value determined by preparation of an appraisal report by specialized and independent company, with proven experience and chosen by the assembly of Shareholders holding shares in circulation from a triple list submitted by the Board of Directors, and the preparation costs of the appraisal report shall be fully borne by the controlling shareholders;
- All other rights to the Shares, pursuant to the Novo Mercado of B3, the Marisa’s Bylaws and the Corporation Law.
The Brazilian securities market is regulated jointly by the CVM, which has the authority to regulate stock exchanges and the securities market, by CMN and BACEN, which have, among other attributions, the authority to license brokerage houses and to regulate foreign investments and foreign exchange operations. The Brazilian securities market is governed by the Brazilian Corporation Law and by the Securities Market Law, as well as by CVM, CMN and BACEN standards. These laws and regulations determine, among others, disclosure requirements applicable to publicly traded securities issuers, penalties for trading securities using inside information and price manipulation, and protection of minority shareholders. In addition, they regulate the licensing and supervision of the participating institutions of the securities distribution system and the governance of the Brazilian stock exchanges.
Under the Brazilian Corporation Law, a company may be open, such as Marisa, or closed. A company is considered open when it has securities of its issue admitted to trading on the stock exchange or over-the-counter (OTC) market. All publicly traded companies must be registered with the CVM and be subject to obligations to periodically disclose information and relevant facts. A company registered with the CVM may have its securities traded on a stock exchange or in the Brazilian over-the-counter market. The shares of a publicly-traded company may also be traded privately, subject to certain limitations.
The over-the-counter market is divided into two categories: (i) the organized over-the-counter market, in which trading activities are supervised by self-regulatory entities authorized by the CVM; and (ii) non-organized over-the-counter market, in which trading activities are not supervised by self-regulating entities authorized by the CVM. In any case, the OTC operation consists of direct negotiations between people, outside the stock exchange, with the intermediary of a financial institution authorized by the CVM. No special license, other than registration with the CVM (and, in the case of organized over-the-counter markets, in the relevant over-the-counter market) is required for securities of publicly-traded companies to be traded on the over-the-counter market.
The trading of securities on B3 may be interrupted upon request of the issuing company prior to the publication of a material fact. Trading may also be suspended on the initiative of B3 or the CVM, based on, or due to, among other reasons, indications that the issuing company has provided inadequate information regarding a material fact or provided inadequate responses to CVM or by the B3.
Pursuant to CVM Rule # 358, of January 3, 2002, the CVM revised and consolidated the requirements regarding the disclosure and use of information related to material facts and acts of publicly held companies, including the disclosure of information in the trading and acquisition of securities issued by publicly held companies.
Such requirements include provisions that:
- Establish the concept of a material fact that gives rise to reporting requirements. Material facts include decisions made by the controlling shareholders, resolutions of the general meeting of shareholders and of management of the Company, or any other facts related to the Company’s business (whether occurring within the Company or otherwise somehow related thereto) that may influence the price of its publicly traded securities, or the decision of investors to trade such securities or to exercise any of such securities’ underlying rights;
- Specify examples of facts that are considered to be material, which include, among others, the execution of shareholders’ agreements providing for the transfer of control, the entry or withdrawal of shareholders that maintain any managing, financial, technological or administrative function with or contribution to the Company, and any corporate restructuring undertaken among related companies;
- Oblige the officer of investor relations, controlling shareholders, other executive officers, members of its board of directors, members of the audit committee and other advisory boards to disclose material facts;
- Require simultaneous disclosure of material facts to all markets in which the corporation’s securities are admitted for trading;
- Require the acquirer of a controlling stake in a corporation to publish material facts, including its intentions as to whether or not to de-list the corporation’s shares, within one year;
- Establish rules regarding disclosure requirements in the acquisition and disposal of a material stockholding stake; and
- Restrict the use of insider information.
