The Federal Government enacted yesterday (March 30) the Executive Order 931 (MP 931) in order to reduce the impacts of the Covid-19 pandemic to business companies, cooperatives, government-owned companies, semi-public companies and respective subsidiaries.
Please find below the main changes introduced by MP 931:
a) postponement of the deadline for holding the annual shareholders’ or quotaholders’ meetings. The previous term of four months counted from the termination of the fiscal year of the companies was extended to seven months for companies with fiscal years ending from December 31, 2019 to March 31, 2020;
b) the Brazilian Securities and Exchange Commission may, exceptionally, postpone the deadlines for the financial statements to be presented, as well as other terms provided in Law No. 6,404/76, as applicable to listed companies;
c) the members of the Board of Directors (if applicable) or the Board of Officers of corporations may approve dividends distributions until the annual shareholders’ meeting is held, regardless of any changes to the bylaws in this sense;
d) the Board of Directors was granted the authority to resolve, ad referendum, urgent matters attributed to the authority of the shareholders’ meetings, except if provided otherwise in the bylaws;
e) as a result of the postponement of the deadline for the annual shareholders’ and quotaholders’ meetings:
(e.1) the members of the management and audit council of limited liability companies and corporations shall have their term of office extended until the annual shareholders’ meeting (or Board of Directors’ meeting, as the case may be) or quotaholders’ meeting is held, as applicable;
(e.2) contractual provisions that require annual meetings to be held before the new deadline set forth by MP 931 shall be deemed without effect during the 2020 fiscal year;
f) MP 931 also allows shareholders and quotaholders, as applicable, to attend and vote, remotely, at shareholders’ or quotaholders’ meetings. Such provision is already partially regulated for listed companies by the Brazilian Securities Exchange Commission, but still pends regulation for the other companies, to be issued by the Departamento Nacional de Registro Empresarial e Integração da Secretaria Especial de Desburocratização, Gestão e Governo Digital do Ministério da Economia;
g) considering that the operations of the boards of trade have been restricted as a result of the Covid-19 pandemic, MP 931 provided the following rules applicable during such period:
(g.1) the term for allowing the retroactive effects of corporates acts executed after February 16, 2020 shall be counted as of the date the applicable board of trade resumes the regular rendering of its services. Accordingly, the 30-day period, required for the effects of a corporate act to retroact to its execution date, shall be counted as from the date the services of the board of trade are resumed;
(g.2) suspension of the requirement of prior registration of corporate acts for the issuance of securities and other legal acts, provided that the filing shall be made with the applicable board of trade within 30 days following the date the board of trade resumes the regular rendering of its services.
Upon its enactment, MP 931 was submitted to the Brazilian Congress for approval and conversion into law within a maximum term of 120 days, under penalty of losing its effects.
We will continue to monitor the legislative procedure related to MP 931 and will report further developments.
Dias Carneiro Advogados remains entirely available to clarify any doubts and assist with this matter under discussion.