Provisional Measure provides for the exercise of the right to vote in meetings and assemblies of partners in times of COVID-19

Provisional Measure No. 931/2020 came into force on 03/30/2020 to, among other measures, extend the deadline for the holding of the annual ordinary conclaves in business companies and allow distance participation of the partners

Provisional Measure No. 931/2020 (“MP 931/2020”) was published on 3/30/2020, which lends itself mainly to dealing with procedural corporate issues affected in the face of the progress of the COVID-19 pandemic.

In addition, the MP in question introduces changes to the provisions of Corporate Law contained in the Civil Code (Law No. 10,406 / 2002 – “CC / 02”), the Brazilian Corporation Law (Law No. 6,404 / 1976 – “LSA” or “Law das SA ”) and the Cooperatives Law (Law No. 5,764 / 1971).

EXTENSION OF LEGAL DEADLINES FOR ORDINARY AND LIMITED MEETINGS OF ORDINARY MEETINGS

MP 931/2020 determines that, exceptionally, the holding of ordinary general meetings / annual meetings may take place, in fiscal year 2020, within the period of seven months from the end of the fiscal year, dispensing with the observation of the legal period of four months . This for anonymous and limited liability companies, whose fiscal year ended between 12/31/2019 and 03/31/2020.

The fiscal year always lasts for 01 (one) year and, although most companies establish their coincidence with the civil calendar – above all for tax reasons – this is not an obligation. The fixing of the fiscal year (the time interval within the civil calendar in which that year will count) is established in the corporate acts of the companies. In the case of corporations, the issue is addressed by art. 175 from the LSA; in the case of limited companies, the articles of association must provide for the closing date of the year, if it does not coincide with the civil calendar.

Both the Brazilian Corporation Law (in its art. 132) and the Civil Code (in its art. 1,078) provide that the ordinary shareholders’ meetings or general assemblies must be held within four months after the end of the fiscal year, for deliberations, in general terms, of the company’s accounts, election of directors and / or directors, when applicable, and allocation of results.

The MP in question determines that the provisions of the company’s articles of association or articles of association that provide for the mandatory completion of ordinary conclaves within a period of less than seven months will be ineffective in 2020.

AUTOMATIC EXTENSION OF MANDATE FOR MANAGEMENT AND MEMBERS OF THE FISCAL COUNCIL AND OTHER STATUTORY COMMITTEES

The Provisional Measure under analysis also establishes that, if the mandates of administrators and members of the fiscal council in limited and limited liability companies end on the date prior to the holding of the annual partner meetings / ordinary general meeting, they will be extended until these conclaves are held. , according to the seven-month period. In S.A., elections may take place, as the case may be, by meeting of the board of directors.

The same applies to members of statutory committees existing in public limited companies.

Therefore, the administrators and the fiscal councilors will remain invested in their positions until the holding, within the extended period of seven months, of the annual general meeting / annual meeting or, as the case may be – for corporations – until the meeting of the board administration.

EXTENSION BY THE COMMISSION OF SECURITIES FOR DEADLINES PROVIDED IN THE LAW OF S.A. FOR PUBLICLY-HELD COMPANIES

MP 931/2020 also opens space, in its art. 3, for the CVM to extend, exceptionally during fiscal year 2020, the deadlines provided for in the Brazilian Corporation Law. Accordingly, the MP determines that the Securities and Exchange Commission (“CVM”) will be responsible for setting the date on which the financial statements publicly-held companies must be presented.

DISTANCE VOTE

In addition to providing for the exceptions mentioned above for the fiscal year 2020 due to the COVID-19 pandemic, MP 931/2020 introduced changes to the Corporate Law, the Civil Code and Law No. 5,764 / 71, regarding the possibility of partners participate and vote from a distance in assemblies.

It should be noted that the Corporate Law already provided for the possibility, in relation to publicly-held companies, of the shareholder participating and voting at a distance at general meetings. The matter was regulated by the CVM through its Normative Instruction 561/15. Referred to IN changed and added points to CVM Normative Instructions 480 and 481, both from 2009.

Law 12.431 / 2011 included a single paragraph in art. 121 of the LSA to provide for the remote participation of shareholders in conclaves, according to rules issued by the CVM. This single paragraph was revoked with MP 931/2020, now under analysis.

The novelty introduced by MP 931/2020 is the provision for the possibility of participation and remote voting by shareholders also of closed companies.Thus, the mentioned single paragraph of art. 121 of the LSA was revoked and was replaced by the new paragraphs 1 and 2, which deal with the possibility of the participation of remote shareholders in the social deliberations in public and private companies, respectively.

The MP in question determines as the competence of DREI – National Department of Business Registration and Integration the regulation of remote voting in relation to privately held companies. The regulation of distance voting in publicly-held companies is, of course, maintained by the CVM.

Furthermore, MP 931/2020 innovates by including art. 1,080-A in the Civil Code, which establishes the same possibility of participation at a distance in conclaves by quota holders of limited companies.

FLEXIBILIZATION OF DEADLINES FOR ARCHIVING CORPORATE ACTS IN TRADE BOARDS

Art. 36 of Law No. 8,394 / 94 (Public Records Law), as is known, establishes that corporate acts must be submitted to the competent Commercial Board within 30 days of their signature, so that they take effect from when signed. If presented after this period, they will take effect only after registration.

With the pandemic of COVID-19, several public services are paralyzed, as is the case of the Commercial Boards, and it is not possible to file corporate acts.

Thus, the MP in reference has a provision that determines that, while the restrictive measures for the normal operation of the Commercial Boards resulting from the pandemic of COVID-19 last, the period of 30 days provided for in the Public Records Law will be counted (with regarding documents signed as of 02/16/2020) from the date on which the respective Commercial Board reestablishes the regular provision of its services.

In addition, item II of art. 6 of MP 931/2020 indicates that the requirement for prior filing of acts for the issuance of securities (as well as for other legal transactions) has been suspended since 03/01/2020, and the filing should be done when the services of the competent Commercial Board (within 30 days).

EXPIRY DATE OF MP 931/2020

It is worth mentioning that any and every MP produces immediate effects with force of law, but, in order to be definitively converted into ordinary law, it needs to be considered in the two Houses of the National Congress (Chamber and Senate).

An MP has an initial term of 60 days, which will be automatically extended for an equal amount of time, if its vote has not been completed in the two Houses of Congress.

If it is not converted into law, the Provisional Measure loses its effectiveness. Within the next few months, the end of the MP 931/2020 will be verified.

COOPERATIVE SOCIETIES

Finally, it should be noted that MP 931/2020 also provides for exceptions and innovations for cooperative societies (and cooperative representation entities), which are similar to those applicable to public limited companies and limited liability companies, discussed above.

It is also foreseen to extend the deadline for the holding of the annual general meeting also to seven months from the end of the fiscal year (the difference is that the legal term for the realization of the AGM of the cooperatives is three months and not four as in SA and limited companies – ref. Article 21, I, of Law No. 5,764 / 1971).

And there is also an amendment to Law No. 5,764 / 1971, to provide for the possibility of distance participation of members in general assemblies.