In 2000, B3 introduced three special listing segments, known as the Level 1 and Level 2 Special Corporate Governance Segments and the Novo Mercado Special Corporate Governance Segment, in order to foster a secondary market for securities issued by Brazilian publicly held companies that adopt best corporate governance practices. The listing segments are for shares issued by companies voluntarily undertaking to abide by good corporate governance practices and disclosure requirements in addition to those already imposed by Brazilian law. These rules generally increase shareholders’ rights and enhance the quality of the information provided to shareholders.
To be listed on the Novo Mercado, in addition to the obligations imposed by current Brazilian law, an issuer must meet all of the following requirements:
Triunfo stock assures its holders the following rights:
Brazil’s securities markets are regulated by the CVM, which has the authority to supervise and issue general rules for governing and administrating the stock exchanges and financial institutions registered at the CVM, which are part of Brazil’s securities markets, as well as by the National Monetary Council (CMN) and the Brazilian Central Bank (BACEN), which have, among other powers, licensing authority over brokerage firms and regulate foreign investments and foreign exchange transactions.
Brazil’s securities markets are regulated by Securities Markets Law, as well by Brazilian Corporation Law and the regulations issued by the CVM, CMN and BACEN. These laws and regulations provide for, among other things, disclosure requirements, restrictions on insider trading and price manipulation and protection of minority shareholders. However, Brazil’s securities markets are not as highly regulated and supervised as U.S. securities markets.
Under Brazilian Corporation Law, a company is either publicly traded if the securities issued by this company are listed on Brazilian securities markets, or privately held if its securities are not listed on Brazilian securities market. All listed companies are registered with the CVM and are subject to reporting and regulatory requirements.
A company registered with the CVM may trade its securities either on the B3 or on the Brazilian over-the-counter market. To be listed on the B3, a company must apply for registration with the B3 and the CVM. Shares of companies listed on the BM&FBovespa may not simultaneously trade on the Brazilian over-the-counter market. Shares of a listed company may also be traded privately, subject to various limitations.
The Brazilian over-the-counter market, both organized and unorganized, consists of trades between investors through a financial institution registered with the CVM and authorized to trade in Brazil’s capital markets. No special application, other than the registration with CVM, is necessary for the securities of a corporation to be traded on the unorganized over-the-counter market. The CVM must receive notice of all trades carried out in the Brazilian over-the-counter market by the respective intermediaries.
The trading of securities on the B3 may be suspended upon the request of a company prior to the announcement of a material fact. Trading may also be suspended at the discretion of the B3 or the CVM, among other reasons, due to a belief that a company has provided inadequate information regarding a significant event or has provided inadequate responses to inquiries by the CVM or the B3.
CVM Rule 358 regulates the disclosure and use of information about the material facts or events of publicly traded corporations, as follows:
Article 48 of the Company?s Bylaws: “The Company, its shareholders, Managers and members of the Fiscal Council undertake to resolve, by means of arbitration, all and any dispute or controversy that may arise between them, related or coming, specially, from application, validity, effectiveness, interpretation, violation and their effects, of the provisions in the Corporation Law, in the Company?s Bylaws, in the rules edited by the National Monetary Council, by the Central Bank of Brazil and by the CVM, as well as in the other rules applicable to the operation of the capital markets in general, in addition to those of the New Market Regulation, in the Regulation of the Market Arbitration Chamber, and in the Agreement of Participation in the New Market, entered into on June 20, 2007, wherein the Company agreed to meet the special requirements for corporate governance and disclosure of information to the market, established by B3, to qualify for listing in the New Market segment becoming effective on the date of the publication of the Initial Announcement, before the Market Arbitration Chamber, in accordance with its respective Arbitration Regulation.”
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