In 2000, B3 introduced three special listing segments, known as Level 1 and Level 2 Special Corporate Governance Segments and the Novo Mercado Special Corporate Governance Segment. The goal was to create a secondary market for securities issued by Brazilian publicly held companies that follow best practices of corporate governance. The listing segments are intended for shares issued by companies that voluntarily undertake to comply with good corporate governance practices and greater disclosure requirements than those already imposed by Brazilian law. Such rules generally extend shareholder’s rights and improve the quality of the information provided to shareholders.
The Novo Mercado listing requires, in addition to the obligations imposed by relevant Brazilian legislation, compliance with the following requirements (among others):
Triunfo stock assures its holders the following rights:
The Brazilian securities market is regulated by the Brazilian Securities and Exchange Commission (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.
The Brazilian securities market is regulated by the Securities Markets Law, as well by the Brazilian Corporation Law and the regulations issued by the CVM, CMN and BACEN. These laws and regulations provide for disclosure requirements, restrictions on insider trading and price manipulation and protection of minority shareholders, among other things. However, the Brazilian securities market is not as highly regulated and supervised as the U.S. securities markets.
Pursuant to the Brazilian Corporation Law, a company is either publicly traded if the securities issued by this company are listed on the Brazilian securities market, or privately held if its securities are not listed on the Brazilian securities market. All publicly-held companies must be 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. The shares of companies listed on the B3 may not be simultaneously trade on the Brazilian over-the-counter market. The shares of a company listed on the B3 may also be traded privately, subject to several 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 the Brazilian capital market. 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 requires the respective intermediaries to give notice of all the transactions carried out in the Brazilian over-the-counter market.
The trading of securities in B3 may be suspended upon the request of an issuing 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 made by the CVM or the B3.
The CVM Instruction 358 regulates the disclosure and use of information about material facts or events related to publicly-held companies, as follows:
Clause 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 resulting, 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 Novo Mercado Regulation, the Regulation of the Market Arbitration Chamber, and the Novo Mercado Participation Agreement, 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 Novo Mercado 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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