Brazil to Improve Regulations for Proxy Voting

In a bid to improve the market’s accessibility for foreign investors, the Brazilian Securities and Exchange Commission (“CVM”) is holding a public hearing for Brazilian issuers with the purpose of improving the regulations set through the recently implemented Instruction 561 and more specifically, those related to proxy disclosure, regulated by Instruction 481. While during the past proxy season only some of the issuers were required to apply Instruction 561, the CVM is now aiming at engaging all public companies to follow suit.

Glass Lewis has submitted a comment to the CVM for consideration for a public hearing on the matter.

Amendments to the current regulations regarding proxy voting are being discussed with a double purpose:

• Polishing off corporate governance matters; and,
• Minimizing the expenses incurred by remote participation.

The main topics to be discussed are:

• Mandatory disclosure of proxy cards for extraordinary shareholders’ meetings held on the same date of the annual general meeting for all issuers.

All companies are expected to submit proxy cards both for the general and the extraordinary meeting to be held on the same day.

• Inclusion of new candidates appointed after the publishing of the proxy card.

Proxy cards will have to be resubmitted if minority shareholders nominate candidates to the board.

• The term for the inclusion of new candidates on the proxy card is set at a minimum of 22 days before the meeting.

Updated proxy cards with nominees may only be submitted up to 15 days before of the meeting.

• Other proposed amendments:
  • Requesting cumulative voting. In cases where cumulative voting has been requested, shareholders will be able to allocate their votes to the candidates proportionally.
  • Providing an “abstain” option in those cases where it has not been available up to now.
  • Substituting the term “common shares” by “shares with voting rights”.
• Publishing an analytical voting map

This will include: shareholders taking part in the meeting (whether present or remote), their ownership and their votes.