[Last updated: 1 January 2024, unless otherwise noted]
The transparency principle, which is one of the most important corporate governance principles, is related to the shareholders' meetings. The call for the meetings, as well as their transcription and discussion, are supposed to be disclosed to the shareholders and the market. All shareholders' agreements must also be disclosed to the market and to the interested public. In that regard, the management must undertake the responsibility of taking all non-confidential information to the public, as well as protecting the minority shareholders' rights in important decisions, such as approval of the appraisal report, amendment of the company's purposes, reduction of dividends, mergers and acquisitions and other relevant corporate reorganizations. For instance, a "tag-along right" is institutionalized in the Brazilian law, and most situations that do not comply with this right are criticized by investors.
As discussed above, the company's financial information must be disclosed to the market in each quarter, and, for company's sponsoring Level II or Level III BDR programs, such financial information must be reconciled in accordance with accounting practices adopted in Brazil, as provided in the Brazilian corporate law and also in the IFRS accounting standards, as issued by the IASB and as approved by the CVM for application in the Brazilian market. Moreover, the auditor's opinion will always be necessary for the companies' management, and at least one meeting involving financial analysts should take place in each one-year period.
Level I. As mentioned above, a foreign company whose shares underlie a Level I BDR program, either sponsored or non-sponsored, is not subject to Brazilian securities laws and regulations. The only requirements applicable to this specific type of program concern the necessity of prior registration of the BDR program with CVM and the obligation of the local depositary institution to make the relevant periodical disclosures of information, as already detailed in section 4 above.
Level II or III. On the other hand, a foreign company whose securities trade under a Level II or III BDR program is subject to stricter rules, especially considering the requirement to have the company registered with CVM as a listed corporation. As an immediate consequence of that, such a foreign company is subject to the same requirements relating to the disclosure of information to the Brazilian market as those applicable to domestic corporations.
Effective as of 2017, the CVM imposed a new obligation on publicly-held companies registered under Category A, in which the companies have to publish a report related to best corporate governance practices (Informe sobre o Código Brasileiro de Governança Corporativa – Companhias Abertas). In this, the companies must disclose whether they comply with (fully or partially) the principles and values indicated in the Código Brasileiro de Governança Corporativa or not, explaining why they do not should that be the case.
Finally, in 2023, the CVM issued Resolution No. 193, regarding the drafting and issuance of financial information reports related to sustainability, which must follow the international standard issued by the International Sustainability Standards Board – ISSB. The new rule must be adopted by publicly-held companies, securitization companies and investment funds and its adoption is currently optional, but will become mandatory as of 1 January 2026.