4/29/2022
The Securities and Exchange Comission of Brazil (“CVM”) has, as its main purpose, the supervision, regulation and development of the stock market. In order to fulfill its mission, it is imperative to ensure a careful and effective protection of the investors’ interests, as well as of the economy as a whole.
The proper and timely disclosure of information about public traded companies is essential. Without this, the assessment of current and future conditions of such companies would be much more difficult, hindering decision-making processes.
On the other hand, arbitration is mostly held as the best means to settle corporate and stock market disputes. As a consequence, issues related to transparency and disclosure of infomation naturally affect arbitration proceedings, which are often confidential.
In light of this context, investors become increasingly concerned with the possibility that the confidentiality of arbitration proceedings may prevent them from having access to relevant information that could impact on share prices, for instance.
Thus, with a view to fostering the appropriate disclosure of any disputes that may affect shareholders and investors’ rights, CVM, after the public hearing SDM nº 01/21, in which L.O. Baptista Dispute Resolution Area’ actively participated, issued Resolution nº 80, replacing the Normative Instruction nº 480.
The new Resolution, that will enter into force on 2 May, this year, imposes new obligations for the company’s administrators in case it becomes involved in any dispute[1], such as the disclosure, within seven business days, of: (a) the commencement of the lawsuit/arbitration proceeding, indicating the parties, amounts, assets or rights involved, the main claims and relief sought; and (b) the main procedural events such as the signing of the Terms of Reference, granting of interim measures, issuance of arbitral awards and settlement agreements.
It is important to emphasize that such obligations cannot be waived. As such, arbitral institutions will have to adjust to these new rules in the near future. There is no doubt, however, that investors will greatly benefit from these changes, since they increase legal certainty and boost confidence in arbitration.
L.O Baptista’s Dispute Resolution Team is ready and available to provide clarifications and guidance on the matter.
[1] As per article 1, paragraph 1 of Annex 1 of the CVM’s Resolution: “For the purposes of this document, corporate disputes are any lawsuits or arbitration proceedings which involve claims related, in part or as a whole, to corporate legislation, to the stock market or to CVM’s rules and regulations”.
