The Novo Mercado is a listing segment for the trading of shares issued by companies that voluntarily commit to adopting corporate governance practices in addition to what is required by the legislation.
The main innovation of the Novo Mercado is the requirement that a company’s capital must be solely represented by common shares (voting shares). However, companies listed on the Novo Mercado also have the following additional obligations:
» To extend the same conditions obtained by the controllers to all shareholders in case of disposal of control (tag along).
» To hold a tender offer for the acquisition of the entire outstanding stock, paying at least the economic value, if the company goes private or is delisted from the Novo Mercado.
» To have a Board of Directors with a minimum of five (5) members and a joint term of office of up to two (2) years, re-election being permitted. At least 20% of its members must be independent.
» To enhance the quality of information provided by adding consolidated financial statements and cash flow statements to the Quarterly Report (ITR) – a document containing quarterly financial statements submitted by the publicly-held companies to the CVM and the BOVESPA and released to the public;
» To provide further information on the fiscal year by adding other information, including cash flow statements to the Standard Financial Statements (DFPs) – a document containing annual financial statements submitted by the publicly-held companies to the CVM and the Bovespa and released to the public;
» To disclose financial statements pursuant to the IFRS or US GAAP international standards;
» To add the number and characteristics of the securities issued by the company and held by the controlling shareholders, members of the Board of Directors, executive officers and Fiscal Council members, as well as the evolution of said interests to the Annual Information Statement (IAN) – a document containing corporate information statements submitted by the publicly-held companies to the CVM and the Bovespa and released to the public;
» To hold public meetings with analysts and investors at least once a year;
» To present an annual calendar featuring a schedule of corporate events, such as shareholder meetings, disclosure of results etc;
» To disclose the terms of contracts entered into by the company and related parties;
» To disclose information on the trading of the Company’s securities and derivatives by the controlling shareholders on a monthly basis.
» To maintain a minimum free float of twenty-five percent (25%) of the Company’s capital stock.
» To adopt mechanisms leading to capital spread when holding public offerings of shares;
» To resort to the Market Arbitration Chamber to resolve corporate conflicts.
In addition to being included in the Novo Mercado Listing Rules, certain of these obligations must be approved by Shareholders Meetings and included in the company’s bylaws. For further information, please click here.