In June 2023, the Executive Branch presented the text of Bill 2,925/23 for analysis by the National Congress, which seeks to amend Law 6,385/76 and Law 6,404/76 (Brazilian Corporate Law). The purpose is to address transparency in arbitration processes and the system for defending the rights of investors in the securities market.
The project is considered a major milestone, considering the possible changes to the Corporate Law. The Bill is pending approval, awaiting an order from the President of the Chamber of Deputies. Once Bill 2,925/23 is approved, it will be up to the CVM (Securities and Exchange Commission) to regulate the changes in detail.
Regarding to the changes proposed for the Brazilian Corporate Law, we list the main points covered in the Bill:
- Publicity in arbitration proceedings: need to publicly disclose arbitration proceedings relating to publicly-held companies;
- Termination of liability actions: expansion of the list of privative matters exclusive to the Shareholder’s General Meeting established in article 122 of the Brazilian Corporation Law to introduce, as a competence of the Assembly, the authorization of transactions aimed at terminating liability actions established in articles 159 and 246 of the 6,404/76 Law. If shareholders representing at least 10% of the voting share capital decide to reject it, the transaction to close liability actions will not take effect;
- Ban of voting by administrators: as proposed in art. 134, II of the Bill, prohibition of voting by administrators, as shareholders or attorneys-in-fact, in deliberations relative to exoneration of liability of administrators and fiscal councilors and filing of liability action;
- Restriction of the exoneration of administrators and fiscal councilors: change to automatic elimination of the exoneration of administrators and fiscal councilors due to liability concerning to the facts that occurred during the exercise of their management, upon approval of the annual financial statements, as set out in art. 134, § 3, of the Bill;
- Filing liability actions: modification of the shareholder legitimacy criteria for proposing liability actions provided for in articles 159 and 246 of the Brazilian Corporation Law, as well as in the case of a liability action filed by a shareholder, the company will not be able to propose independent liability action;
- Rebalancing economic incentives in accountability actions: if the controlling shareholder or administrator is convicted, the proposal to change the premium due as set out in art. 246, § 2 of the Bill, goes from 5% to 20% of the compensation value.