Released in 2000, Novo Mercado established since its creation a new and highly differentiated standard in corporate governance. Since the first listing in the Segment, in 2002, Novo Mercado has become the standard in transparency and corporate governance required by investors to new IPOs. It has also become recommended to companies that intend to carry out large offers targeted to any kind of investor (institutional investors, private individuals, foreigners, etc).
In the last decade, Novo Mercado has become a listing segment for trading of shares issued by companies that voluntarily adopt additional corporate governance practices beyond those required by Brazilian legislation. Listing in this special segment entails the adoption of a set of corporate rules that increases shareholders’ rights, as well as enhances the disclosure of policies and the existence of monitoring and control structures.
Novo Mercado leads companies to the higher corporate governance standards. Listed companies in this segment can issue only common voting shares.
Since its creation, Novo Mercado has been revised twice, in 2006 and 2011. Recently, after an extensive work carried out by B3, market participants and listed companies, the new Novo Mercado Listing Regulation was approved by the listed companies in a closed hearing in June, 2017 and was approved by the CVM’s Board of Commissioners on September, 2017. The new listing regulation will come into force on 2nd January, 2017.
Here are some of the Novo Mercado’s rules related to corporate governance structures and shareholders’ rights:
- Share Capital must consist only of common voting shares;
- Same conditions provided to majority shareholders in the transfer of the Company’s Control will have to be extended to all shareholders (100% Tag Along);
- Setting up of Internal Auditing and Compliance department as well as an Audit Committee (Statutory or Non-statutory);
- In case of delisting from Novo Mercado, holding of a Public Tender Offer (PTO) for a fair price, with minimum acceptance quorum of 1/3 of the free float shareholders;
- Board of Directors must be composed of, at least, 2 or 20% of independent directors (whichever is greater), with unified term of office of at most 2 years;
- Listed companies commit to maintain a free float of, at least, 25% or 15%, in case of ADTV (average daily trading volume) above R$25 million;
- Structuring and disclosure of a process of assessment of the board of directors, its committees and the executive officers;
- Elaboration and disclosure of the following policies: (i) Compensation Policy; (ii) Nomination Policy of the Board of Directors, Advisory Committees and Executive Management Board; (iii) Risk Management Policy; (iv) Related Party Transaction Policy; and (v) Securities Trading Policy, with minimum requirements (except for the Compensation Policy);
- Simultaneous disclosure, in Portuguese and English, of Material Information, benefit distribution information and results press releases;
- Mensal disclosure of the negotiations, by the controlling shareholders, with securities issued by the company.