Brazilian Securities and Exchange Commission (CVM) Instruction 586

What is CVM 586?

In order to bring more robustness and transparency to information for Brazilian stock market investors, the Brazilian Securities and Exchange Commission (CVM) published – in June 2017 – Instruction 586, which amends Instruction 480 and introduces new rules for the registration of securities issuers authorized to trade on regulated markets.

The major new development brought by CVM 586 is the obligation for companies to disclose information about the application of the practices set forth in the Brazilian Code of Corporate Governance (CBGC). The new standard follows the "comply or explain" model, where companies are not required to follow CBGC guidelines, but should explain why they have not adopted certain practices.

The main changes brought by CVM 586 are:

The adoption of a new periodical document, the "Brazilian Corporate Governance Code Report", to be filed within 7 months from the end of each fiscal year. The requirement covers category “A” companies which have their shares or depository receipts authorized for trading on the stock exchange;

• The updating of the Report is no longer mandatory when submitting a request for registration of a public offering;
• A substantial increase in the volume of information regarding aspects of corporate governance and compliance to be included in issuers Reference Forms;
• A reduction in the scope of information provided on a company's management structure in the Reference Form, which now requires only information regarding the board of directors and the permanent bodies and committees that report to management;
• The Reference Form shall be updated within 7 business days when there is any change in the administrator, members of the supervisory board, or members of the audit, risk, financial, or compensation committees;
• Mandatory completion of the quarterly information form (ITR) by the board of executive officers, accompanied by a representation from the officers responsible for preparing the financial statements.
  
   

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