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The Exemption of Publications of the DFs in the Official Gazettes and the Reduction of Costs for the Companies

The legislative effort to sophisticate and modernize the legal framework that supports corporate law, more specifically that of joint stock companies, regulated by Law 6,404 of 1976 ("Law of Corporations") and ancillary provisions, accentuated during the pandemic reality experienced in 2022,  has lasted for almost two years.

These are the cases, for example, of the enactment of law 14.010/20, which made it possible to hold a general meeting in a virtual or semi-present form, or of the Normative Instruction DREI 81/2020, which details the possibility for Boards of Trade to adopt the digital registration of corporate acts and accept documents electronically signed by third-party systems or signature portals. Before that, however, Law 13,818, of April 24, 2019, was enacted, which has the potential to have a unique impact on the reality of Brazilian companies.

Law 13,818/19 has as its main objective the amendment of articles 289 and 294 of the S/A law. The legal text became effective as of its publication date, but article 1, which amends article 289 of the Brazilian Corporate Law, only came into force on January 1, 2022. And it is precisely the provisions implemented there little that we will discuss in this article, more specifically in the repercussion of the new wording of article 289 of the Brazilian Corporations Law in relation to the publication of financial statements by Brazilian companies.

The old wording of article 289 of the S/A law provided that the publications ordered by the S/A law should be made "in the official organ of the Union or of the State or of the Federal District, according to the place where the company is located and in another newspaper published in the location where the company's headquarters are located" (emphasis added). Such publications included, for example, the documents mentioned in article 133 of the Brazilian Corporation Law (i.e.: management report, financial statements, auditors' opinions), convening notices and corporate minutes.

What did that mean in practice? That, in the specific case of the financial statements, the companies have historically made two full publications of their financial statements and results simultaneously - including the Independent Auditor's report and the opinion of the Fiscal Council, when applicable, as well as the other explanatory notes - in printed form, both in the Official Gazette of the State where they had their headquarters, and in local newspapers.

Faced with the enormous costs that double publication represented for companies, Law 13,818/19 changed the way in which financial results were published, simplifying the procedure and facilitating access to the general public. No information, however, has been mitigated.

The new wording began to define that the publication of the financial statements of the companies must take place "in a newspaper of great circulation published in the place where the company's headquarters are located, in a summarized form and with simultaneous disclosure of the full documents on the page of the same newspaper on the internet", through the authentication of the documents published through digital certification. In other words: the company normally continues to disclose the corporate and financial information required by the S/A law, aiming at transparency to the market, but it will do so with the disclosure of the financial statements (i) in summary form in printed newspapers, (ii) in fully in the electronic version of the same newspaper in which the printed publication occurs, and (iii) without the need for publication in the Official Gazette, since only the local newspaper is sufficient for publication.

With this, the onerous (and, today, obsolete) obligation of publication in the Official Gazette of the Union or of the State that represented a significant portion of the costs incurred in the informational duties of the companies was extinguished.

In the same vein, on December 20, 2021, the Brazilian Securities and Exchange Commission ("CVM") issued Guidance Opinion 39 to give firmer outlines to the new mode of publication and detail the content necessary for the summary publication of the financial statements. With regard to its content, CVM Opinion 39 opts for a very didactic and informative wording, focusing on the clarification of all the provisions that must be complied with by companies when carrying out the simplified publication modality to avoid possible questions about the form of publication that will be adopted.

First, by determination of the Autarchy, it is defined that simplified publications must contain two introductory notices to maintain the health of the information system.

The first of them deals with the indication of the abbreviated nature of the simplified publication, obliging those opting to reproduce the following wording: "Disclaimer: The financial statements presented below are summarized financial statements and should not be considered in isolation for decision making. financial and equity situation of the company requires the reading of the complete audited financial statements, prepared in accordance with corporate law and applicable accounting regulations".

The second mandatory notice informs the public of the electronic addresses where the complete financial statements will be made available: "The complete audited financial statements, including the respective independent auditor's report, are available at the following electronic addresses: a) [Insert the electronic address of the newspaper of mass circulation]; b) [Insert the electronic address of the company, if Company registered in Category A]; c) [Insert the electronic address of the CVM]; d) [Insert the electronic address of B3 in the case of companies listed].

With regard to the content of the publication, the summarized Financial Statements for the fiscal year must be presented together with comparative information on the results of the previous year, in order to represent the company's performance and equity position, disclosing at least: (a) Summary Balance Sheet; (b) Summarized income statement; (c) Summary statement of comprehensive income; (d) Summarized statement of cash flows; (e) Summary statement of changes in equity; and (f) Summary statement of added value.

A summary of the explanatory notes to the Financial Statements must also appear in the summary publication. In this case, comparative disclosure of data from the previous fiscal year is necessary, considering: (a) Brief operational context of the company; (b) Basis of preparation and presentation of financial statements; (c) Changes in accounting practices in relation to the previous fiscal year; (d) Critical and discretionary accounting policies; and (e) Material subsequent events.

Thus, notwithstanding the partial publication of relevant information regarding the results of the fiscal year in question, the CVM ensured that the minimum necessary information is made available in printed form, allowing the public to contextualize simplified information updated with that previously made available and better understanding of the content of the simplified publication. As a form of recommendation, market participants are also encouraged to disclose, in the context of simplified publication, the proposal for the allocation of results for the year, specifying, if applicable, the basis for calculating dividends, including dividends already paid during the fiscal year and the amount of the dividend per share.

Additionally, keeping the character of information simplification, it is possible for companies to publish a summary of the Independent Auditor's report and the opinion of the Fiscal Council, as long as the premise of detailing the summary nature of the report and clearly informing the address electronic access to full versions of documents. The summary report must be based on the full report and must necessarily contain: (i) type of opinion (unmodified or with modification, specifying whether qualified opinion, adverse opinion or disclaimer of opinion); (ii) a summary of the matters that led to changes in the auditor's opinion, if any; (iii) statement on the existence of a report on the complete financial statements; (iv) where the auditor's report is available; and (v) date of issuance of the report. The summary opinion of the Supervisory Board, in turn, must contain, at least, the opinion of the supervisory board on the preparation process and content of the financial statements and the annual management report, always paying attention to the need to indicate a dissenting vote. and other matters considered essential by the fiscal council, when applicable.

Finally, the last recommendation contained in CVM Opinion 39 is that any mention of the terms EBITDA or EBIT and others arising from them must be accompanied by the reconciliation of the values ​​presented, and it is also necessary to align the cross-references with the information contained in the Management Report accompanying the Financial Statements.

In summary, the changes implemented by Law 13,818/19 and complemented by CVM Opinion 39 not only have the potential to positively affect all Brazilian companies with a significant reduction in their informational costs, but also facilitate and simplify access to accounting information for all the market. It is, therefore, under the aegis of the recent reform of institutes of corporate legislation such as the Marco Legal das Startups and the Economic Freedom Act, another example of how the constant modernization and updating of the corporate legal system provides a favorable environment for the growth of the domestic industry and fosters the organic development of so many Brazilian companies at a time that is at least challenging for our economy.

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