According to Corporate Law, Public limited companies are obliged to publish their corporate acts and financial statements in the Official Gazette and in a newspaper with mass circulation at the location of the company's headquarters. By imposing such an obligation, the legislator's intention is to publicize such acts.
Although publicity is given, it is a bureaucratic and costly process. In practice, the publication procedure involves hiring specialized companies, which in turn provide publications in newspapers. As prices are set based on the space occupied in the newspaper, on average, for a company to comply with the legal requirement and publish a general meeting minutes that consolidates its bylaws, for example, it must pay between 10 thousand reais and 20 thousand reais.
In line with the process of reducing bureaucracy that has been carried out in Brazil, the PM 892, published on August 06, 2019, relaxed the rules for publishing documents provided for in art. 289¹ da Corporate Law, without the need for publications in the Official Gazette and in mass circulation newspapers.
Under the Ordinance No. 529 of the Ministry of Economy e CVM Resolution 829, the MP came into effect on October 14, 2019 and, from that date onwards:
- Closed corporations are now required to publish their acts and disclose their information in the Central Balance Sheet (CB) of the Public Digital Bookkeeping System (SPED); It is
- Public companies are now obliged to carry out the publications ordered by the Brazilian Corporations Law. or provided for in CVM regulations in the Empresas.NET System.
During the effectiveness of the MP, publications and disclosures by corporations became centralized, electronic, public and free. Given the easy access and consultation of published acts, the MP began to further reduce information asymmetry.
By eliminating publication costs, the financial benefit for companies was notable, especially for closed corporations, which often do not have large resources available. Furthermore, in the case of closed joint-stock companies, the new rule imposed by the MP now makes it possible for several entrepreneurs to choose this type of company, such as startups, who often fail to make this option before receiving a venture capital investment as a result of the high costs involved.
Although very well liked by corporations, the MP was not even voted on in the plenary sessions of the Chamber and Senate within the legal period of 120 days. Thus, the MP lost its effectiveness and its validity period ended on December 03, 2019.
Consequences of the loss of effectiveness of MP 892
Bearing in mind that the old rule is back in effect, the question that arises for businesspeople who took advantage of the MP window is whether public limited companies should republish acts published electronically and free of charge in the newspapers. Not in principle, but these cases are subject to the discipline of a legislative decree from the National Congress, which can be issued within 60 days after the MP loses its effectiveness.
Considering the suspension of the activities of the National Congress from December 23, 2019 to February 1, 2020, according to §§ 3, 4 and 11 of art. 62 of the Federal Constitution², if the National Congress does not issue the aforementioned legislative decree by March 13, 2020, the legal relationships established and resulting from acts carried out during the term of the MP will remain governed by it. In other words, in this case, the publications of public limited companies made in accordance with the MP between October 14th and December 03rd 2019 would be in accordance with the law.
Not all hopes of public limited companies — and some businesspeople — are lost because, having lost its effectiveness due to the expiry of the deadline, the MP may be reissued by the President of the Republic in the next legislative session³, which is likely to happen, as the President has already expressed himself in this regard.
Finally, it should be noted that, like any legislative initiatives to reduce bureaucracy and tax relief, the MP should be highly regarded by everyone, as they reflect on the country's progress.
Source: Legislation & Markets (Open Capital)
¹Art. 289. The publications ordered by this Law will be made in the official body of the Union or the State or the Federal District, depending on where the company's headquarters are located, and in another newspaper of wide circulation published in the location where the company is located. company headquarters.
- 1st The Securities and Exchange Commission may determine that the publications ordered by this Law are also made in a newspaper with wide circulation in locations where the company's securities are traded on a stock exchange or over-the-counter market, or disseminated by some other means. that ensures its wide dissemination and immediate access to information.
- 2nd If a newspaper is not published in the place where the company's headquarters are located, publication will be carried out in an organ with a large local circulation.
- 3º The company must always make the publications provided for in this Law in the same newspaper, and any change must be preceded by a notice to shareholders in the extract from the minutes of the ordinary general meeting.
- 4º The provisions at the end of § 3º do not apply to the possible publication of minutes or balance sheets in other newspapers.
- 5 All publications ordered by this Law must be filed in the trade registry.
- 6 Publications of the balance sheet and profit and loss statement may be made using thousands of reais as the monetary expression.
- 7º Without prejudice to the provisions of the caput of this article, publicly-held companies may also make the aforementioned publications available via the world wide web.
²Art. 62. In case of relevance and urgency, the President of the Republic may adopt provisional measures, with the force of law, and must immediately submit them to the National Congress.
- 3º Provisional measures, with the exception of the provisions of §§ 11 and 12, will lose effectiveness, from the moment of publication, if they are not converted into law within a period of sixty days, extendable, under the terms of § 7º, once for an equal period, and Congress must National disciplinary, by legislative decree, the legal relations arising therefrom.
- 4º The period referred to in § 3º will be counted from the publication of the provisional measure, being suspended during periods of recess of the National Congress.
- 11. If the legislative decree referred to in § 3 is not issued within sixty days after the rejection or loss of effectiveness of the provisional measure, the legal relations established and resulting from acts carried out during its validity will remain governed by it.
³Art. 62. In case of relevance and urgency, the President of the Republic may adopt provisional measures, with the force of law, and must immediately submit them to the National Congress.
- The reissue, in the same legislative session, of a provisional measure that has been rejected or that has lost its effectiveness due to the expiration of a deadline is prohibited.