CVM Instruction no. 547, enacted on February 5, 2014 and in effect since March 10, 2014, released publicly-traded companies from the requirement for publishing information on material facts in widely-circulated newspapers, provided that they advertise said information on Web news portals.
In CVM's view, the advertisement of material facts established in article 157 of the Brazilian Corporation Law is not subject to the rule in article 289 of said Law, under which such information should be published in the Official Gazette or any widely-circulated newspaper.
The matter, however, is still controversial and there are arguments pro and against CVM's position.
For some legal scholars and specialists, the advertisement in the press and the publication under the Law represent two different situations, considering that, according to them, both articles 157 and 289 of the Corporation Law concern different alternatives and addressees.
For them, the provision in article 157 of the Corporation Law is intended for the management of publicly-traded companies, who has the duty to advertise in the press material acts and facts that have occurred or are related to the companies' business and may have a significant effect on market investors' decisions on whether to buy or sell securities issued by those companies; on the other hand, article 289 provides for the procedure for legal publications that have to be made by companies during the regular course of their activities.
Another trend, however, considers that articles 157 and 289 of the Corporation Law are complementary. This group's arguments are based on the own Corporation Law.
For the legal scholars and specialists in this group, the legal advertisement procedure has always been that provided for in said article 289 of the Corporation Law and it is valid for all publications required under, or mentioned in, said Law.
It should be pointed out that the Corporation Law does not make any distinction between "advertisement" and "publication" of corporate acts in the press, irrespective of whether those acts are a responsibility of the management or the company.
In this article, we are not evaluating whether the Internet should or should not be considered a valid alternative to disseminate material facts. We are only stating that the matter is controversial and requires attention by those engaged in the Corporate and Capital Market sectors.
Maria Lúcia de Almeida Prado e Silva is a partner and attorney in charge of the Corporate practice at Demarest Advogados
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