In 2000, B3 introduced three special listing segments, known as the Level 1 and Level 2 Special Corporate Governance Segments and the Novo Mercado Special Corporate Governance Segment, in order to foster a secondary market for securities issued by Brazilian publicly held companies that adopt best corporate governance practices. The listing segments are for shares issued by companies voluntarily undertaking to abide by good corporate governance practices and disclosure requirements in addition to those already imposed by Brazilian law. These rules generally increase shareholders' rights and enhance the quality of the information provided to shareholders.
To be listed on the Novo Mercado, in addition to the obligations imposed by current Brazilian law, an issuer must meet all of the following requirements:
- issue only common shares;
- grant tag-along rights to all shareholders in connection with a transfer of control of the Company, with the acquirer required to hold a stock tender offer for other shareholders at the same price per share paid for the controlling block;
- assure that shares in Triunfo representing at least 25% of its total capital are effectively available for trading;
- adopt offering procedures that favor widespread ownership of shares;
- comply with minimum quarterly disclosure standards;
- adopt stricter disclosure policies with respect to transactions made by the Company's controlling shareholders, board members and officers involving securities issued by the Company;
- submit any existing shareholders' agreements and stock options plans to the B3;
- disclose a schedule of corporate events to the shareholder;
- have a Board of Directors composed of at least five members with a term limited to two years;
- within two years of listing on the Novo Mercado, prepare annual financial statements in English, including cash flow statements, in accordance with international accounting standards, such as U.S. GAAP or International Financing Report Accounting Standards (IFRS);
- adhere exclusively to the arbitration rules of B3, pursuant to which the B3, the Company, the controlling shareholder, management and the members of Fiscal Council, if any, agree to resolve by arbitration any dispute or controversy related to the Novo Mercado listing rules;
- hold public meetings with financial analysts and any other interested third-parties at least once a year to present information regarding its financial and economic position, projects and prospects; and
- if a decision to delist from the Novo Mercado is made, the controlling shareholder must carry out a stock tender offer for all outstanding shares at a minimum price to be established based on a valuation report prepared by a specialized and independent company.
Triunfo stock assures its holders the following rights:
- the right to vote at the Company's Shareholder Meetings;
- the right to the minimum annual mandatory dividend, corresponding to 25% of adjusted net income, in accordance with Article 202 of Brazilian Corporation Law;
- in the event of the direct or indirect divestment for valuable consideration, whether through a single operation or successive operations, the right to sell the shares at the same conditions assured to the selling Controlling Shareholders (100% tag-along rights);
- in the event of cancellation as a publicly traded company or the delisting from the Novo Mercado of the B3, the right to sell their shares in a public offering carried out by the Controlling Shareholders at a minimum price to be established based on a valuation report prepared by a specialized and independent company with proven experience and selected by a meeting of the holders of the outstanding shares based on the triplicate list presented by the Board of Directors, with the costs involved with preparing the valuation report fully borne by the Controlling Shareholders;
- all other rights assured to the shares, in accordance with the regulations of the Novo Mercado of the B3, the Bylaws of Triunfo and Brazilian Corporation Law.
Brazil's securities markets are regulated by the CVM, which has the authority to supervise and issue general rules for governing and administrating the stock exchanges and financial institutions registered at the CVM, which are part of Brazil's securities markets, as well as by the National Monetary Council (CMN) and the Brazilian Central Bank (BACEN), which have, among other powers, licensing authority over brokerage firms and regulate foreign investments and foreign exchange transactions.
Brazil's securities markets are regulated by Securities Markets Law, as well by Brazilian Corporation Law and the regulations issued by the CVM, CMN and BACEN. These laws and regulations provide for, among other things, disclosure requirements, restrictions on insider trading and price manipulation and protection of minority shareholders. However, Brazil's securities markets are not as highly regulated and supervised as U.S. securities markets.
Under Brazilian Corporation Law, a company is either publicly traded if the securities issued by this company are listed on Brazilian securities markets, or privately held if its securities are not listed on Brazilian securities market. All listed companies are registered with the CVM and are subject to reporting and regulatory requirements.
A company registered with the CVM may trade its securities either on the B3 or on the Brazilian over-the-counter market. To be listed on the B3, a company must apply for registration with the B3 and the CVM. Shares of companies listed on the BM&FBovespa may not simultaneously trade on the Brazilian over-the-counter market. Shares of a listed company may also be traded privately, subject to various limitations.
The Brazilian over-the-counter market, both organized and unorganized, consists of trades between investors through a financial institution registered with the CVM and authorized to trade in Brazil's capital markets. No special application, other than the registration with CVM, is necessary for the securities of a corporation to be traded on the unorganized over-the-counter market. The CVM must receive notice of all trades carried out in the Brazilian over-the-counter market by the respective intermediaries.
The trading of securities on the B3 may be suspended upon the request of a company prior to the announcement of a material fact. Trading may also be suspended at the discretion of the B3 or the CVM, among other reasons, due to a belief that a company has provided inadequate information regarding a significant event or has provided inadequate responses to inquiries by the CVM or the B3.
CVM Rule 358 regulates the disclosure and use of information about the material facts or events of publicly traded corporations, as follows:
- establishes the concept of material fact, which includes any decision by a controlling shareholder, any resolution by a general meeting of shareholders or management body of the Company or any other event or fact of a political-administrative, technical, transactional or economic and financial nature occurring or related to the Company's business that may considerably influence (i) the market price of the security; (ii) the investors' decisions on buying, selling or maintaining these securities; and (iii) the investors' decisions to exercise any rights that benefit holders of a company's securities;
- provides examples of a potential material event or fact that include the execution of an ownership control transfer agreement or contract, the inclusion or removal of a partner who maintains a contract or operational, financial, technological or administrative collaboration and incorporation, merger or spin-off involving the Company or its subsidiaries;
- requires the Investor Relations Officer, controlling shareholders, officers, members of the fiscal council and of any other technical or advisory bodies to inform CVM of any material fact;
- requires the simultaneous disclosure of a material fact in all markets where the company has shares listed for trading;
- requires the controlling shareholder of a publicly traded company to disclose material facts, including if they plan to cancel the registration as a publicly held corporation within one year of the acquisition;
- establishes rules for disclosure of the acquisition or sale of a relevant interest in a publicly traded company; and
- limits the use of insider information.
Article 48 of the Company?s Bylaws: "The Company, its shareholders, Managers and members of the Fiscal Council undertake to resolve, by means of arbitration, all and any dispute or controversy that may arise between them, related or coming, specially, from application, validity, effectiveness, interpretation, violation and their effects, of the provisions in the Corporation Law, in the Company?s Bylaws, in the rules edited by the National Monetary Council, by the Central Bank of Brazil and by the CVM, as well as in the other rules applicable to the operation of the capital markets in general, in addition to those of the New Market Regulation, in the Regulation of the Market Arbitration Chamber, and in the Agreement of Participation in the New Market, entered into on June 20, 2007, wherein the Company agreed to meet the special requirements for corporate governance and disclosure of information to the market, established by B3, to qualify for listing in the New Market segment becoming effective on the date of the publication of the Initial Announcement, before the Market Arbitration Chamber, in accordance with its respective Arbitration Regulation."