Novo Mercado is a listing segment designed for shares issued by companies that voluntarily
undertake to abide by corporate governance practices and transparency requirements
in additional to those already requested by the Brazilian Law and CVM (Brazilian
Securities and Exchange Commission).
It is based on the premise that stock valuation
and liquidity are positively impacted and assured by shareholder’s rights
and by the quality of companies´ information.
The admission to Novo Mercado
implies the compliance with corporate rules, known as "good practices of corporate
governance", which are more rigid than those required by the current legislation
These rules, consolidated in the Listing Regulation, increase shareholder's
rights and enhance the quality of information commonly disclosed by companies. Additionally,
the Market Arbitration Panel for conflict resolution between investors and companies
offers a safer, faster and specialized alternative to investors.
The main innovation
of Novo Mercado concerns the capital stock, which must be solely represented by
common shares (voting shares). In brief, publicly-held companies listed on Novo
Mercado have the following additional obligations:
- Public share offerings have to use mechanisms to favor capital dispersion and broader
- Maintenance of a minimum free float, equivalent to 25% of the capital.
- Same conditions provided to majority shareholders in the disposal of the Company’s
Control will have to be extended to all shareholders (Tag Along).
- Establishment of a two-year unified mandate for the entire Board of Directors, which
must have five members at least, of which at least 20% (twenty percent) shall be
- Disclosure of annual balance sheet, according to standards of the US GAAP or IFRS.
- Improvements in quarterly reports, such as the requirement of consolidated financial
statements and special audit revision.
- Obligation to hold a tender offer by the economic value criteria, in case of delisting
or cancellation of registration as publicly-held company.
- Compliance with disclosure rules in trades involving securities issued by the company
in the name of controlling shareholders.
- Some of these obligations must be approved at the General Shareholders Meetings
and included in the corporate bylaws.