BM&FBOVESPA Begins The Special Corporate Governance Segment’s Development Process - Listed Companies, Investors, Intermediaries, Academics And Market Bodies Have Until May 16 To Participate In The Public Consultation - The First Discussion Stage For The Special Corporate Governance Segment’s Development

BM&FBOVESPA announces today the start of the Special Corporate Governance Segment’s development process. As of now, companies, investors and other market participants may participate in the Public Consultation, which is the first discussion stage regarding enhancement of the Special Corporate Governance Segment. This stage involves answering the questionnaire on the BM&FBOVESPA web portal about corporate governance practices, grouped under subjects such as free float, board of directors, internal controls, transparency and delisting rules.

Special Corporate Governance Segment’s Development Process

After completion of the State-Owned Enterprise Governance Program, BM&FBOVESPA resumed studies to identify the corporate governance best practices in international codes for corporate governance and in other exchanges’ listing rules.

Meanwhile, in order for the Special Corporate Governance Segment’s development process to be widely discussed, BM&FBOVESPA intends to discover the opinions and considerations of companies and market participants about corporate governance practices.

Therefore, a discussion process is foreseen that will involve listed companies and other market participants, divided into three stages: Public Consultation, Public Hearing and Closed Hearing.

Public Consultation

The first phase of the discussion, which starts today and will finish on May 16, 2016, will be carried out through a questionnaire available at web portal with general questions about corporate governance practices.

In this way, listed companies, investors, market bodies and associations, brokers, law firms, academics, consultants and press will be able to answer 38 questions covering topics such as free float, the board of directors, internal controls, transparency and delisting rules. The questionnaire also allows those answering it to express an opinion on other issues, such as the simplification of existing rules, and to propose other suggestions to BM&FBOVESPA.

After the end of the public consultation, BM&FBOVESPA will publish the questionnaire results on a consolidated basis. In addition, the information collected through the questionnaire and workshops will support further discussions and the BM&FBOVESPA proposal to enhance the Special Corporate Governance Segment.

In addition to the questionnaire, during the first phase of discussions BM&FBOVESPA will hold workshops to discuss important corporate governance issues and to obtain other relevant sources of information for the Special Corporate Governance Segment’s development process.

Public Hearing

The second stage of discussion of the Special Corporate Governance Segment’s development process also aims to gather the impressions of market participants and other stakeholders on the proposed amendments to the regulations of the Special Corporate Governance Segments, from the data collected during the first discussion phase.

This phase will take place between June 27, 2016 and September 09, 2016 and all comments received will be published in full.

Closed Hearing

The last stage of the d Special Corporate Governance Segment’s development process - Closed Hearing - will start on November 07, 2016 and will finish on February 06, 2017.

During the Closed Hearing phase, the companies listed in the Special Corporate Governance Segment (Novo Mercado and Nível 2 and Nível 1 corporate governance) will decide on the respective changes to listing regulations.

Changes can only be implemented if not contested by more than 1/3 of listed companies in each of the Special Corporate Governance Segments (Novo Mercado, Nível 2 and Nível 1 corporate governance).

History

The Novo Mercado was established in 2000 as a differentiated listing segment for trading shares issued by companies committed to the adoption of corporate governance practices beyond those required by law. At the same time, Levels 1 and 2 (Níveis 1 and 2) of corporate governance were also created.

The premise for the creation of the special listing segments was that adopting good corporate governance practices permits reduced investor risk perception. The resultant reduced information asymmetry and the additional  rights and guarantees could thus positively influence the valuation and liquidity of shares. To maintain the applicability of this premise, however, the rules must constantly evolve. The rules for the special corporate governance segments were reviewed in 2006 and 2011, and now, five years after their last revision, BM&FBOVESPA is launching new discussions with broad market participation. Currently there are 130 companies in the Novo Mercado, 21 at Nível 2 and 29 at Nível 1.

Please access here the link with the Listing Rules of the Special Corporate Governance Segments.