In force since May 2, 2022, the Brazilian Securities and Exchange Commission’s (Comissão de Valores Mobiliários – CVM) Resolution 80/22 consolidates and updates the capital market’s main regulatory standards on the mandatory disclosure of information by issuers under its supervision – i.e. distributors of securities admitted to trade in markets regulated by the agency.

One of the main novelties brought by Resolution 80/22 is the duty to disclose corporate disputes. This requirement is provided for in item XLIII of article 33 of the Resolution, which lists the information that may be provided by companies registered under category “A” (issuers authorized to trade any securities in the market regulated by CVM). This includes confidential arbitration proceedings, as provided in Annex I of Resolution 80/22.

Even before it was approved, the new rule had already been generating much debate within the legal community, due to its possible impacts on the confidentiality of arbitration proceedings, considered one of the greatest advantages of arbitration by its users.

If, on the one hand, publicly-listed companies’ activities are governed by the general rule of transparency and the duty to inform – ensuring the broad, adequate, and timely disclosure of relevant information to investors – on the other hand, confidentiality ensures the protection of sensitive information and has been applied practically automatically in corporate arbitrations involving publicly-listed companies.

The issue of making the confidentiality of arbitration proceedings compatible with the duty to inform is especially relevant in Brazil, because it is one of the few jurisdictions in which arbitration has become the prevalent method for resolving corporate disputes involving publicly listed companies. In fact, arbitration is mandatory for companies listed in B3’s special listing segments.

Context in which CVM’s Resolution 80/22 was enacted

CVM’s former Instruction 480/09 (ICVM 480/09) already provided, in its Annex 24 (item 4.3 et seq.), that companies registered under category “A” should disclose, in their annual reference forms, the existence of any information that may be relevant for investors about judicial, administrative, or arbitral proceedings that were not under secrecy and to which the issuer or its subsidiaries were party.

With regard to confidential proceedings, item 4.5 of Annex 24 provided that the issuer should only “analyze the impact in case of loss and disclose the amounts involved” (emphasis added).

Subsequently, CVM’s Instruction 590/17 (ICVM 590/17) included the duty to disclose the initiation of arbitrations that could affect the economic and financial situation of the company in the non-exhaustive list of material facts subject to disclosure (article 2, sole paragraph, item XXII of the current CVM Resolution 44/21).

With the intention of expanding the scope of disclosure, in February 2021, CVM presented a proposal to amend ICVM 480/09 to the market, through which it stated its intent to provide investors with greater visibility of disputes (directly and indirectly) involving the issuer.

The proposal, which was the subject of extensive debate in a public hearing (see article on the Public Hearing 01/21 held by CVM’s Superintendence of Market Development – SDM), culminated in the approval of Resolution 80/22, which:

  • establishes the duty to disclose corporate disputes for companies registered in category "A" and foreign companies;
  • defines the term corporate disputes (demandas societárias), which are subject to disclosure (see article that details the scope of the term corporate disputes); and
  • sets out guidelines for such disclosures, listing the information on corporate disputes that must be divulged by the regulated issuers and the applicable deadlines.

On May 13, 2022, as Resolution 80/22 came into force, CVM's Superintendence of Corporate Relations also released Circular Letter 3/2022-CVM/SEP, informing publicly-listed and foreign companies about the duty to disclose corporate disputes that fall under the scope of Annex I of Resolution 80/22.

These disclosures should be made through CVM’s “Sistema Empresas.NET” channel, under the category “Disclosure on Corporate Disputes” (“Comunicação sobre Demandas Societárias”).

New rules on the disclosure of arbitration proceedings

in its Annex C, CVM’s Resolution 80/22 restates the guidelines that were formerly set out in ICVM 480/09 on the disclosure of judicial, administrative, or arbitral proceedings to which the issuer or its subsidiaries are party. However, in its Annex I, the Resolution also establishes new duties to disclose more detailed information, directed especially at arbitral proceedings.

article 1, paragraph 2, of Annex I of the Resolution is especially relevant when it comes to discussing the relativization of confidentiality in arbitration proceedings, as the referenced provision establishes that the confidentiality imposed by arbitration agreements and/or the rules of arbitral institutions does not exempt companies from disclosing all of the information required by Resolution 80/22.

In light of this provision, there is no doubt that, even when parties expressly opt for confidentiality in their proceedings – via the underlying arbitration agreement or by selecting the rules of arbitral institutions that establish confidentiality as a rule –, the duty to disclose any and all information that falls within the scope of Resolution 80/22 shall prevail. The only information exempted from disclosure by Resolution 80/22 is that which is expressly classified as confidential by law.

Article 2 of Annex I lists the basic information that must be provided about the initiation of arbitration proceedings and the developments of such proceedings.

In this sense, the Resolution provides that, once the initiation of the arbitration proceeding has been disclosed, companies must (within seven working days from the submission of the notice of arbitration or its receipt), also disclose:

  • the parties involved;
  • the amounts, assets or rights involved;
  • the main facts relevant to the dispute; and
  • the claims presented.

The following developments over the course of the dispute must also be disclosed, always within seven working days from date on which the party becomes aware of them:

  • the submission of an answer to the request for arbitration;
  • the execution of the terms of reference, or the equivalent document indicating the definitive claims made in the proceeding;
  • the issuance of decisions on requests for injunctive relief, arbitrators’ jurisdiction, the joinder or exclusion of parties; and
  • the issuance of partial or final arbitral awards.

Finally, in the event that the parties to the dispute execute a settlement agreement over the course of the proceeding, this information must also be disclosed within seven working days from the submission of the executed settlement agreement (presumably, to the arbitrators), with an indication of the amounts and the parties involved and “other aspects that may be of interest to the shareholders” (item IV of article 2).

It is worth noting, however, that the wording of the header of article 2 – “[t]he issuer shall disclose to the market relevant information relating to dispute, including: [...]” (highlighted) – suggests that this is the minimum information to be disclosed.

Therefore, it remains at the discretion of the company’s investor relations officers/legal representatives to disclose additional information related to ongoing corporate arbitration proceedings, in addition to those mandatory disclosures expressly listed in article 2.

Regarding the compatibility of the new rules for the disclosure of information related to corporate disputes with the existing rules that regulate the disclosure of information about material facts to the market and investors, CVM’s Resolution 80/22 recognizes that, if the existence of corporate disputes or the developments of such disputes constitute a material fact under the existing applicable regulation, the company is allowed to disclose only the notice of the occurrence of a material fact, provided that such notice contains all of the information required by Resolution 80/22 (§4 of article 1 of Annex I).

The terms of the sole paragraph of article 2 are also noteworthy, as this provision dispenses the submission of the entire content of the documents cited in Annex I by the company, while the proposal originally submitted by the CVM for discussion in a public hearing left doubts about the need to disclose full copies of the relevant procedural documents – which would possibly exceed what is necessary for investors to make informed decisions.

The new rules are mandatory in relation to corporate disputes initiated after the Resolution 80/22 entered into force and optional for those disputes initiated previously.

It is expected that, with the new obligations to disclose corporate disputes, CVM’s objectives will be met – that is, that investors of companies subject to these rules will have access, in an adequate and timely manner, to information on corporate disputes that may influence their decisions.

Regarding the potential impacts of CVM’s new guidelines on the choice of arbitration as a venue for the resolution of corporate disputes, we believe that CVM’s Resolution 80/22, as approved, will not be a major disincentive to arbitration. It will be necessary, however, to carefully monitor how CVM will interpret these new rules in cases of possible doubts/divergences surrounding the scope of the new disclosure obligations.