Antonio Felix de Araujo Cintra Paulo Roberto Martins de Toledo Leme The Brazilian Securities Commission (CVM) announced in February an important decision from its board of commissioners regarding preferred shares issued by Brazilian publicly-held corporations. During the registration procedures of the initial public offering (IPO) of the Brazilian airline Azul, the company had its request to become public denied by the CVM's technical department. The decision was motivated by a specific section of Azul's by-laws that entitled each preferred share to a dividend equivalent to 75 times the dividends payable to the common shares. For the CVM's technical team responsible for reviewing Azul's application, the provision in Azul's by-laws did not comply with Brazilian corporate law because it violated the general principle that economic rights should be related to shareholders' political rights.
February 24, 2014