Novo Mercado
Encyclopedia
Novo Mercado is a listing segment of BM&F Bovespa for the trading of shares issued by companies that commit themselves voluntarily to adopt corporate governance
practices in addition to those that are required by law.
The value and liquidity
of the shares are positively influenced by the degree of security offered by the rights granted to shareholders and the quality of information provided by the companies. This is the basic premise of the Novo Mercado.
The entry of a company in New Market place by signing a contract and requires adherence to a set of corporate rules, generally referred to as "good corporate governance practices, more stringent than those present in the Brazilian legislation. These rules, consolidated in the Listing Rules of the Novo Mercado, expand shareholder rights, improve the quality of information usually provided by companies and widespread ownership, and to determine the resolution of corporate conflicts by a Board of Arbitration offer investors the security of an alternative more responsive and specialized.
The main innovation of the Novo Mercado, in relation to legislation is the requirement that the capital of the company is composed only of common shares
. However, this is not the only one. For example, the company opened a participant in the New Market has the additional obligations:
Also present in the Listing Rules, some of these commitments must be approved in General Meeting and included in the Company's Bylaws.
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
practices in addition to those that are required by law.
The value and liquidity
Market liquidity
In business, economics or investment, market liquidity is an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value...
of the shares are positively influenced by the degree of security offered by the rights granted to shareholders and the quality of information provided by the companies. This is the basic premise of the Novo Mercado.
The entry of a company in New Market place by signing a contract and requires adherence to a set of corporate rules, generally referred to as "good corporate governance practices, more stringent than those present in the Brazilian legislation. These rules, consolidated in the Listing Rules of the Novo Mercado, expand shareholder rights, improve the quality of information usually provided by companies and widespread ownership, and to determine the resolution of corporate conflicts by a Board of Arbitration offer investors the security of an alternative more responsive and specialized.
The main innovation of the Novo Mercado, in relation to legislation is the requirement that the capital of the company is composed only of common shares
Common stock
Common stock is a form of corporate equity ownership, a type of security. It is called "common" to distinguish it from preferred stock. In the event of bankruptcy, common stock investors receive their funds after preferred stock holders, bondholders, creditors, etc...
. However, this is not the only one. For example, the company opened a participant in the New Market has the additional obligations:
- Extension to all shareholders the same conditions obtained by the controllers when the sale of the company's control (tag along).
- Implementation of a public offer to acquire all outstanding sharesShares outstandingShares outstanding are common shares that have been authorized, issued, and purchased by investors. They have voting rights and represent ownership in the corporation by the person or institution that holds the shares. They should be distinguished from treasury shares, which is common stock held by...
, at least by the economic value, the chances of closing the capital or cancellation of registration of trading on the Novo Mercado.
- Board of DirectorsBoard of directorsA board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
with a minimum of 5 (five) members and unified term of up to 2 (two) years, reelection being permitted. At least 20% (twenty percent) of the members should be independent directors.
- Improving the information provided, adding to the Quarterly Information (ITR) - a document that is sent by companies listed on the CVM and the BOVESPA, available to the public and contains quarterly financial statementsFinancial statementsA financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
- among others: financial statements and statement of cash flowsCash flow statementIn financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing...
.
- Among other demand
Also present in the Listing Rules, some of these commitments must be approved in General Meeting and included in the Company's Bylaws.