Brazil's CVM asks whether its governance report still earns its place

Brazil's securities regulator, the CVM, opened a public call for evidence on 29 October on the corporate governance report that listed companies must file under Annex D of CVM Resolution 80, the regulator said, with contributions due by 28 February 2027.

The call, numbered ASA/CVM 01/26, is run by the CVM's economic analysis, risk management and integrity office and was on the regulator's 2026 regulatory agenda. It asks for technical contributions on the disclosure regime for listed companies, specifically the governance report, and invites data, studies and experience that can test the regulator's working hypotheses.

Seven hypotheses, none endorsed

The CVM lists seven hypotheses it wants evidence for or against. The report's added information value may be concentrated in a small set of practices. Explanations for not adopting a practice, or adopting it in part, may tend to be standardised and repeated. Its direct use may be concentrated among institutional investors and other specialised users. Its costs may be modest next to those of the reference form but proportionally heavier for smaller companies.

The remaining three concern the code behind the report. The lack of a periodic review of the Brazilian Corporate Governance Code may be eroding the relevance of its practices; higher adoption of the practices may come mainly from factors other than the report; and the concentrated ownership of Brazilian companies may limit the market discipline that disclosure is meant to create.

The hypotheses are not conclusions or preferences of the regulator, the CVM said, and the call is preliminary and exploratory and does not necessarily lead to a regulatory impact analysis. Any change to the report may draw on the evidence received, with or without such an analysis.

What the 2024 review found

The call follows a regulatory outcome review the CVM published in December 2024, which concluded that the report has a positive but limited influence. Of 26 jurisdictions it compared, 14 put governance disclosures in companies' annual reports and 12 in separate forms, and unlike the others it studied in depth, Brazil has no routine for reviewing its code. It found that 77.7 per cent of the code's practices overlap to some degree with other rules: 9.3 per cent with federal laws, 57.4 per cent with disclosures already required in the reference form and 11.1 per cent with listing segment requirements.

Aggregate compliance with the code's practices rose from 50.62 per cent in 2019 to 65.53 per cent in 2023, the review found, though it said the improvement may be linked to other instruments, especially the Novo Mercado listing segment. Some practices remained below 30 per cent, including the requirement for an external majority on the board with at least one third independent members. The quality of explanations had stagnated, with a persistently high rate of repetition.

Public engagement was low: the report drew far less use than structured filings such as the reference form, the review said. It proposed integrating the report into the reference form, a regular review of the code and its disclosure regime, and the use of its findings in the CVM's ordinary supervision.

How to take part

Contributions go by email with the call's number as the subject line, with the main document in PDF and quantitative data also in the template spreadsheet in Annex I of the call notice, the CVM said. Respondents need not answer every question in the notice.

A similar explain rule now applies to sustainability reporting. CVM Resolution 244 of 29 May 2026 revoked the obligation to file reports under the ISSB-based standards, and from 1 January 2027 a listed company that opts not to file one must give management's reasons in a market notice published by the date it files its annual financial statements with the CVM, a change EM Governance Review's reporting clock flags for Brazil. The competition authority is meanwhile consulting on its own rulebooks, as EM Governance Review reported on 27 October.