Overview

Corporate governance policies
  • Quality Software is a company listed on B3 MAIS, one of the organized over-the-counter listing segments of the São Paulo Securities, Commodities and Futures Exchange (BM&FBOVESPA). It follows the same principles of Novo Mercado, which represents the BM&FBOVESPA’s main market division, requiring high standards of corporate governance and transparency.
  • Although the B3 MAIS’ listing requirements and trading rules are quite similar to those of Novo Mercado, they are more appropriate for companies wishing to enter the capital market gradually, seeking lower volume offerings and market exposure.
  • Therefore, Quality Software has made the following corporate commitments:
  • Issue only common shares;
  • Not have profit sharing bonds;
  • In the event of transfer of control, all holders of common shares have the right to sell them under the same conditions obtained by the controlling shareholder (tag along);
  • Conduct a tender offer for the acquisition of outstanding shares, at least for the economic value, if the company is delisted or goes private;
  • Use the Market Arbitration Chamber to resolve corporate disputes;
  • Quality Software has also made the following commitments to transparency, undertaking to disclose:
  • Additional information in the Interim Financial Information (ITRs), Annual Financial Statements (DFPs) and Annual Information (IANs): quarterly consolidated cash flow and shareholding positions of management, controlling shareholders and any shareholder who owns more than 5% of the Company’s capital stock;
  • Annual corporate events calendar;
  • Contracts with related parties;
  • Trades in Company shares carried out by the controlling shareholders, on a monthly basis; and
  • Send all the Company’s information to the BM&FBOVESPA and make it available on Quality Software’s website.
Regulations of the Brazilian capital market

The Brazilian securities market is regulated by the Brazilian Securities and Exchange Commission (“CVM”), which has the authority to supervise and issue general rules on the disciplinary power and management of stock exchanges and financial institutions registered with the CVM, members of the Brazilian securities market, as well as by the National Monetary Council (“CMN”) and the Central Bank of Brazil (“BACEN”), which have powers to authorize the constitution and operation of securities brokers and to regulate foreign investments and foreign exchange transactions, among other things.

The Brazilian securities market is regulated by the Brazilian Securities Act, as well as by Brazilian Corporate Law and regulations issued by the CVM, the CMN and the BACEN. These laws and regulations determine information disclosure requirements, restrictions on stock trading related to insider information and price manipulation, and the protection of minority shareholders, among other things. However, the Brazilian securities market does not have the high level of regulation and supervision seen in the U.S. securities markets.

According to Brazilian Corporate Law, a company is classified as publicly held if its securities are admitted to trading on the Brazilian securities market and as privately held if their securities are not publicly traded on the Brazilian securities market. All publicly held companies must be registered with CVM and are subject to regulatory and information disclosure requirements.

A company registered with the CVM may trade its securities on the BM&FBOVESPA or on the Brazilian over-the-counter market. Companies need to apply for registration with the BM&FBOVESPA and the CVM in order to have its shares listed on the BM&FBOVESPA. The shares of companies listed on the BM&FBOVESPA cannot be traded simultaneously on the Brazilian over-the-counter market. The shares of companies listed on the BM&FBOVESPA may also be traded in private transactions, subject to several limitations.

The Brazilian over-the-counter market, organized or not, consists of trades between investors through a financial institution registered with the CVM and authorized to operate in the Brazilian capital market. No special requirements are imposed on the trading of publicly traded securities on the non-organized over-the-counter market. The CVM requires the respective intermediaries to provide notice of all trades carried out on the Brazilian over-the-counter market.

Securities trading on the BM&FBOVESPA may be interrupted at the issuer’s request before the publication of a material fact. Trading may also be suspended at the initiative of the BM&FBOVESPA or the CVM, based on or due to indications that the company has provided inadequate information in relation to a material fact or has provided inadequate responses to inquiries made by the CVM or the BM&FBOVESPA, among other reasons.

Information use and disclosure

CVM Instruction 358 governs the use and disclosure of information on material acts or facts relating to publicly held companies, as follows:

  • It defines the concept of material fact, which comprises any decision of a controlling shareholder, resolution of a shareholders’ meeting or a meeting of the management bodies of a publicly held company, or any other act or fact of a political-administrative, technical, business or economic-financial nature occurred in or related to the company’s business, which may influence (i) the price of the securities; (ii) investors’ decision to buy, sell or hold such securities; and (iii) investors’ decision to exercise any rights inherent in the condition of holders of securities issued by the Company;
  • It gives examples of potentially material acts or facts that include, among others, the signing of an agreement or contract for the transfer of the company’s control; entry or exit of a partner who maintains with the company an operational, financial, technological or administrative contract or collaboration agreement; and merger, consolidation or spin-off involving the company or related companies;
  • It obliges the Investor Relations Officer, controlling shareholders, officers and members of the Fiscal Council and any bodies with technical or advisory functions to report any material fact to the CVM;
  • It requires the simultaneous disclosure of material facts in all the markets where the company’s shares are listed for trading;
  • It obliges the acquirer of a controlling interest in a publicly held company to disclose a material fact, stating its intention to cancel its registration as a publicly held company within one year of the acquisition;
  • It establishes rules regarding the disclosure of the acquisition or disposal of a relevant equity interest in a publicly held company; and
  • It restricts the use of privileged information.