Get to know Nível 1 and Nível 2

BOVESPA sets a series of standards for the conduct of companies, managers and controlling shareholders considered as important for valuation of shares and other assets issued by the company. The adherence to these practices distinguishes a company as either Companhia Nível 1 (Level 1 Company) or Companhia Nível 2 (Level 2 Company), depending on the degree of commitment assumed by the company.

The adherence to BOVESPA's "Special Corporate Governance Levels" better advertises the efforts of the company to improve the relation with its investors and increases the potential for appreciation in asset value.

Nível 1

Companhias Nível 1 largely undertake to improve methods of disclosure to the market and to disperse their shares among the largest number of shareholders possible. Thus, the principal practices required of a Companhia Nível 1 are:

  • Maintenance of a free-float of at least 25% of the capital;
  • Public offerings have to use mechanisms to favor capital dispersion;
  • Improvement in quarterly reports, including the disclosure of consolidated financial statements and special audit revision;
  • Monthly disclosure of trades involving equities issued by the company on the part of the controlling shareholders or the management;
  • Disclosure of an annual calendar of corporate events.

Nível 2

To be classified as a Companhia Nível 2, in addition to the obligations of Nível 1, the company and its controlling shareholders must adopt and observe a much broader range of corporate governance practices and minority shareholder rights. In brief, the criteria for listing as a Companhia Nível 2 are:

  • A single one-year mandate for the entire Board of Directors, which must have five members at least;
  • Disclosure of annual balance sheet according to standards of the US GAAP or IFRS;
  • In case majority shareholders sell their stake, same conditions granted to them must be extended to common shareholders, while preferred shareholders must get, at least, 70% of the value/conditions (tag along);
  • Voting rights granted to preferred shares in circumstances such as incorporation, spin-off and merger and approval of contracts between the company and other firms of the same holding group, when deliberated at general meeting.
  • Obligation to hold a tender offer by the economic value criteria, in case of delisting or deregistration process;
  • Admission to the Market Arbitration Panel for resolution of corporate disputes.

 

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