Gender equality and female participation in companies: what you need to know
The month of March is widely recognized as International Women’s Day, which is celebrated on the 8th. This date aims to remember women’s struggle for rights and gender equality throughout history, as well as highlighting the importance of female participation in all aspects of social, economic, political and cultural life. It is an opportunity to celebrate women’s achievements, reflect on the challenges that still need to be overcome and promote actions that contribute to building a fairer and more equal society for all people, regardless of gender. Gender diversity and female participation in the corporate world are increasingly relevant and urgent issues. Although there has been some progress in recent years, equal opportunities and treatment for men and women in the workplace is still a challenge to be faced. The presence of women in leadership positions is still very low, even in companies that claim to be committed to diversity and inclusion. According to a survey by the Brazilian Institute of Corporate Governance (IBGC), only 10% of the boards of directors of publicly traded companies in Brazil are made up of women. In addition, women still face obstacles to advancing in their careers, such as unequal pay, a lack of specific training and development programmes and an organizational culture that doesn’t value women’s skills and abilities. For this reason, the UN created the Global Compact 2030, which plays an important role in promoting equal opportunities and treatment between men and women in the business environment. In this sense, companies that join the Global Compact 2030 have the opportunity to commit to concrete measures to reduce gender inequality in their operations and throughout the value chain. This includes promoting equal pay policies, developing training and leadership programmes for women, creating a safe and respectful working environment for all employees, and collaborating with other companies and organizations to promote gender equality. However, gender diversity is not only a matter of social justice, but also a matter of competitive advantage and long-term business sustainability. Companies that value and promote gender diversity tend to have better financial performance, greater innovation and employee engagement. This is because diversity of perspectives, skills and experiences enriches the working environment and allows companies to better adapt to changes in the market and society. Some initiatives that companies can adopt to promote gender diversity and female participation include: Set clear targets for the presence of women in leadership positions and implement concrete actions to achieve them, such as mentoring, coaching and leadership development programs for women. Implementing recruitment practices that avoid gender discrimination, such as reviewing the requirements for positions, publicizing vacancies on different channels and conducting interviews with a multidisciplinary and diverse team. Promote equal pay for men and women who perform the same jobs, in order to value women’s skills and abilities and ensure fairness and equity in the workplace. Create an inclusive and respectful work environment that values diversity of opinions, perspectives and experiences, and has a zero-tolerance policy for harassment and discrimination. Encouraging female participation in traditionally male areas such as technology, engineering and exact sciences, through specific training and mentoring programs. In addition, it is important that companies recognize the importance of gender diversity as a strategic and cross-cutting issue, which must be addressed in all areas and levels of the organization. This requires the commitment and leadership of senior management, as well as raising awareness and training all employees in the importance of diversity and inclusion. In short, companies that adopt inclusion and diversity policies, such as promoting gender equity, tend to have higher performance and more positive financial results. In addition, an inclusive work environment can improve employee satisfaction and engagement, contributing to a healthier and more productive corporate culture. Want to know more? Get in touch with our team of experts!
Brazilian Securities and Exchange Commission (CVM) publishes Resolution No. 178
On February 14, 2023, the Brazilian Securities and Exchange Commission (CVM) published Resolution No. 178, the new regulatory framework for the activity of investment advisors (the new nomenclature for “autonomous agents”), which will replace Resolution No. 16 of 2012. The Resolution in question brought about a number of changes in relation to the repealed Resolution, in particular: Possibility for the advisor to provide services to more than one intermediary, putting an end to the obligation of exclusivity; Flexibility as to the type of company adopted by legal entity investment advisors, who may adopt other types, in addition to the simple company form. The name of the legal entity, as well as any fantasy names used, must include the expression “investment advisor” or the acronym “AI”, and the use of acronyms and words or expressions that could mislead investors as to the company’s purpose is prohibited; Obligation for the investment advisor to identify all intermediaries on whose behalf it acts in prospecting and attracting clients; Obligation for the investment advisor to identify on behalf of which intermediary he is providing that service; Explicit possibility of carrying out complementary activities related to the financial, capital, insurance and pension and capitalization markets, as long as they do not conflict with his activities; The need to inform investors with whom the advisor already has a previous relationship if the advisor starts acting on behalf of a new intermediary, under the conditions established in the Resolution, with a specific warning about potential conflicts of interest to which the investment advisor may be subject as a result of entering into the new contract, including those arising from differences in the investment advisor’s remuneration for offering products and services and financial incentives associated with prospecting and attracting, for the new intermediary, investors with a previous business relationship with the original intermediary; e When the investment advisor is a legal entity, it is necessary to appoint a responsible director, who must provide all the information required by capital market legislation and regulations; respond to requests for information made by the CVM and the accrediting entity; and verify compatibility between the policies, rules, procedures and internal controls of the different intermediaries. It is worth remembering that the investment advisor is responsible for the following activities: (i) prospecting and attracting clients; (ii) receiving and registering orders and transmitting these orders to the appropriate trading or registration systems; and (iii) providing information on the products offered and the services provided by the intermediaries on whose behalf they act. According to the new standard, the provision of information referred to in item “iii” includes the activities of support, guidance and investment recommendations inherent in the commercial relationship with clients, and the investment advisor must ensure that the recommendations he makes are compatible with the specific policies, rules and procedures of the intermediaries regarding the duty to verify the suitability of the investment to the client’s profile. The investment recommendation mentioned, therefore, is linked to providing the information that the intermediary provides, i.e. it must conform to and be limited to the products and services recommended by the intermediaries themselves. Thus, the investment advisor is not allowed to manage funds, act as a consultant or carry out analysis of investors’ securities, but is only responsible for selecting and offering investments, with the final decision being made by the client. Finally, it is important to clarify that the intermediary is responsible to its clients and to any third parties for the actions carried out by the investment advisor it hires. The Resolution will come into force on June 1, 2023. Want to know more? Our Corporate and M&A team is here for you!
Annual Approval of Company Accounts
By the last day of April 2023, companies whose financial year ended on December 31, 2022, must hold a shareholders’ meeting to approve the accounts of the directors. It is at this assembly or meeting of shareholders that the company’s accounts and the financial statements presented by the directors are examined, discussed and voted on, as well as deciding on the allocation of net profits for the year, if any, and on the election or re-election of directors, if applicable. Thus, as preparatory acts for the assembly or meeting, it is necessary to prepare and publish the financial statements and summon the shareholders to the occasion. The rules relating to the obligation to publish, the form and deadline for calling meetings, the documents that make up the financial statements, among others, may vary according to the type of company (by shares or limited), the number of shareholders, the net worth, the value of assets or annual gross revenue, or even the provisions of the bylaws or articles of association. The approval of accounts is a legal obligation applicable to all companies. Once the accounts and financial statements have been approved without reservations, the directors are released from liability in relation to acts carried out within their powers and during the financial year covered by such approval. Want to know more?
CVM’s concern with ESG and transparency
Since January 2, 2023, publicly traded companies have been required to indicate in their Reference Form whether or not they have adopted environmental, social and corporate governance (ESG) policies, a requirement introduced by Resolution 59 of the Brazilian Securities and Exchange Commission (CVM). If the company has not adhered to ESG practices, it must provide explanations as to why it has not disclosed ESG information and key performance indicators, why it has not audited or reviewed any ESG information that may have been disclosed, why it has not adopted recommendations related to climate issues, and why it has not carried out greenhouse gas emission inventories, among others. In the same vein, with regard to Investment Funds, the new regulatory framework – CVM Resolution 175, generally effective as of April 3, 2023, established that funds in any category whose name contains reference to environmental, social and governance factors, such as “ESG”, “ASG”, “environmental”, “green”, “social”, “sustainable” or any other terms related to sustainable finance, must establish: I – what environmental, social or governance benefits are expected and how the investment policy seeks to originate them; II – what methodologies, principles or guidelines are followed for the qualification of the fund or class; III – which entity is responsible for certifying or issuing a second opinion on the qualification, if any, as well as information on its independence in relation to the fund; and IV – specification on the form, content and frequency of disclosure of the report on the environmental, social and governance results achieved by the investment policy in the period, as well as the identification of the agent responsible for preparing the report. If the investment policy integrates environmental, social and governance factors into the activities related to portfolio management, but does not seek to generate socio-environmental benefits, the use of the above terms is prohibited. Pro-environmental initiatives based on ethics and sustainability, a high level of transparency and corporate responsibility have been treated as special concerns of the regulator with a functional system of corporate governance, capable, for example, of hindering the practice of conduct condemned by stakeholders, such as greenwashing, and thus attracting the trust (and resources) of potential investors.