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Companies discuss changing payout volumes

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Some companies' boards of directors are discussing revising the amount of dividends to pay this year. The matter has been arising in talks between companies and law firms working on consolidating the 2019 financial reports. The purpose is to preserve cash in an outlook of little visibility of the effects that the coronavirus pandemic will have on the economy.

The only public company that has already announced changes was BR Properties, and ratings agency Moody's argued that Petrobras may have to make alterations. The discussion about dividends stumbles on another issue: holding shareholder meetings, in which the proposals must be submitted.

"Public and also private companies are at the point of discussing account approvals, including distribution or not of dividends. Today I received a demand from a client to hold on to the documentation, because it will alter this point," says Marcela Ejnisman, partner of law firm TozziniFreire. "We will see some cases like this, but I don't think it applies to most companies. The discussion of how much the crisis will affect companies' cash they are all doing."

BR Properties intends to take the proposal of reducing its initially estimated payout of R$73.9 million to R$42 million to the meeting scheduled for April 24. The developer reckons it must be more conservative, given the uncertainties of the pandemic's impact.

This issue has also arisen at law firm Ochman Real Amadeo. "Public companies that have already published financial statements need new proposal from the management to shareholders to revise dividend payment. It is more complex, but there are alternatives," partner Renato Ochman says. The firm has about 30 corporate clients requesting guidance about financial reports at this moment.

He points out that the Securities and Exchange Commission of Brazil (CVM) circular letter 2/2020, which brings instructions to public companies, mentions the subject. It consolidates instructions of the Corporate Law and says that the company that posts profit can't set aside reserves to the detriment of fixed or minimum dividends. But it says the mandatory...

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