panhia Brasileira de Distribuicao(CBD) - 2020 Q4 - Annual Report

Capital Structure and Shareholder Rights - As of December 31, 2020, the company had a subscribed and paid-up capital represented by 268,351,567 common shares[387]. - The company is authorized to increase its capital stock up to 400,000 thousand shares without amending its bylaws[390]. - The mandatory minimum dividend is set at 25% of the adjusted net profit, which must be distributed to shareholders[396]. - The company may allocate 5% of its net profit to a legal reserve until it reaches 20% of the share capital[396]. - The company can pay interest on shareholders' equity, which may be treated as deductible expenses for tax purposes[400]. - Payments of interest on shareholders' equity cannot exceed 50% of net profit for the year[400]. - The company must distribute dividends within 60 days after the declaration date[399]. - Shareholders holding at least 10% of the voting stock can elect one member of the board of directors[404]. - The quorum for shareholders' meetings is at least 25% of issued and outstanding common shares on the first call[415]. - Shareholders have a preemptive right to subscribe for shares in any capital increase, proportional to their shareholding[416]. - The company must allocate net profits and determine dividend distribution at the annual shareholders' meeting[408]. - The company is required to conduct a public tender offer to buy all shares held by remaining shareholders in the event of a sale of control, ensuring equal treatment of all shareholders[422]. - Any person or group acquiring more than 25% of the company's equity interest must commence a public tender offer within 30 days, with the purchase price being at least 125% of the weighted average unit price over the previous 120 trading sessions[425]. - Shareholders exercising withdrawal rights are entitled to receive book value for their shares based on the most recent audited balance sheet, with specific conditions for valuation if the resolution is adopted more than 60 days after the last audited balance sheet[429]. - The right to withdraw shares lapses 30 days after the publication of the minutes of the relevant shareholders' meeting, with the company entitled to reconsider actions that may jeopardize financial stability[429]. - The company’s shares are not redeemable, and dissenting shareholders have specific rights under Brazilian corporate law regarding withdrawal[418]. - The acquisition of a significant equity interest triggers a mandatory public tender offer, promoting widespread ownership and preventing concentration of shares[423]. - The company is subject to Brazilian corporate law, which includes provisions for tender offers and shareholder rights in the event of control changes[421]. Financial Performance and Taxation - Dividends paid by Brazilian corporations to Non-Resident Holders are currently not subject to withholding income tax if related to profits generated on or after January 1, 1996[434]. - Excess Dividends paid to Non-Resident Holders may be subject to a withholding tax of 15.0% or 25.0% depending on the tax jurisdiction of the beneficiary[434]. - Payments of interest on shareholders' equity to Non-Resident Holders are subject to withholding tax at rates of 15.0% or 25.0% based on the tax jurisdiction[437]. - Capital gains from the sale of common shares on a Brazilian stock exchange are exempt from income tax for Non-Resident Holders who are registered under specific regulations[440]. - Non-Resident Holders not registered under the applicable regulations may face capital gains tax rates ranging from 15.0% to 25.0% depending on their tax jurisdiction[443]. - The conversion of ADS into common shares should not subject Non-Resident Holders to Brazilian income tax[439]. - There is pending legislation in Brazil discussing the taxation of dividends, which may impact future distributions[434]. - The average price per common share on the B3 on the day of deposit may determine capital gains tax implications for Non-Resident Holders converting common shares into ADS[444]. - Brazilian tax authorities have established that profits calculated under IFRS may differ from those calculated under previous accounting methods, affecting dividend distributions[434]. - The distribution of interest on shareholders' equity must be proposed by the board of directors and ratified by shareholders[437]. - The Brazilian tax authorities have established a minimum withholding tax rate of 15.0% for payments to beneficiaries in privileged tax regimes, which could increase to 25.0% if deemed applicable to Non-Resident Holders[447]. - The IOF/Exchange tax rate for foreign currency exchange transactions is currently set at 0.38%, with a 0% rate applicable for inflows related to investments in the Brazilian financial market[450]. - The IOF/Bonds tax rate for transactions involving common shares is currently 0%, but the government may increase it up to 1.5% per day for future transactions[451]. - There are no federal inheritance, gift, or succession taxes applicable to Non-Resident Holders for the ownership or transfer of common shares or ADSs[448]. - Dividends paid to U.S. holders will generally be subject to U.S. federal income taxation as ordinary income, with potential for reduced tax rates if classified as qualified dividend income[455]. - The Brazilian government reserves the right to increase the IOF/Exchange tax rate to a maximum of 25.0% at any time for future transactions[450]. - The current understanding is that the withholding tax applicable to payments made to Non-Resident Holders could be assessed at a rate up to 25.0% if classified under a privileged tax regime[447]. - Distributions paid in Brazilian currency will be included in the gross income of U.S. holders based on the exchange rate at the time of receipt[455]. - The Brazilian tax authorities have not yet amended the list of Low or Nil Tax Jurisdictions to reflect the reduced 17.0% threshold established by Ordinance No. 488[447]. - U.S. holders should consult tax advisors regarding the treatment of foreign currency gain or loss related to dividends received in Brazilian currency[457]. - The company does not expect its common shares or ADSs to be classified as a Passive Foreign Investment Company (PFIC) for the current fiscal year, based on projected income and assets[459]. - U.S. holders may face adverse tax consequences if the company is deemed a PFIC, including potential interest charges on gains or excess distributions[461]. Financial Management and Risk - The company employs a treasury policy to manage financial market risk, particularly by swapping a substantial portion of U.S. dollar-denominated liabilities to obligations in reais[470]. - Cross-currency interest rate swaps are utilized to hedge against U.S. dollar currency exposure and interest rate fluctuations[470]. - The company is exposed to interest rate volatility regarding cash and cash equivalents, which are generally swapped to floating rates based on the CDI rate[471]. - Significant interest rate-sensitive instruments are managed through periodic debt retirement and the use of derivative financial instruments[473]. - The company uses bank loans, typically denominated in U.S. dollars and swapped to reais, to meet financing requirements[471]. - Éxito Group employs derivatives to hedge against foreign exchange variations on imports and bank loans[470]. - Credit risks related to accounts receivable are minimized by selling receivables to banks and credit card companies, enhancing working capital[480]. - The company has established investment policies at financial institutions to minimize credit risk, regularly updated by the Financial Committee[478]. - Total cash and cash equivalents amounted to R$8,711 million in 2021, with a significant increase in cash and banks denominated in reais to R$4,943 million in 2022[474]. - Total liabilities increased to R$9,163 million in 2022, with total loans and financing reaching R$4,556 million, reflecting a rise from R$2,373 million in 2021[474]. - The company reported that sales to customers using credit cards accounted for 46.5% of consolidated net operating revenue in 2020, indicating a stable reliance on credit card transactions[480]. - The net foreign currency exposure to U.S. dollars was a credit of R$12 million as of December 31, 2020, down from R$15 million in 2019, showing improved management of foreign currency risks[477]. - The average interest rate for loans denominated in reais was 9.80% per year, while loans in U.S. dollars had an average rate of USD + 2.27% per year[474]. - The company has not experienced difficulties in obtaining financing or refinancing existing debt, indicating strong liquidity and capital resources[474]. - The total amount of debentures and promissory notes in reais was R$4,607 million in 2022, with a notable increase from R$2,383 million in 2021[474].