Equity capital markets in Brazil: regulatory overview

A Q&A guide to equity capital markets law in Brazil.

The Q&A gives an overview of main equity markets/exchanges, regulators and legislation, listing requirements, offering structures, advisers, prospectus/offer document, marketing, bookbuilding, underwriting, timetables, stabilisation, tax, continuing obligations and de-listing.

To compare answers across multiple jurisdictions visit the Equity Capital Markets Country Q&A tool

This Q&A is part of the global guide to equity capital markets law. For a full list of jurisdictional Q&As visit www.practicallaw.com/equitycapitalmarkets-guide.

Contents

Main equity markets/exchanges

1. What are the main equity markets/exchanges in your jurisdiction? Outline the main market activity and deals in the past year.

Main equity markets/exchanges

The only exchange currently operating in Brazil in the equity markets is the São Paulo Stock Exchange (Bolsa de Valores, Mercadorias e Futuros) (BM&FBOVESPA) (www.bmfbovespa.com.br/en_us/), which manages the organised securities and derivatives markets, providing registration, clearing and settlement services. It acts as central counterparty, guaranteeing financial liquidity for the trades executed in its environments.

Market activity and deals

The Brazilian capital markets have been experiencing the consequences of the global financial crises since 2013. Activity in the BM&FBOVESPA has decreased substantially following year-by-year since then. In particular, for the last two years the Brazilian capital markets suffered directly from the effects of the "Lava Jato" investigation (known as "Operation Car Wash"), which has had a negative impact on foreign investor confidence in Brazil.

According to the January 2016 report prepared by the Brazilian Financial and Capital Markets Association (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais) (ANBIMA), in 2015 there were six equity public offerings, accounting for BRL18.334 million.

Most of them were brought to the public through a new regulatory framework that allowed companies under certain conditions to access the equity market without any sort of registration before the Brazilian Securities and Exchange Commission (Comissão deValores Mobiliários) (CVM). This mechanism is generally called a "476 offering" because of CVM Instruction 476, which introduced this system for unregistered offerings of securities sold with restricted efforts in the markets.

This new mechanism stimulated the Brazilian capital markets at a time when there was reluctance to raise money in the stock market, as a result of a reduction of associated costs and the fasttrack naturally imposed by the regulation (the new mechanism does not require any pre-analysis by the CVM, as is usual in a registration process carried out under CVM Instruction 400 or under the fasttrack created by the CVM Instruction 471). For practical purposes this results in a time reduction in the offering process of around two to three months.

In 2015, The Brazilian capital markets welcomed the following equity offerings:

  • Under CVM Instruction 400, there were two registered offerings: Telefonica Brasil SA, a primary equity offering in the amount of approximately BRL16 billion, and a secondary offering carried out by the shareholders of FPC Par Corretora de Seguros SA worth around BRL603 million.

  • Under CVM Instruction 476, there were four equity offerings, by Valid Soluções e Serviços de Segurança em Meios de Pagamento e Identificações SA, General Shopping SA, Metalúrgica Gerdau SA and Encalso Participações em Concessões SA, in the total amount of BRL1.6 billion.

 
2. What are the main regulators and legislation that applies to the equity markets/exchanges in your jurisdiction?

Regulatory bodies

The Brazilian financial system, including the capital markets, is overseen by the following:

  • National Monetary Council (Conselho Monetario Nacional) (CMN), responsible for setting monetary and credit policies.

  • Brazilian Central Bank (Banco Central do Brasil) (BACEN), the monetary authority of the country responsible for the implementation of monetary and credit policies enacted by the CMN.

  • Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários) (CVM), the federal agency responsible for monitoring the activities and services performed in the capital markets.

There are also self-regulatory authorities that contribute to a stable and more confident environment for trading activities in the capital markets, which are the:

  • BM&FBOVESPA, the main equity market in Brazil.

  • BM&FBOVESPA Market Supervision, responsible for supervising the transactions carried out on the BM&FBOVESPA and ensuring their compliance with all applicable laws and regulations.

  • ANBIMA, which oversees the capital markets intermediaries' financial and ancillary institutions and self-regulate their products, activities and best practices.

Legislative framework

The legislative framework applicable to the capital markets in general are:

  • Law 6385/1976, as amended (Law 6385 Capital Markets Law), regulates the market and creates the CVM.

  • Law 6404/1976, as amended (Law 6404 Corporation Law), that regulates the structure, organisation and responsibilities of corporations in general (whether or not they are publicly-held companies).

Regulations issued by the CVM (called "Instructions") applicable to the equity capital markets are:

  • Instruction No 400, enacted by the CVM on 29 December 2003, as amended (CVM Instruction 400), which regulates securities offerings and their registration.

  • Instruction No 476, enacted by the CVM on 16 January 2009, as amended (CVM Instruction 476), that regulates public offerings on a restricted effort basis.

  • Instruction No 480, enacted by the CVM on 7 December 2009, as amended (CVM Instruction 480), that regulates the registration of issuers of securities traded in regulated securities markets, such as the BM&FBOVESPA stock exchange.

Furthermore, in addition to the legal framework above, ANBIMA frequently issues certain deliberations and letters applicable to transactions carried out in the capital markets (such as the Code for Public Offerings). BM&FBOVESPA, as the organisation responsible for the introduction of corporate governance standards in Brazil, also stipulates in its corporate governance special segments Codes certain rules applicable to equity offerings carried out by companies listed on that stock exchange.

 

Equity offerings

3. What are the main requirements for a primary listing on the main markets/exchanges?

Main requirements

For a primary listing on the BM&FBOVESPA an issuer must both:

  • Obtain its registration as a publicly-held, category A company before the CVM.

  • Register the intended securities before the BM&FBOVESPA.

In order to attract more investors to the Brazilian capital markets, in 2000 the BM&FBOVESPA created special corporate governance listing segments, in addition to those established by Law 6404 Corporation Law. The new standards created by the BM&FBOVESPA ensure shareholders' rights and guarantees, as well as the dissemination of more complete information, and reduce the risks assumed by investors when investing in Brazilian listed companies in one of the five corporate governance listing segments which now exist and consist of:

  • Bovespa Mais.

  • Bovespa Mais Nível 2.

  • Novo Mercado.

  • Nível 2.

  • Nível 1.

These corporate governance standard listing regulations have been reviewed twice since their respective original publications, in 2006 and 2011. Recently, BM&FBOVESPA launched a new round of discussions to update these standards, which are expected to be completed by the end of 2017/beginning of 2018.

Companies can also be listed in the traditional trading segment of the BM&FBOVESPA (to which the special corporate governance rules do not apply).

Foreign companies can have their securities traded in Brazil through Brazilian depositary receipts (BDRs), which are deposit certificates representing securities issued by foreign publicly-held companies. They can be classified into BDRs levels I, II, and III. Only BDRs levels II and III can be admitted to be traded on the traditional segment of the BM&FBOVESPA, and foreign issuers must be registered before the CVM and the BM&FBOVESPA.

Minimum size requirements

There are no minimum size requirements for the registration of a primary listing on the BM&FBOVESPA.

Trading record and accounts

Issuers must observe the International Financial Reporting Standards (IFRS) accounting principles for their accounting and records, as well as be duly audited by auditing companies registered before the CVM.

In a follow-on offering, companies must disclose (and this is a continuing obligation for them after going public) historical trading records for a certain period of time.

Minimum shares in public hands

Unless an issuer is listed on one of the three levels of the BM&FBOVESPA corporate governance listing segments (Novo Mercado, Nível 1 and Nível 2), there is no minimum free float established by any law or regulation that must be complied with.

Companies with shares admitted for trading on Novo Mercado, Nível 1 and Nível 2 must maintain a free float that represents at least 25% of the total issued capital stock of the company as long as they are admitted for trading in one of the three listing segments. Companies with shares admitted for trading on Bovespa Mais and Bovespa Mais Nível 2 have seven years from the date of listing to reach a free float that represents at least 25% of the total issued capital stock of the company.

 
4. What are the main requirements for a secondary listing on the main markets/exchanges?

Main requirements

The main requirements for a secondary listing are the same as for a primary listing (see Question 3).

 
5. What are the main ways of structuring an IPO?

An IPO can be structured either as:

  • A public offering.

  • A public offering with restricted selling efforts.

An IPO can be structured through a primary offering, where the company goes public placing new securities in the market, or through a secondary offering, where the company places securities in the market that have been previously issued and already exist.

If the IPO is structured as a public offering, the offering must first be registered before the CVM (CVM Instruction 400), and the issuing company must also be registered before the CVM (CVM Instruction 480) (see Question 3).

However, under CVM Instruction 476, an IPO may be exempt from registration with the CVM if certain requirements are met (for example, if the IPO is about to happen on the Bovespa Mais or Bovespa Mais Nível 2; if Brazilian depository receipts (BDRs) level II programmes are publicly offered, and the acquisition of any of these securities are made by professional investors (a sort of qualified institutional buyer (QIB)).

Professional investors are defined by CVM Instruction 554/2014 as:

  • Financial institutions and other institutions authorised to operate by the Central Bank of Brazil.

  • Insurance companies and investment capital companies.

  • Individuals or legal entities that have at least BRL10 million in investments in general and confirm that qualification in writing.

  • Investment funds.

  • Investment clubs, provided that their portfolio will be managed by asset managers authorised by the CVM.

  • Independent investment agents, asset managers and securities consultants authorised by the CVM regarding their own investment.

  • Pension funds.

  • Non-resident investors.

 
6. What are the main ways of structuring a subsequent equity offering?

A subsequent offering, or a follow-on offering, can be structured in the same way as an IPO (see Question 5).

Additionally, a follow-on offering can be structured using the benefits of a fasttrack procedure under CVM Instruction 471 as a result of an agreement entered into by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários) (CVM) and the Brazilian Financial and Capital Markets Association (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais) (ANBIMA). In this fasttrack procedure, ANBIMA perform an analysis of the whole process and documentation prior to the CVM. ANBIMA issues a report recommending the registration of the offering (or not) to the CVM. However, the CVM is not obliged to follow ANBIMA's registration recommendation.

 
7. What are the advantages and disadvantages of rights issues/other types of follow on equity offerings?

Brazilian legislation does not recognise any "rights issues".

 
8. What are the main steps for a company applying for a primary listing of its shares? Is the procedure different for a foreign company and is a foreign company likely to seek a listing for shares or depositary receipts?

Procedure for a primary listing

The procedure for a primary listing comprises:

  • Filing a registration request for the IPO with the CVM.

  • Filing a registration request with the CVM to have the company enrolled as a category A, publicly-held company.

To obtain the necessary registration with the CVM as a category A, publicly-held company, the issuer must comply with all requirements established by CVM Instruction 480.

Procedure for a foreign company

Foreign companies can have their securities traded in Brazil through Brazilian depository receipts (see Question 3), which are certificates representing securities issued by foreign, publicly-held companies. The procedure for registration is substantially the same as for Brazilian companies applying for a primary listing (see above, Procedure for a primary listing).

 

Advisers: equity offering

9. Outline the role of advisers used and main documents produced in an equity offering. Does it differ for an IPO?

As a general rule, in a public offering of equity securities three different advisers are used:

  • Underwriters.

  • Lawyers.

  • Auditors.

Underwriters

CVM Instruction 400 requires that a lead underwriter is responsible before the CVM and the investors for the offering. The lead underwriter must undertake specific obligations, such as:

  • Organising a plan of distribution for the offering.

  • Filing the documentation required for the registration of the offering with the CVM.

  • Suspending the offering where it discovers that any illegal act or fact has occurred.

Along with the lead underwriter, other underwriters can join the syndicate to help structure the offering.

Lawyers

Lawyers are responsible for advising on the structuring of the offering in connection with its legal aspects. Lawyers also are responsible for performing legal due diligence.

Lawyers are divided into issuer's counsel and underwriter's counsel, with all of them responsible for drafting all documents related to the offering.

Issuer's counsel are responsible for drafting all documents related to matters with respect to the issuer, such as completing the reference form (Formulário de Referência), representing the issuer before the CVM and the Brazil Securities, Commodities and Futures Exchange (Bolsa de Valores, Mercadorias e Futuros) (BM&FBOVESPA) in connection with the registrations with those organisations, and reviewing the offering documents prepared by the underwriter's counsel.

Underwriter's counsel are generally responsible for drafting the offering documents, representing the underwriters in the syndicate (and the lead underwriter before the CVM and the BM&FBOVESPA), and reviewing the issuer's documents prepared by its counsel.

Auditors

The auditors' role is to confirm that the financial data provided by the issuer is accurate, and that there is no substantial or unpredictable change in the issuer's financial accounting situation from the last publication of the standardised financial statement form.

Main documents

The main documents produced in an equity offering include, among other documents:

  • Offering registration request.

  • Prospectuses.

  • Financial statements.

  • Drafts of public announcements in general.

  • Agreements executed with the underwriters.

  • Minutes of corporate resolutions.

  • Updated bye-laws of the issuer.

  • Reference form and all documents requested by CVM Instruction 480 ( Question 8).

  • Adhesion agreement to the respective special corporate governance segment.

  • Code of conduct.

  • Calendar of corporate events.

  • Any other documents and information requested by the CVM, the Brazilian Financial and Capital Markets Association (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais) (ANBIMA) and/or the BM&FBOVESPA.

In the case of a public offering with restricted selling efforts, the disclosure requirements consist of summarised information regarding the issuer and the offer, observing CVM Instruction 476.

 

Equity prospectus/main offering document

10. When is a prospectus (or other main offering document) required? What are the main publication, regulatory filing or delivery requirements?

Prospectus (or other main offering document) required

Except for public offerings with restricted selling efforts under CVM Instruction 476, and the few exemptions provided for in CVM Instruction 400, a prospectus is always required for an equity public offering in Brazil.

Main publication, regulatory filing or delivery requirements

Both a preliminary prospectus and a final prospectus must be filed with CVM and the BM&FBOVESPA. CVM Instruction 400 must also be observed, which sets out the requirements for the disclosure of the appropriate information in the prospectuses. The prospectuses must be also available electronically to investors on the websites of the:

  • Issuers (company and selling shareholder, when applicable).

  • Underwriters.

  • CVM.

  • BM&FBOVESPA.

 
11. What are the main exemptions from the requirements for publication or delivery of a prospectus (or other main offering document)?

Offerings carried out under CVM Instruction 476 do not require any kind of preparation or publication of a prospectus. Furthermore, CVM Instruction 400 foresees some exceptions to the requirement to prepare and publish a prospectus, depending on the amount of the offering, the plan of distribution and the target public for the offering. Nevertheless, whether or not these exceptions apply will be analysed on a case-by-case basis.

 
12. What are the main content or disclosure requirements for a prospectus (or other main offering document)? What main categories of information are included?

The prospectus must contain certain specific contents that must be disclosed in accordance with CVM Instruction 400, including:

  • Summary and description of the offering, including features and deadlines.

  • Identification of managers, consultants and auditors.

  • Risk factors relating to the offering, including risks related to:

    • the issuer;

    • the business and industry;

    • the security;

    • the Brazilian market.

  • Use of proceeds.

  • Industry overview.

  • Financial statements.

  • Other information deemed necessary by CVM and the BM&FBOVESPA.

 
13. How is the prospectus (or other main offering document) prepared? Who is responsible and/or may be liable for its contents?

The prospectus is drafted by the issuer, assisted by its legal counsel, along with the underwriters and its legal counsel, and must disclose complete, precise, truthful, current, clear, objective and necessary information, in understandable language, so that investors can form their investment decisions. Both the issuer and the lead underwriter are liable for the accuracy, consistency and quality of the information contained in the prospectus.

Where a prospectus contains misleading information, the CVM can impose penalties against the issuer and the lead underwriter, which can vary from a warning and fines to cancellation of the registration or the authorisation to carry out activities in the capital markets.

Furthermore, under Brazilian laws and regulations, issuers and underwriters can incur:

  • Civil liability in the case of negligent or imprudent actions or omissions that violate rights and cause damages to a third party.

  • Criminal liability, usually for actions or omissions which have a fraudulent element.

 

Marketing equity offerings

14. How are offered equity securities marketed?

During the time between filing and registration, the underwriters market the securities and build up a book of interested potential investors. A variety of marketing methods are typically employed in an IPO transaction, such as:

  • Pre-marketing.

  • Road shows.

  • One-on-one meetings with key investors.

  • Advertising.

No public advertising in relation to the offering can be used without the CVM's pre-approval, except the pre-marketing material for investors' education, and support documents used during the road show presentations (which must not, however, be handed to investors).

In a public offering with restricted selling efforts, the following rules must be observed:

  • Only 75 professional investors can be contacted regarding the offering.

  • Only 50 professional investors can subscribe for, or acquire, the securities regarding the offering.

  • Investors cannot be contacted by using any public means of communication or any local offices.

 
15. Outline any potential liability for publishing research reports by participating brokers/dealers and ways used to avoid such liability.

Any research material prepared by the research team of any of the underwriters participating in the offering must be filed before the CVM which must also contain information on the participation of the financial institution involved in the offering.

 

Bookbuilding

16. Is the bookbuilding procedure used and in what circumstances? How is any related retail offer dealt with? How are orders confirmed?

Bookbuilding is the process of determining at what price the securities will be offered and/or sold. Usually, equity offerings are priced in connection with a bookbuilding procedure.

The book is opened after the offering is disclosed to the market (after the date the registration request is filed before the CVM or after the disclosure of the preliminary prospectus).

Orders made by retail investors are not considered in the book and are not "price makers".

Subscription orders are binding upon payment. Shares are allocated by the underwriters to subscribers after pricing.

 

Underwriting: equity offering

17. How is the underwriting for an equity offering typically structured? What are the key terms of the underwriting agreement and what is a typical underwriting fee and/or commission?

Equity offerings can be structured in the following ways:

  • On a firm commitment basis (where the underwriters pay for the offering price on behalf of defaulted investor).

  • On a firm placement commitment basis (where the underwriters commit to purchase the offered securities at a specified price).

  • On a best efforts basis (where the underwriters commit to make the best efforts to sell as many securities as possible to the public).

The relationship between the issuer and the underwriters must be formalised through an underwriting agreement, which must contain:

  • Qualification of the issuer, the underwriters, and intermediaries hired by the underwriters to participate in the offering.

  • Description of the corporate acts approving the offering.

  • Description of the plan of distribution of the securities.

  • Description of the securities.

  • Description of the fees payable to the underwriters and to other intermediaries.

  • Description of the stabilisation agreement.

Underwriter fees are divided into a placement fee, firm commitment fee and incentive fee.

 

Timetable: equity offerings

18. What is the timetable for a typical equity offering? Does it differ for an IPO?

The registration process before the CVM for a public offering under CVM Instruction 400 takes from three to five months.

Alternatively, follow-on equity offerings can be submitted to the Brazilian Financial and Capital Markets Association (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais) (ANBIMA) using the fasttrack procedure under CVM Instruction 471, and the registration process generally takes approximately eight weeks to be completed.

For a public offering with restricted selling efforts, once it is exempt from registration before the CVM, it usually takes six to ten weeks until the notice of conclusion is disclosed to the CVM.

 

Stabilisation

19. Are there rules on price stabilisation and market manipulation in connection with an equity offering?

Stabilisation is required to avoid or postpone the falling of the price of the securities after an IPO. Stabilisation cannot be considered as market manipulation provided that stabilisation agreements are pre-approved by the CVM and the BM&FBOVESPA.

Under CVM Instruction 400, the issuer can grant to the underwriters an option to increase the total amount of the offering up to 15% of the original amount. This is known as a "greenshoe" and it is commonly used for stabilisation purposes.

CVM Instruction 476 is silent about the use of a stabilisation procedure in public offerings with restricted selling efforts, as well as the use of "greenshoe" or "hot issue" in such offerings. The CVM has not issued any notice, legal opinion or deliberation so far on this matter.

 

Tax: equity issues

20. What are the main tax issues when issuing and listing equity securities?

Under general Brazilian tax law, any income or gains obtained by a foreign investor is subject to withholding income tax, levied at a rate of 15% (except where the beneficiary resides in a tax haven jurisdiction, in which case a 25% rate applies). As of 1 January 2017, the current withholding income tax rate of 15% will migrate to progressive tax rates varying from 15% to 22.5% depending on the gain.

However, under Central Bank of Brazil Resolution 4,373 of 29 September 2014, which governs non-resident investors' investments in the Brazilian financial and capital markets, non-resident investors are exempt from taxation on the capital gains earned on transactions carried out in Brazilian stocks, futures and commodities exchanges (except in relation to combined transactions that permit a gain that is a fixed yield result).

 

Continuing obligations

21. What are the main areas of continuing obligations applicable to listed companies and the legislation that applies?

In Brazil, publicly-held companies must principally observe the rules issued by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários) (CVM) and Law 6404 Corporation Law. Specifically concerning continuing obligations, CVM Instruction 480 establishes the disclosure requirements, including the requirement to publish the reference form (formulário de referência) containing financial information, risk factors, related party transactions, compensation and so on.

CVM Instruction 480 sets out the following periodic information documents, which must be disclosed by the issuers through the CVM, the Brazil Securities, Commodities and Futures Exchange (Bolsa de Valores, Mercadorias e Futuros) (BM&FBOVESPA) and their own websites:

  • Registration form (formulário cadastral), to be updated annually.

  • Reference form (formulário de referência), to be updated annually, as a general rule.

  • Financial statements.

  • Standardised financial statement form (formulário de demonstrações financeiras padronizadas (DFP)).

  • Quarterly information form (formulário de informações trimestrais (ITR)).

  • Minutes of general meetings and notices of general meetings.

Certain other matters must also be disclosed to the CVM and the BM&FBOVESPA, including:

  • Notice of the occurrence of a relevant act or fact.

  • Notice calling for an extraordinary or special shareholders' meeting.

  • Summary of the decisions and minutes of the extraordinary or special shareholders' meeting.

  • Shareholders' agreements.

  • Trading and disclosure polices.

 
22. Do the continuing obligations apply to listed foreign companies and to issuers of depositary receipts?

The continuing obligations are only applicable to foreign companies that sponsor Brazilian depository receipts programmes (levels II and III) registered before the CVM.

 
23. What are the penalties for breaching the continuing obligations?

Daily fines of BRL500 can be imposed on a company enrolled as a category A which fails to comply with its continuing obligations.

If the company, and/or its directors and/or officers repeatedly fail to comply with the continuing obligations, the CVM can impose the following sanctions:

  • Suspension of directors and/or officers.

  • Temporary prohibition (of up to 20 years) from acting as a director or officer.

  • Suspension of the licence to operate in the capital markets.

  • Revocation of the licence to operate in the capital markets.

  • Temporary prohibition from providing services to entities duly registered with the CVM (for up to 20 years).

  • Temporary prohibition from trading in the capital markets (for up to ten years).

 

Market abuse and insider dealing

24. What are the restrictions on market abuse and insider dealing?

Restrictions on market abuse/insider dealing

Under Brazilian law, insider dealing or insider trading refers to illegal conduct where a person or an entity trades securities in breach of a fiduciary duty with a securities issuer on the basis of material, non-public information.

Any person who is aware of non-public material information can be considered to be an "insider", particularly those who have any commercial, professional or fiduciary relationship with the company.

Penalties for market abuse/insider dealing

Violation of the restrictions related to insider trading can result in administrative, civil or criminal sanctions.

Administrative penalties include, among others:

  • Notices.

  • Fines.

  • Suspension of management functions.

  • Prohibition from trading in the capital markets (for up to ten years).

Fines cannot exceed BRL500,000 or three times the economic advantage (or losses) derived from the illegal trading.

From a civil perspective, any third party with whom the insider traded in the market who has suffered damage can sue the insider for any applicable damages.

From a criminal perspective, insiders that have fiduciary duties to the company and who obtained benefits from the illegal trading can be subject to one to five years' imprisonment, and monetary fines equivalent to three times the economic benefit that resulted from the criminal offence.

 

De-listing

25. When can a company be de-listed?

De-listing

Usually, a company can de-list from the stock exchange:

  • When the market conditions are not favourable for the pricing of the securities.

  • To trade such securities.

  • Where there has been a decrease in the liquidity of the securities.

Voluntary cancellation of the publicly-held corporation registration (de-listing) will proceed when the shareholders approve it. However, it must be preceded by a tender offer by the controlling shareholder, or by the company itself, for the acquisition of the free float.

The tender offer must be registered with the CVM and must be made at a fair value (determined by an independent valuation based on the criteria established by Law 6404 Corporation Law), and at least two thirds of the free float must participate in the tender offer.

Companies listed in one of the three corporate governance segments of the BM&FBOVESPA must comply with additional rules for de-listing.

Suspensions

Under CVM Instruction 480, publicly-held companies can have their registration suspended in the case of failure to comply, for a period exceeding 12 months, with their disclosure obligations. Securities cannot be traded on the regulated markets during the suspension. In 2015, 19 publicly-held companies were suspended, and in 2016, two publicly-held companies were suspended, according to the CVM website.

Publicly-held companies can also have their registration canceled by the CVM if their registration remains suspended for a period exceeding 12 months. In 2015, seven publicly-held companies completed voluntary offers to be delisted from the market and four publicly-held companies had their registration before the CVM canceled on a compulsory basis. In 2016, 14 publicly-held companies had their registration cancelled by the CVM on a compulsory basis and five due to the performance of a voluntary offer in the market. There are 13 voluntary offers currently under the CVM's analysis in 2016 which have the intention to be delisted from the market.

 

Reform

26. Are there any proposals for reform of equity capital markets/exchanges? Are these proposals likely to come into force and, if so, when?

Recently, the BM&FBOVESPA brought to public auction a reform in its corporate governance segment levels which are expected to end in 2017 or at the beginning of 2018. At this stage, the market participants are evaluating the proposals submitted by the BM&FBOVESPA to amend the corporate governance standards.

On April 2016, BM&FBOVESPA and the Central Custody and Settlement of Securities (Central de Custódia e de Liquidação Financeira de Títulos) (CETIP) announced the combination of its operations through a process of merger. As publicly-held companies, they have already announced the transaction and will keep the market posted on its progress.

 

Online resources

Palácio do Planalto

W www2.planalto.gov.br/acervo/legislacao

Description. Official website maintained by the federal executive branch, which contains up-to-date texts of laws.

Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários) (CVM)

W www.cvm.gov.br

Description. Official website maintained by the CVM, which contains up-to-date texts of laws and regulations related to the capital markets.

CVM (English language translations)

W www.cvm.gov.br/subportal_ingles/menu/investors/regulation.html

Description. Official website maintained by the CVM, which contains free translations into English (those these may potentially be out of date) of the main laws and regulations related to the capital markets.

Brazilian Central Bank (Banco Central do Brasil) (BACEN)

W www.bacen.gov.br

Description. Official website maintained by the BACEN, which contains up-to-date texts of laws and regulations related to the Brazilian financial system.

BACEN (English language translations)

W www.bcb.gov.br/en/#!/home

Description. Official website maintained by the BACEN, which contains free translations into English (though these may potentially be out of date) of the main laws and regulations related to the Brazilian financial system.

Brazilian Financial and Capital Markets Association (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais) (ANBIMA)

W http://portal.anbima.com.br/Pages/home.aspx

Description. Official website maintained by the ANBIMA, which contains self-regulatory dispositions and regulations related to the Brazilian financial and capital markets.

Central Custody and Settlement of Securities (CETIP SA – Mercados Organizados)

W www.cetip.com.br/

Description. Official website maintained by CETIP, which contains information about custody and settlement of securities, notably fixed-income securities, and other related matters.

CETIP (English language translations)

W www.cetip.com.br/?lang=en-us

Description. Official website maintained by the CETIP, which contains free translations into English (though these may potentially be out of date) of information about custody and settlement of securities, notably fixed-income securities, and other related matters.



Contributor profiles

Alexei Bonamin, Partner

TozziniFreire Advogados

T +55 11 5086-5179
F +55 11 5086-5555
E abonamin@tozzinifreire.com.br
W www.tozzinifreire.com.br

Professional qualifications. Advogados, Brazil

Areas of practice. Banking & finance; capital markets; corporate finance; investment funds; project finance; private equity & venture capital.

Non-professional qualifications. LL.M. degree in Banking and Finance from The London School of Economics and Political Science, England; Graduate of the Law School of Pontifícia Universidade Católica de São Paulo.

Fabíola Cavalcanti, Partner

TozziniFreire Advogados

T +55 21 3535-2111
F +55 21 3535-2121
E fcavalcanti@tozzinifreire.com.br
W www.tozzinifreire.com.br

Professional qualifications. Advogados, Brazil

Areas of practice. Banking & finance; capital markets; corporate law and foreign investment; mergers and acquisitions.

Non-professional qualifications. MBA in Corporate Law, IBMEC; Graduate of the Law School of Universidade do Estado do Rio de Janeiro (UERJ).

Kenneth Antunes Ferreira, Partner

TozziniFreire Advogados

T +55 11 5086-5559
F +55 11 5086-5555
E kferreira@tozzinifreire.com.br
W www.tozzinifreire.com.br

Professional qualifications. Advogados, Brazil.

Areas of practice. Capital markets; corporate finance.

Non-professional qualifications. Master in Commercial Law from Pontifícia Universidade Católica de São Paulo (PUC-SP); Executive MBA in Corporate Finance from the Instituto Brasileiro de Mercado de Capitais de São Paulo (Ibemec-SP); Advanced Business Law and International Business Law from Mt San Antônio College, USA; Graduated from the Law School of Universidade Paulista.

Rodrigo de Campos Vieira, Partner

TozziniFreire Advogados

T +55 11 5086-5230
F +55 11 5086-5555
E rvieira@tozzinifreire.com.br
W www.tozzinifreire.com.br

Professional qualifications. Advogados, Brazil.

Areas of practice. Banking & finance; capital markets; corporate finance; investment funds; project finance; private equity & venture capital; infrastructure.

Non-professional qualifications. Specialised in Business Management from the Fundação Dom Cabral (FDC); specialised in Business Management from the Business School São Paulo; Graduate of the Law School of Faculdade Milton Campos.


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