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Brazil

Published on Tuesday 6th March 2018

    • Brazil

      The offering and trading of securities are regulated by the National Monetary Council (CMN) and Brazilian Securities and Exchange Commission (CVM), through five main statutes:

      • Law 6385, of 7 December 1976, as amended (Securities Market Law), which rules the securities market and creates the Brazilian Securities Commission;
      • Law 6404, of 15 December 1976, as amended (Corporations Law), which regulates publicly held companies;
      • Law 4728, of 14 July 1965, as amended (Capital Markets Law), which created the National Monetary Council and established guidelines for the development of the securities market;
      • Instruction No. 400, enacted by the CVM on 29 December, as amended (CVM Instruction 400), which regulates securities offerings and their registration; and
      • Instruction No. 476, enacted by the CVM on 16 January 2009, as amended (CVM Instruction 476), which regulates public offerings of securities with restricted selling efforts.

      Broadly speaking, the legislative process for enacting federal laws is basically composed by an initiative, through filling a bill before the competent legislative entity, debates, voting by the Plenary, approval by the Congress, sanction or veto by the President, enactment and afterwards publication. It can be proposed by the President, Supreme Court, Senate, deputies, General Attorney and citizens.

      Additionally, considering that the Securities Market Law attributed regulatory function to the CVM and therefore powers to regulate the matter set forth in such law and in the Corporations Law, the CVM has the authority to issue administrative rules concerning matters of the securities market and its participants. 

      Last verified on Tuesday 6th March 2018

    • Brazil

      The rationale of the Brazilian legislation is to create a legal and regulatory framework to assure  capital markets development through investor protection and access to reliable information. In this sense, the Securities Market Law grants the CVM powers of surveillance of markets, issuers and market intermediaries. The CVM may also obtain information on markets, institutions, financial products, customers and parties involved in securities transactions, carry out investigations, impose sanctions, suspend trading of securities, and prohibit improper market conduct, assuring then the necessary protection set for investors.

      Last verified on Tuesday 6th March 2018

    • Brazil

      Brazilian capital markets and financial systems are overseen by CMN, the Brazilian Central Bank (BACEN) and the CVM, the main attributions of which are listed below:

      • CMN: issues general monetary and credit policies for the financial and capital markets, but does not have supervisory power. It comprises the Finance Minister, the Planning and Budget Minister and BACEN president;
      • CVM: is a federal agency responsible for overseeing the Brazilian securities market; and
      • BACEN: is a federal agency responsible for the implementation of monetary and credit policies enacted by CMN. It is responsible for regulating monetary policy, financial institutions and foreign exchange market.

      Alongside the regulation mentioned above, market associations, over-the-counter (OTC) organised markets and securities exchange have developed an import set of self-regulation policies that should be complied with by their members and participants, including B3 SA – Brasil, Bolsa, Balcão (B3) (which is the result of the merger between BM&FBovespa SA – Bolsa de Valores, Mercadorias e Futuros (BOVESPA) (the only Brazilian operating securities exchange and CETIP – Mercados Organizados SA, (the main administrator of OTC organised market), the Brazilian Financial and Capital Markets Association (ANBIMA), Brazilian Association of Private Equity and Venture Capital (ABVCAP) and the Brazilian Association of Investment Analysts (APIMEC). 

      Last verified on Tuesday 6th March 2018

    • Brazil

      The concepts of financial fraud, price manipulation and other unfair trade practices are defined in Instruction No. 08, enacted by the CVM on 8 October 1979. Further, price manipulation is considered a crime according the Securities Market Law.

      The practice of financial fraud price manipulation and other unfair trade practices may result in administrative, civil or criminal sanctions, including fines that may not exceed the highest of the following values: (i) 50 million reais; (ii) twice the value of the consideration associated with the wrongdoing; (iii) three times the economic advantage derived or loss avoided from the illegal trading; or (iv) twice the value of the damage caused to investors due to the illegal trading, and imprisonment from one to eight years.

      Last verified on Tuesday 6th March 2018

    • Brazil

      The Securities Market Law establishes administrative liability that may be imposed by the CVM for practices against its provisions, against the Corporations Law and against the CVM’s regulations. The penalties may include warning, payment of fines; suspension or prohibition from exercising corporate activities; and a suspension or cancelation of the authorisation to exercise activities in the Brazilian capital markets.

      The fines imposed by the CVM cannot exceed the highest of the following values: (i) 50 million reais; (ii) twice the value of the consideration associated with the wrongdoing; (iii) three times the economic advantage derived or loss avoided from the illegal trading; (iv) or two times the value of the damage caused to investors due to the illegal trading, and imprisonment from one to eight years.          

      Furthermore, the CVM can prohibit companies from entering into contracts with government entities, including the participation in public bids and financial transactions with government-owned financial institutions.

      Law No. 13.506/2017, of 13 November 2017, known as the Financial Leniency Law, innovated with rules regarding the administrative sanctioning process within BACEN and CVM. With regard to BACEN, the main points of Law No. 13.506/2017 are found in Chapter II (sections 2 to 32). Section 3 provides for 17 punishable offenses and section 5 penalties to be applied to the respective infractions, which include public admonition, fine, prohibition of providing certain services and perform certain activities or modalities of operation, disqualification to act as administrator and hold a statutory position and cancellation of the authorisation for operation. In subsequent articles, Law No. 13.506/2017 addresses the factors to be used as generic parameters for the dosimetry of penalties: recidivism, severity and duration of the infraction, degree of injury to the National Financial System (SFN) and financial capacity of the offender, also defining how penalties will be applied, setting limits and new procedures, such as the amount of a fine that will not exceed the greater of 2 billion reais or 0.5 per cent (five tenths) of the revenue from services and financial products. Law No. 13.506/2017 also creates alternative means of settling disputes, named the compromise term (sections 11 to 15) and the administrative agreement in the process of supervision, known as the Leniency Agreement (sections 30 to 32).

      In relation to the CVM, its sanctioning administrative process is regulated in Chapter III (sections 33 to 35) of Law No. 13.506/2017, applying some provisions of the previous Chapter for the regulation of the matter. The highlight in relation to CVM refers to the limit of the fine that it can apply, which will not exceed the greater of 50 million reais, twice the value of the issue or irregular operation, three times the amount of the economic advantage obtained or the loss avoided as a result of the wrongful act, or double the harm caused to investors as a result of the wrongful act. In addition, the CVM may prohibit those accused of hiring, up to a maximum of five years, with official financial institutions, and of participating in a bidding that has as its object acquisitions, divestitures, works and services concessions and concessions of public services in public administration federal, state, district and municipal governments and in indirect public administration entities. Law No. 13.506/2017 also amends criminal offenses provided for in Law No. 6,385/76, such as insider trading and market manipulation.

      Finally, the final and transitional provisions of Law No. 13.506/2017 are contained in the remaining sections of Chapter IV (sections 36 to 72), such as updating the extrajudicial liquidation of financial institutions regulation, establishment of rules on transactions between related parties for financial institutions, provision of appeals against COAF decisions regarding the application of administrative penalties to the National Financial System Resources Council (CRSFN), changes in exchange control rules, as well as a broad change and consolidation of the current legislation, in view of the new legal text.

      Law No. 10,303/2001 of 31 October 2011 added to the Securities Market Law criminal liability of individuals for crimes against the capital markets, such as insider trading and market manipulation. The criminal penalties may range from one to eight years of imprisonment and from six months to two years of detention. Fines may also be imposed.

      In turn, Law No. 9,613/1998, of 3 March 1998, which addresses money laundering crimes and creates the Council of Control of Financial Activities (COAF), establishes criminal penalties of imprisonment from three to 10 years and the payment of fines.

      Law No. 7,492/1986, of 16 June 1986 establishes crimes against the National Financial System (white-collar crimes), such as inducing or misleading investors or authorities about an operation, either withholding material information or providing false data, or issuing and trading securities without the necessary register before the CVM, and establishes the criminal penalties of imprisonment from two up to 12 years and the payment of fines.

      Last verified on Tuesday 6th March 2018

    • Brazil

      Investors may file complaints with the CVM and BACEN for any misconduct of any entities participating in the Brazilian securities distribution system. Also, private investors may file lawsuits or initiate arbitration proceedings (if this is the mechanism elected by the parties to resolve conflicts) to obtain remedies against any losses they have suffered based on the general civil responsibility rules contained in the Brazilian Civil Code. In case of a lawsuit, a civil or a federal court would be the applicable venues, depending on whether the federal government, an autarchic entity or a federal public company are considered as interested party in the lawsuit in the condition of authors, defendents, assistants or opponents, Investors may also seek coverage for losses (limited to 120,000 reais per event) deriving from operational mistakes of the brokers and agents dealing as intermediaries or custody agents within the markets administrated by B3.          

      The usage of arbitration is expressly allowed by the Corporations Law. The corporation by-laws may include arbitration agreement as a conflict resolution mechanism in cases of divergences between shareholders and the corporation or between the controller shareholders and minority shareholders. Since 2015, by means of Law No. 13.129, of 26 May 2015, the approval of the amendment of the corporation’s by-laws in order to insert an arbitration agreement, in some circumstances, triggers the right of refund of shares to the dissenting shareholder.

      Last verified on Tuesday 6th March 2018

    • Brazil

      The CVM can bring administrative enforcement proceedings against the legal entities and individuals suspect of breaching the capital markets regulation. The proceeding is usually preceded by an investigation initiated by a technical area (Superintendency) of the CVM, results in a formal accusation against the suspects, grants the right of full defence to the suspects, is analysed by the Legal Division of the CVM, and is decided either by the Board of Commissioners or by the Superintendent who heads the technical area that initiated the investigation. Against the decision of the Superintendent, the convicted individual or entity can appeal to the Board of Commissioners. The decisions of the Board of Commissioners can be appealed to the National Financial System Appeals Council (CRSFN), a collegiate body uniting representatives of both public entities (the Ministry of Finance, the CVM and the BACEN) and private associations (such as the Brazilian Banking Federation or the Brazilian Association of Listed Corporations).

      Law No. 13.506/2017 brought the possibility of the celebration of leniency agreements by BACEN and CVM. Nevertheless, such law is still novelty for market players and as of January 2018, the procedures and requirements for leniency agreements have not been regulated.        

      Last verified on Tuesday 6th March 2018

    • Brazil

      While certain jurisdictions adopt a closed type of definition of securities, which is granted by a list of assets that are considered securities, and others choose an open type of definition of securities, in which investment arrangements that fall into certain characteristics are considered securities, Brazil follows a hybrid mechanism to define the instruments that can be defined as securities.

      Article 2 of the Securities Market Law defines the concept of securities, as follows:

      (i)  shares, debentures and warrants;

      (ii)  coupons, rights, subscription notes and share certificates related to the securities listed in item “i”;

      (iii)  depositary receipts;

      (iv)  debenture certificates;

      (v)  shares of investment funds or investment clubs;

      (vi)  commercial papers;

      (vii)  futures, options or other derivatives contracts where the underlying assets are securities;

      (viii)  other derivatives contracts, regardless of the respective underlying asset;

      (ix)  whenever offered to the public, any other title or collective investment contract that grants equity, partnership or compensation, including rendering of services whose earnings result from the efforts of the entrepreneur or third parties.

      Items (i) to (viii) of article 2 of the Securities Market Law establish a list of instruments that are characterised as securities, while item (ix) brings a general concept through which any other titles or investment contracts can be tested in order to verify whether they would be considered and treated as securities for purposes of the law. 

      Last verified on Tuesday 6th March 2018

    • Brazil

      Law 6385/76 establishes that no public offering of any kind of securities in the Brazilian capital markets may occur without prior registration with the CVM. The following activities characterise a public offering of securities under Law 6385/76:

      • use of sale or subscription lists or slips, leaflets, prospectuses or advertisements targeted at the public;
      • seeking securities subscribers or purchasers through employees, agents or brokers; and
      • trading conducted at shops, offices or facilities open to the public or through the use of public communication services.

      Further to such provisions of the Securities Market Law, the public offering of securities is also regulated by CVM Instruction 400, which provides for the regulation of securities offerings and their registration.

      Further, CVM Instruction 400 requires an offer registration request to be filed by both the issuer and the lead underwriter with the relevant offering documents, including a prospectus with minimum content, which is listed in such rule.

      With the submission of the offering registration request, together with the relevant documentation, the issuer may initiate efforts to collect order indications from investors with a preliminary prospectus. However, it has become common practice that only after the CVM issues a letter acknowledging the terms of the offer and indicating its final comments to the documents will the bookbuilding and roadshow presentations take place. By the end of the bookbuilding procedures, when the underwriter or underwriters reach the final pricing terms, the final documentation is submitted to the CVM and only then is the registration granted. After the registration of the offering is granted, an announcement is published in the newspaper and the sales can be completed.

      It is important to note that the CVM Board of Officers (Colegiado) can grant specific waivers of compliance with the requirements of CVM Instruction 400. The registration process with the CVM may take from 10 to 12 weeks to complete.

      Despite its technical concept of a public offer rule, the CVM Instruction 476 rules offerings of securities with restricted selling efforts, which are exempt from registration before the CVM. Pursuant to this rule, the selling efforts are restricted of up to a maximum of 75 professional investors, of which up to 50 may effectively purchase securities.

      Private offerings are not subject to the prior registration before the CVM by neither the issuer nor the lead underwriter.

      Last verified on Tuesday 6th March 2018

    • Brazil

      CVM Instruction 400 sets out the requirement of the disclosure of the prospectus for the distribution of public offerings. This document shall be elaborated by the issuer together with the underwriter and disclose complete, precise, truthful, current, clear, objective and necessary information, in understandable language, so that investors can form their investment decisions.

      The prospectus shall, in a manner that it neither omits important facts nor contain information that may mislead investors (material misrepresentation or omission), provide data and information regarding (i) the offer; (ii) the securities subject of the offer and their rights; (iii) the issuer and its assets, economic and financial conditions; (iv) third party guarantors of obligations related to the securities object of the offer; and (v) third parties that will be recipients of the funds raised with the offer.  

      Additionally, section 21 of CVM Instruction No. 480 of 7 December 2009, as amended (CVM Instruction 480), which regulates the registration of issuers of securities in the Brazilian markets regulated by the CVM, sets out the following periodical information documents that must be disclosed by the issuers through the CVM website:

      • registration form, to be updated annually;
      • reference form, which is one of the most important and complete documents regarding listed companies, to be updated annually;
      • financial statements;
      • standardised financial statement form (DFP);
      • quarterly information form (ITR); and
      • minutes of general meetings and notices of general meetings.

      In the case of public offerings with restricted selling efforts, the disclosure requirement consists of summarised information regarding the issuer and the offer. As for the private offerings, there are no disclosure requirements imposed by the Brazilian authorities. We shall also discuss the disclosure requirements of material information below.

      Last verified on Tuesday 6th March 2018

    • Brazil

      CVM Instruction 400 provides that issuers of securities may request an exemption from registration or an exemption from the prospectus requirements. It is important to note that any exemptions need to be sought on a case-by-case basis.

      A common exemption from registration example is the public offer of single and indivisible lot of securities. In the past couple of years, it has been used with more frequency the exemption from registration of securities issued by small and micro companies, as defined by law.

      In addition, CVM Instruction No. 400 provides that the following public offer distributions shall be automatically exempted from registration:

      • those regarding the sale of shares of government-controlled entities;
      • a single and indivisible lot of securities;
      • securities issued by small businesses companies, as defined in the law.

      Also, offers under CVM Instruction 476 discussed above are also exempt from registration. Pursuant to this rule, the selling efforts are restricted of up to a maximum of 75 professional investors, of which up to 50 may effectively purchase securities.

      Last verified on Tuesday 6th March 2018

    • Brazil

      Based on Brazilian law, any income or gains obtained by a foreign investor under the securities market is subject to taxation by withholding income tax, levied at a rate of 15 per cent, except where the beneficiary resides in a tax haven jurisdiction, in which case a 25 per cent rate applies.

      In relation to financial investments, the foreign investors are, in general, subject to the same taxation applicable to Brazilian individuals, unless such foreign investors obtain the registration with the BACEN and the CVM as foreign investor in Brazilian financial and capital markets, the so-called 4,373 investor, as explained below.

      Then, based on special regime, the 4,373 investors will be subject to withholding income tax at the following rates depending on the nature of the investment:

      • 10 per cent, on income and gains arising from stock funds, swap transactions, futures on an organised OTC market;
      • 15 per cent in all other cases, including on income and gains arising from fixed yield investments and fixed yield investment funds.

      Additionally, 4,373 Investors are exempt from taxation on the capital gains earned: (i) on transactions carried out in Brazilian stocks, futures and commodities exchanges, except in relation to combined transactions that permit a fixed yield result; (ii) on transactions with gold on an OTC market; and (iii) transactions with bonds issued by the federal government.

      Last verified on Tuesday 6th March 2018

    • Brazil

      Securities can be traded either publicly or privately, in securities exchanges or on organised and non-organised OTC markets.

      In March 2017, BM&FBovespa merged with CETIP, which resulted in the creation of B3. B3 is the only exchange currently operating in Brazil, acting as exchange for equities, equity derivatives, derivatives, corporate bonds and other financial instruments. B3, now with its Securities Segment (UTVM), acts as administrator of the organised OTC market once administered by CETIP.

      B3 is duly authorised by the CVM to operate and, therefore, must observe all rules established by it. It also act as self-regulatory body that has its own internal rules concerning the criteria for approval, registration and trading of securities transactions.

      Last verified on Tuesday 6th March 2018

    • Brazil

      Securities that are traded or registered in exchanges and organised OTC markets may be cleared within their systems in accordance with the rules applied by each administrator of such environments, since they also act as clearing and settlement system. There are, however, certain exceptions. For example, B3 will only provide clearing services in those transactions where it also acts as central counterparty, in accordance with its manuals.

      In case of B3 - Securities Segment (UTVM), all OTC transactions registered therein must be cleared within its systems, except for: (i) transactions entered into by an authorised participant of B3 - Securities Segment (UTVM) (clearing members, settlement banks, traders, brokers, custodians and registration agent) and its clients, and (ii) transactions governed by foreign law.               

      Securities denominated in foreign currency cannot be cleared in Brazil, since the country imposes controls on the inflow and outflow of foreign exchange. 

      Last verified on Tuesday 6th March 2018

    • Brazil

      Brazilian corporate funding operations in the domestic and international markets totalled 178,5 billion reais in 2016 (not including the 20 billion reais in debentures issued by leasing companies). This result signals a timid recovery of offerings compared to the values of the past five years, but becomes an important indicator when considering the country’s actual political and economic situation. Equity offerings, both primary and secondary offerings, correspond for 6 per cent of 2016 overall Brazilian offerings. Among those sectors that made the most use of the equity capital markets in 2016 were electricity, transport and logistics, which were responsible for 50 per cent of the year’s equity issues.

      In contrast, the Brazilian debt market has seen a positive outcome in the long run, with debentures offerings totalling around 57 billion reais in 2016. However, said number represents11 per cent decrease compared to 2015. On the other hand, Certificate of Receivables of Real Estate and Certificate of Receivables of Agribusiness, which are tax exempted for natural persons, had their offerings increased from 12 per cent in 2015 to 27 per cent in 2016 relatively to the amount of debt offered in 2016. The offerings of promissory notes and quotas of receivables funds fell for the second year in a row, accounting for 10 per cent of the offerings.

      Last verified on Tuesday 6th March 2018

    • Brazil

      Since 2000, structured finance has gained relevance in number of transactions and volumes, especially through two securitisation instruments: (i) through securitisation companies; and (ii) receivable funds (FIDCs).

      Securitisation companies characterised as non-financial corporations with the corporate object of purchasing and securitising credits and issuing and offering negotiable instruments in the market are regulated by CMN Resolution No. 2.686, of 26 January 2000. The most used instruments issued by securitisation companies are the Certificate of Receivables of Real Estate and Certificate of Receivables of Agribusiness. 

      In August 2016, the CVM rendered important decision related to the Certificate of Receivables of Agribusiness. Prior to said decision, the Certificate of Receivables of Agribusiness could only be offered if the funds raised in their issuance would be destined to the financing of rural producers. By means of the decision, the CVM changed its understanding to accept the offering of Certificates of Receivables of Agribusiness that had their basis in transactions among rural producers (or cooperatives) and third parties as long as with any connection to any of the stages of rural producing.  

      FIDCs consist of mutual funds that acquire credit rights and are regulated by CVM Instruction No. 356, of 17 December 2001.

      Later, in 2010, Law No. 12.249, of 11 December  2010, created another instrument of relevance for structure finance transactions: the Certificate of Structured Transactions (COE), which is issued by financial institutions and represents transactions backed by derivatives instruments. 

      Last verified on Tuesday 6th March 2018

    • Brazil

      On 30 September 2005, the Brazilian Securities Commission (CVM) issued Guidance Opinion 33 (Opinion 33/05), that deals with the intermediation of transactions and offerings of securities issued and admitted to trading in other jurisdictions and the procedures to advertise such securities to investors residing in Brazil.

      Pursuant to Opinion 33/05, only members of the Brazilian securities distribution system duly registered with CVM are authorised to (i) exercise the activity of intermediating transactions involving securities in Brazil and (ii) exercise an intermediation activity in Brazil. Therefore, only a member of the Brazilian securities distribution system registered with CVM may conduct activities in Brazil involving offering of securities issued and admitted to trading in other jurisdictions to investors residing in Brazil. For a discussion of a public offering of foreign securities in Brazil see question 25.

      Last verified on Tuesday 6th March 2018

    • Brazil

      Under Brazilian law, insider trading refers to the illegal conduct in which an entity or individual trades securities in breach of a fiduciary duty with a securities issuer on the basis of material non-public information. In Brazil, the conduct was first considered an administrative violation by the Corporations Law.

      Until 1984, only corporate officers could be considered insiders. Nowadays, insider traders may be the company itself, direct and indirect controlling shareholders, directors, members of the board of directors and members of any corporate body with technical or advisory roles or any person who, owing to his or her position at either the company or at its controller, controlled company or subsidiaries, has knowledge of non-public material information. It also establishes that any persons, while aware of non-public material information, may be considered insiders (tippee), especially those who have any commercial, professional or fiduciary relationship with the company, such as auditors, outside accountants, brokers, investment bankers, lawyers, etc (temporary insiders).

      Law No. 10,301/2001 amended the Corporations Law to prevent the use of non-public material information by any individual or entity with knowledge or access to it before its disclosure. Furthermore, such Law criminalised insider trading by adding article 27-D to the Securities Marker Law. 

      Law No. 10,303/2001 of 31 October 2011 amended article 27-D of the Securities Market Law and the criminal liability of individuals for crimes against the capital markets. Nowadays, anyone who trades securities in possession of material non-public information may be convicted of a crime subject to imprisonment from one to five years. The sanction can be increased by one-third if the person who commits such crime has the obligation to maintain the information confidential.

      Last verified on Tuesday 6th March 2018

    • Brazil

      The intermediation of transactions involving securities issued and admitted for trading in other jurisdictions may not be considered as an irregular public offering in Brazil provided that (i) the activity of prospecting investors is performed solely overseas by foreign agents duly authorised to perform such activities overseas, and (ii) the offering is not characterised as a public offering in Brazil under Law 6385/76. The coexistence of the factors mentioned in items (i) and (ii) above may not be sufficient to disqualify as public an offering of securities in Brazil. CVM shall consider the characterisation of a certain offering of securities as an irregular public offering based on the analysis of each case.

      Last verified on Tuesday 6th March 2018

    • Brazil

      The corporate governance principles in Brazil are based on the pillars of accountability, fairness, transparency and corporate responsibility. Concepts such as interest of the company, good faith, fiduciary duties, such as the duty of loyalty and duty of care, and conflicts of interest are provided for in the Civil Code (Law 10.406/02), the Corporations Law (Law 6.404/76) and regulations enacted by the CVM, in addition to the voluntary Code of Best Corporate Governance Practices, issued by the Brazilian Institute of Corporate Governance (IBGC), a highly reputable not-for-profit organisation aimed at improving corporate governance practices in Brazil. The principle of the ‘business judgement rule’ is also recognised and applied by the CVM.

      Last verified on Tuesday 6th March 2018

    • Brazil

      Brazilian public companies are managed by two or more executive officers, responsible for the legal representation and daily management of the businesses. Executive officers should be elected by the board of directors composed by at least three members. The board of directors is responsible for, among others, establishing the general strategy for the corporation's business and supervising the performance of the directors. Boards of directors of public companies that have adhered to special segments (Nivel 2 or Novo Mercado) within the B3 shall have at least 20 per cent of independent directors. Public companies shall also have an audit committee with three to five members. 

      Last verified on Tuesday 6th March 2018

    • Brazil

      As a general rule, in Brazil, all issuers of public securities need to be organised as corporations and registered as a public company with the CVM, according to section 21 of Law 6.385. Such registration is ruled by CVM Instruction 480. Companies registered in category A are allowed to negotiate any security in organised markets, while companies registered in category B are allowed to negotiate any security, except stocks or stocks deposit certificates, and any securities which allow their owner to acquire the mentioned securities. 

      Although subject to different rules, investment funds, which are constituted as condominiums and not as corporations, are also allowed to publicly offer their shares. Also, the CVM has allowed other types of entities to offer their interests to the public, such as real estate units of hotels that are sold as condominiums and limited liability companies that can issue promissory notes. Finally, foreign issuers can list depositary receipts in B3.

      Last verified on Tuesday 6th March 2018

    • Brazil

      As to the recent initiatives, we could name the adoption of accounting principles in harmony with IFRS and regulations issued by the CVM, including CVM Instruction 480, that created new disclosure requirements with the reference form  (financial information, risk factors, related-party transactions and compensation), and CVM Instruction 481/09, on proxy voting and information to be disclosed prior to shareholders’ meetings. Instruction 561 issued in 2015 is also important since it deals with participation and voting at shareholders' meetings of listed companies by electronic means, which eases the access of investors to the meetings. As it regards regulation of investment funds and securitisation transactions there has been a relevant effort of the CVM in improving regulation to provide more protection to investors in general, mainly by strengthen the disclosure requirements mainly.

      Last verified on Tuesday 6th March 2018

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