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Publicly Traded Companies Newsletter – No 04 – April 2023
May 15th, 2023
The Publicly Traded Companies Newsletter aims to provide information on the main media news, trends, cases and legislation concerning Traded Companies matters, in Brazil and abroad. This material is for informational purposes and should not be used for decision making. Specific legal advice can be provided by our lawyers.
BRAZILIAN SECURITIES COMISSION (“CVM”)
REGULATION
On May 11, 2023, the Brazilian Securities and Exchange Commission (“CVM”) published CVM Resolutions 182 and 183, which amend the regulations applicable to the Brazilian Depositary Receipts (“BDR”) programs, seeking to modernize protection mechanisms for the Brazilian capital market and its investors.
CVM Resolution 182 regulates aspects related to the financial backing of BDR, its classification in different levels and the registration requirements for programs, replacing CVM Instruction 332. On the other hand, CVM Resolution 183 amends the provisions of CVM Resolutions 80 and 160 on the registration of foreign issuers.
Among the main changes implemented by the new regulations are the following:
- BDR debt securities by Brazilian issuers: CVM Resolution 182 now authorizes securities representing debt issued by Brazilian issuers, even when not traded on organized markets, to represent the backing for BDRs traded in Brazil.
- Investment entities: CVM Resolution 182 introduced specific disclosure rules for issuers classified as investment entities.
- Requirements for obtaining issuer registration: Annex A of CVM Resolution 183 provides three possibilities for foreign issuers to obtain registration. In addition, the new rule has eliminated requirements related to the location of the issuer’s assets and revenues.
- BDR public offerings in Level I and Level II sponsored programs: the CVM has opted to maintain the possibility of Level I and II BDR public offerings, aimed exclusively at professional investors.
- Simplified registration requirements: CVM Resolution 183 reduced the quantitative thresholds for issuers that apply for registration based on the fact that they already trade securities in other jurisdictions – from 25% of outstanding shares and BRL 25 million regarding the average daily financial volume to 10% and BRL 10 million, respectively.
- Integration with the regulatory framework for public offerings: as a result of CVM Resolution 183, the rules governing public offerings of BDRs have been integrated with the general rules for public offerings under CVM Resolution 160, seeking to preserve, whenever possible, the consistency of the requirements that apply to BDR offerings and offerings of the securities that provide backing for the BDR.
- Lift of the lock-up rule: CVM Resolution 183 amended CVM Resolution 160 to lift the lock-up restriction on secondary market trading of publicly offered securities, in the case of fixed income securities, traded as part of blocked repo transactions.
CVM Resolutions 182 and 183 will enter into force on June 01, 2023.
Our team will also provide a specific guide on the new BDR regulatory framework.
SANCTIONING PROCEEDINGS
April 04 trial session on conflict of interest and disclosure of material act or fact
On April 04, 2023, the Brazilian Securities and Exchange Commission (“CVM”) held the trial session for Sanctioning Administrative Proceeding (“PAS”) No. 19957.009294/2017-11.
The PAS was brought by the CVM against Bernardo Flores, Caio Aurélio Gonzalez Blasco (“Caio Blasco”), and Triskelion Capital Consultoria e Gestão de Investimentos Estratégicos Ltda. (“Triskelion”), together with Bernardo Flores and Caio Blasco (“Defendants”).
The PAS investigates the possible liability of: (i) Bernardo Flores, investor relations officer at Decrusul S.A. (“Company” or “Recrusul”), for violation of art. 157, paragraph 4, of Law No. 6,404, dated December 15, 1976 (“Brazilian Corporation Law”), art. 3, main section, of CVM Instruction No. 358, in force at the time; (ii) Caio Blasco, as a member of the Board of Directors of the Company, for violation of art. 156 of the Brazilian Corporation Law; and (iii) Triskelion, as controlling shareholder of the Company, for violation of Article 115, paragraph 1, of the Brazilian Corporation Law.
The case addresses the complaint filed by a shareholder of the Company, who requested the CVM to express its opinion, among other matters, regarding the acts involved in Recrusul’s capital increase and the delay, by the new shareholder Triskelion, in paying up the shares subscribed in the capital increase.
In a report, the CVM expressed its position that Triskelion’s failure to pay up the funds under the conditions originally provided for in the capital increase should have been announced through a material fact, due to the significant financial amount involved, as well as the expected entry of a new majority shareholder. In addition, the CVM clarified that the management failed to inform the company that the funds had not been deposited within the expected time frame, even though it relied on negotiations with Triskelion.
Regarding Caio Blasco’s liability, the CVM determined that he could not have voted on the resolution to extend the term for payment of the shares subscribed by Triskelion in the capital increase, considering that he was the main shareholder of Triskelion, thus constituting a conflict of interest.
After analyzing the case and following the vote of Reporting Officer Alexandre Rangel, the CVM Collegiate Board unanimously decided as follows:
- Bernardo Flores: Liable to pay a fine of BRL 200,000.00 for failure to announce the non-payment of the capital increase by Triskelion under the conditions originally disclosed;
- Caio Blasco: Liable to pay a fine of BRL 300,000.00 for having exercised its voting right at the Board of Directors Meeting on the term extension, in a conflict of interest.
- Triskelion: Liable to pay a fine of BRL 500,000.00 for having exercised its voting right at the Extraordinary General Meeting on the term extension, in a conflict of interest.
READ THE VOTE OF REPORTING OFFICER ALEXANDRE RANGEL IN FULL
READ THE VOTE OF OFFICER FLÁVIA PERLINGEIRO IN FULL
READ THE VOTE OF PRESIDENT JOÃO PEDRO NASCIMENTO IN FULL
April 04 trial session on disclosure of material fact
On April 04, 2023, the Brazilian Securities and Exchange Commission (“CVM”) held the trial session for Sanctioning Administrative Proceeding (“PAS”) No. 19957.007550/2019-05.
The PAS was brought by the Superintendence of Company Relations (“Technical Area”) against David Moise Salama (“Defendant”), investor relations officer of Companhia Nacional Siderúrgica (“Company”), from May 30, 2016, to March 26, 2018.
The PAS arose from CVM Administrative Proceeding No. 19957.005787/2019-43, which was initiated by Official Letter No. 712/2019/MPF/PRM-VR/LECOH (“Official Letter“), sent to CVM by the Attorney General’s Office in the City of Volta Redonda, and sought to alert the CVM about the potential failure to comply with the obligation to disclose material facts related to the Company, pursuant to art. 157, paragraph 3, of Law No. 6,404, of December 15, 1976, and of art. 2, sole paragraph, items XIX and XXII, of CVM Instruction 358, of January 03, 2022, in force at the time.
During the period of time mentioned above, the Company operated the Presidente Vargas Power Plant (“Power Plant“), for which it had an environmental operating permit, and had entered into a conduct adjustment agreement (“TAC“) with the State Environmental Institute (“INEA“). On November 30, 2017, INEA sent an Official Letter (“INEA Letter“) to the Company informing that, due to the expiration of the TAC, the Plant would not have an operating license after December 10, 2017.
In early December, the media published news informing that the Company should shut down its activities at the Power Plant. On December 04, 2017, the CVM requested that the Company provide clarification on the failure to disclose a material fact on this matter. On December 07, 2017, a court decision ordered the Company to disclose the INEA Letter as a material fact. On the same date, the State Commission for Environmental Control endorsed the INEA Letter and issued a temporary environmental authorization, under which the Company should submit, within 180 days, a plan to either shut down its activities or sign a new agreement with INEA.
On December 08, 2017, the Company disclosed a material fact informing that it had obtained an extension of its permits for 180 days and that it would seek a definitive solution with the appropriate authorities within this period of time.
On December 13, 2017, the Company disclosed a material fact referring to the court decision rendered on December 07, 2017, which determined the publication of the fact at issue about the INEA Letter, informing that it had been adversely affected due to the extension received.
The Technical Area concluded that the material facts of December 08 and 13, 2017, were disclosed in an incomplete and inaccurate manner, as reported in more detail in the opinion.
After analyzing the case, Reporting Officer Alexandre Rangel voted to hold the Defendant liable to a fine of BRL 345,000.00.
The session was then adjourned after officer João Accioly requested that the case be reviewed.
READ THE VOTE OF REPORTING OFFICER ALEXANDRE RANGEL IN FULL
CVM accepts proposal for Settlement Agreement with Gustavo Henrique Santos de Souza and Paulo Rogério Caffarelli
On April 05, 2023, the CVM accepted the settlement agreement proposed by Gustavo Henrique Santos de Souza (“Gustavo Souza“), as Investor Relations Officer of Cielo S.A. (“Company“), and by Paulo Rogério Caffarelli (“Paulo Caffarelli“), as Chief Executive Officer of Cielo, within the scope of a sanctioning administrative proceeding filed by the Superintendence of Company Relations (“SEP“).
The complaint arose from a proceeding brought to analyze potential irregularity in the disclosure of information by the Company, due to news published in the media on January 27, 2021, to investigate alleged irregularities by:
- Gustavo Henrique Santos de Souza, for failing to disclose, in a timely manner, a material fact related to the likely commencement of WhatsApp Pay activities during the first semester of 2021 (infraction, in theory, of article 157, paragraph 4, of Law No. 6,404, of October 15, 1976 (“Brazilian Corporation Law“), and the provision in article 6, sole paragraph, of CVM Instruction 358, in force at the time).
- Paulo Rogério Caffarelli, for failing to protect the confidentiality of the information about the likely commencement of WhatsApp Pay activities during the first semester of 2021, transmitted in a conference call (held in the morning of January 27, 2021), until such information was disclosed to the market by the Company, in due course, through a material fact (violation, in theory, of the provisions of art. 155, paragraph 1, of the Brazilian Corporation Law, and art. 8 of CVM Instruction 358, in force at the time).
PFE-CVM, along with the CVM, concluded that there was no legal impediment to reaching a settlement agreement. After negotiations with the Settlement Agreement Committee (“CTC“), the proponents undertook to pay BRL 960,000.00 to the CVM, of which BRL 480,000.00 must be paid by each proponent.
The CTC considered the acceptance of the agreement as timely and appropriate. The Collegiate Board of the CVM followed the CTC’s decision and accepted the Settlement Agreement with Gustavo Henrique Santos de Souza and Paulo Rogério Caffarelli.
CVM accepts proposal for Settlement Agreement with Rodrigo Fernandes Hissa and Sidney Ostrowski
On April 05, 2023, the Brazilian Securities and Exchange Commission (“CVM“) accepted the Settlement Agreement proposed by Rodrigo Fernandes Hissa (“Rodrigo Hissa“) and Sidney Ostrowski (“Sidney Ostrowski“), Chief Operating Officers of the construction company Tenda S.A. (“Company“), prior to the filing of a sanctioning administrative proceeding (“PAS“) by the Superintendence of Market and Intermediary Relations (“SMI“).
PAS CVM 19957.006925/2022-15 was brought by the SMI to investigate alleged insider trading when the Company carried out operations with the Company’s shares in possession of potentially important information undisclosed to the market, for attending a managerial meeting held on January 11, 2022, in which an analysis of the operational, financial and strategic aspects of the Company’s business plan for 2022 and upcoming years was presented, including information on the rise in construction costs and impacts on the Company’s construction budgets (violation, in theory, of art. 13 of CVM Resolution 44).
After negotiations with the Settlement Agreement Committee (““CTC”), the proponents undertook to pay the following amounts to the CVM, adjusted by the IPCA index, from March 11, 2022, until the effective payment date:
- Rodrigo Fernandes Hissa: BRL 191,276,22; and
- Sidney Ostrowski: BRL 527,761,20.
The CTC considered the acceptance of the agreement as timely and appropriate. The Collegiate Board of the CVM followed the CTC’s decision and accepted the Settlement Agreement with Rodrigo Hissa and Sidney Ostrorowski.
CVM accepts proposal for Settlement Agreement with Sonae Sierra Brazil Holdings, Sarl.
On April 12, 2023, the Brazilian Securities and Exchange Commission (“CVM“) accepted the Settlement Agreement proposed by Sonae Sierra Brazil Holdings, Sarl (“Controlling Company“) prior to the opening of a sanctioning administrative proceeding (“PAS“) by the Superintendence of Company Relations (“SEP“).
The proceeding arose from the Controlling Company’s consultation with the SEP, on October 31, 2022, about the interpretation of article 14, paragraph 2, of CVM Resolution No. 44, of August 23, 2021, as amended (“RCVM 44“), which regulates the 15-day trading ban period established in the article. In the consultation, the Controlling Company informed that, on October 26, 2022, it allegedly carried out transactions with securities issued by A.S.S.C. S.A. (“Subsidiary“), of which Sonae would be the controlling shareholder, during the trading ban period, prior to the disclosure of the Quarterly Report (“ITR“), scheduled for November 10, 2022.
The Specialized Federal Attorney General’s Office, along with the CVM, concluded that there was no legal impediment to reaching a settlement agreement. After negotiations with the Settlement Agreement Committee (““CTC”), the Controlling Company undertook to pay BRL 140,000.00 to the CVM.
CVM rejects proposal for Settlement Agreement with Marcos Antônio Molina dos Santos, Tang David and MMS Participações Ltda.
On April 12, 2023, the Brazilian Securities and Exchange Commission (“CVM“) rejected the Settlement Agreement proposed by MMS Participações Ltda. (“MMS”), final constituent of the securities transactions of Marfrig Global Foods S.A. (“Company“) in the spot and forward markets; Marcos Antonio Molina dos Santos (“Marcos Molina“), controller of MMS; and Tang David (together with Marcos Molina), an executive officer without specific designation of Marfrig, prior to the opening of a sanctioning administrative proceeding (“PAS“) by the Superintendence of Market and Intermediary Relations (“SMI“).
PAS CVM 19957.005456/2021-28 was brought by the SMI to investigate the alleged creation of artificial conditions of demand, supply or price of securities in business involving the Company’s shares allegedly carried out by the constituent MMS (potential violation of CVM Instruction 8, in force at the time).
PFE-CVM, along with the CVM, concluded that there was no legal impediment to reaching a settlement agreement. After evaluation, the CTC considered that it would not be timely and appropriate to accept the settlement agreement due to the unprecedentedness and seriousness, in theory, of the case.
The CTC suggested that the agreement be rejected. The Collegiate Board of the CVM followed the CTC’s decision and rejected the Settlement Agreement with Marcos Molina, Tang David and MMS Participações Ltda.
CVM rejects Settlement Agreement proposal with Marina Oehling Gelman
On April 12, 2023, the Brazilian Securities and Exchange Commission (“CVM“) rejected the settlement agreement proposed by Marina Oehling Gelman (“Marina Gelman“), investor relations officer (“DRI“) of Ânima Holding S.A. (“Company“) within the scope of the sanctioning administrative proceeding brought by the Superintendence of Company Relations (“SEP“), with no other defendants.
The complaint arose from a proceeding filed to analyze the term for the Company to disclose material facts about the progress of the negotiation regarding the acquisition of the Brazilian operations of the Laureate Group (potential violation of art. 157, paragraph 4, of Law No. 6.404, of December 15, 1976, and arts. 3 and 6, sole paragraph, of CVM Instruction 358, in force at the time).
PFE-CVM, along with the CVM, concluded that there was no legal impediment to reaching a settlement agreement. After evaluation, the CTC considered that it would not be timely and appropriate to accept the settlement agreement considering that, despite all negotiation attempts, the proposed amount was far from what is considered adequate and sufficient by the CVM in similar cases.
Therefore, the CTC suggested that the agreement be rejected. The Collegiate Board of the CVM followed the CTC’s decision and rejected the Settlement Agreement with Marina Gelman.
CVM accepts Settlement Agreement proposal with André Corrêa Natal
On April 12, 2023, the Brazilian Securities and Exchange Commission (“CVM“) rejected the Settlement Agreement proposed by MMS Participações Ltda. (“MMS”), final constituent of the securities transactions of Marfrig Global Foods S.A. (“Company“) in the spot and forward markets; Marcos Antonio Molina dos Santos (“Marcos Molina“), controller of MMS; and Tang David (together with Marcos Molina), an executive officer without specific designation of Marfrig, prior to the opening of a sanctioning administrative proceeding (“PAS“) by the Superintendence of Market and Intermediary Relations (“SMI“).
PAS CVM 19957.005456/2021-28 was brought by the SMI to investigate the alleged creation of artificial conditions of demand, supply or price of securities in business involving the Company’s shares allegedly carried out by the constituent MMS (potential violation of CVM Instruction 8, in force at the time).
PFE-CVM, along with the CVM, concluded that there was no legal impediment to reaching a settlement agreement. After evaluation, the CTC considered that it would not be timely and appropriate to accept the settlement agreement due to the unprecedentedness and seriousness, in theory, of the case.
The CTC suggested that the agreement be rejected. The Collegiate Board of the CVM followed the CTC’s decision and rejected the Settlement Agreement with Marcos Molina, Tang David and MMS Participações Ltda.
CVM analyzes new Settlement Agreement proposed by JBS executives
On November 25, 2022, Joesley Mendonça Batista and Wesley Mendonça Batista (jointly, the “Defendants“), both, respectively, shareholder, vice-chairman of the Board of Directors and CEO of JBS S.A. (“Company“), have jointly submitted a Settlement Agreement proposal in an attempt to terminate Sanctioning Administrative Proceeding (“PAS”) No. 19957.004676/2018-39. The Settlement Agreement submitted by the Defendants is a second version, given that the Securities and Exchange Commission (“CVM“) rejected the first.
The PAS was brought by the Superintendence of Company Relations (“SEP“), to investigate a potential abuse of the Defendants’ voting rights, for indirectly voting on the approval of their own accounts, in a potential violation of the provisions of paragraph 1, article 115 of Law No. 6,404, of December 15, 1976 (“Brazilian Corporation Law“). The complaint was submitted to the Superintendence for Investor Protection and Guidance, claiming that the final analysis of the voting of the Company’s Annual General Meeting, held on April 28, 2017 (“AGO“), showed a considerable amount of votes in favor of the approval of the controlling shareholders.
The SEP submitted an official letter to the Company requesting the voting map of said AGO and, subsequently, a new letter requesting that the CEO of FB Participações S.A., holder of 42.3% of the Company’s capital stock, provide the Defendants’ opinion on the alleged violation. The Defendants responded that such impediment was disclosed by means of a CVM letter dated 2018, and that it could not be applied, since: (i) the letter is of a date subsequent to the AGO; and (ii) it would not be applicable due to the fact that the holding company is an autonomous center of interests.
In the first Settlement Agreement proposal, the Defendants undertook to pay BRL 1,500,000.00 each to the CVM, totaling BRL 3,000,000.00, which was rejected. Subsequently, the Defendants increased the global amount of the first proposal by BRL 500,000.00, reaching the amount of BRL 6,500,000.00. The Specialized Federal Attorney General’s Office, along with the CVM, agreed upon the execution of the Settlement Agreement.
However, the Settlement Agreement Committee (“CTC“) decided to reject the joint proposal for a settlement agreement submitted by the Defendants. By majority vote, the Collegiate Board of CVM diverged from the CTC and decided to accept the Settlement Agreement proposed by the Defendants.
April 25 trial session on investment policy delisting
On April 25, 2023, CVM held the trial session of Sanctioning Administrative Proceeding (“PAS“) No. 19957.009104/2019-27.
The PAS was brought by the Superintendence of Company Relations against Antônio Sergio de Souza Guetter (“Antônio Guetter“) and Luiz Eduardo da Veiga Sebastiani (“Luiz Sebastiani“, together with Antônio Guetter, “Defendants“), former officers of Companhia Paranaense de Energia S.A. (“Company”).
The PAS is investigating the potential liability of the Defendants for:
- non-compliance with article 153 of Law No. 6,404, of December 15, 1976, as amended (“Brazilian Corporation Law“), for not taking effective measures to reframe the investments to the Company’s investment policy;
- non-compliance with articles 176 and 177 of the Brazilian Corporation Law, due to the recognition and measurement of substantially overestimated balances related to financial investments, which became the subject to accounting adjustment; and
- further non-compliance with the aforementioned articles due to the disclosure, in the notes to the financial statements, about the Company’s “Securities”, regarding its impacts on the consolidation of investments held by UEG Araucária in Índico Fundo de Investimento Multimercado Crédito Privado. The non-compliance took place in 2014 (in connection with Antônio Guetter), as well as 2015, 2016, and 2017 (in connection with Luiz Sebastiani). The complaint states that the corresponding amounts were indexed to CDI percentages, when, in fact, they had no fixed income investment characteristics. On the contrary, they were subject to the risk related to projects to which the resources of such fund were ultimately directed.
In view of the irregularities found, the Defendants jointly proposed a Settlement Agreement. The Specialized Federal Attorney General’s Office, along with the CVM, stated that the proposal should be rejected, since it does not include compensation to the injured party in addition to the concretely evidenced losses.
After analyzing the case and following the vote of the reporting officer Otto Lobo, the Collegiate Board of CVM unanimously decided to dismiss the claims against Antônio Sergio de Souza Guetter and Luiz Eduardo da Veiga Sebastiani.
READ THE VOTE OF REPORTING OFFICER OTTO LOBO
April 25 trial session on irregularities regarding the allocation of funds in a debenture offering
On April 25, 2023, the CVM held the trial session of Sanctioning Administrative Proceeding (“PAS“) No. 19957.009798/2019-01. The PAS was brought by the Superintendence of Securities Registration (“SRE“) against Centara Investimentos e Participações S.A. (“Company“), due to several irregularities in the Company’s issuance of debentures under CVM Instruction 476, which was currently repealed by CVM Resolution 160.
The funds raised through the issuance of debentures (“Offering“) would be used to acquire all quotas from Realizar Empreendimentos Imobiliários Ltda. (“Realizar“), in order to develop the “Felicitá” real estate project, in the amount of BRL 7,000,000.00.
During the course of the Offering, irregularities were identified by the technical area of the CVM, which sent an official letter advising the leading intermediary to cancel the Offering with the CVM and B3, in addition to refunding the amounts given in exchange for the securities offered. In response to such letter, the Company informed that it held a General Meeting of Debenture Holders, in which it was decided to suspend the Offering.
Subsequently, the SRE sent a new letter to the Company, requesting documents related to the Offering and, among them, Realizar’s evaluation report. Upon preliminary investigations, the SRE found the following irregularities
- the overvaluation of the land, which is the purpose of the Offering’s development, in an appraisal report prepared by a company contracted by the issuer through a verbal agreement;
- the failure to present an evaluation report on Realizar, but instead an evaluation report on the real estate in which the project would be carried out;
- the failure to establish guarantees; and
- the destination of the funds raised by the Company, with numerous operations between related parties.
The Specialized Federal Attorney General’s Office, along with the CVM, published an opinion recommending that the Federal Public Prosecutor’s Office be notified, due to indications of a crime of public criminal action, as well as fraudulent management by issuing securities without sufficient collateral. As a result, the SRE drafted a new Statement of Charges.
After analyzing the case and following the vote of reporting officer Otto Lobo, the Collegiate Board of CVM unanimously decided to acknowledge the extinction of the Company’s liability, considering that there is no evidence in the records that the extinction of the legal entity was fraudulent or motivated by a simple attempt to evade the CVM sanctioning activity.
READ THE VOTE OF REPORTING OFFICER OTTO LOBO
CVM releases new issue of Sanctioning Activity Report
On April 05, 2023, the Brazilian Securities and Exchange Commission (“CVM“) published its Sanctioning Activity Report (“Report“), containing data from the 4th quarter of 2022 and the annual compilation.
According to the document, 693 potentially sanctioning administrative proceedings were carried out. Eight final areas of the CVM are involved in investigations that may result in sanctioning proceedings. During this period, the number of sanctioning proceedings was higher due to the adoption of a new methodology, applied based on the report for the second quarter of 2022, whose purpose was to bring greater accuracy and precision to regulated companies, the market and society.
The Report consolidates information about the activities of the CVM concerning oversight, investigation and inspection, which result in the prevention or mitigation of potential unlawful acts in the securities market.
The activities of enforcement and compliance with the law aim to curb misconduct and punish those who violate legal or regulatory provisions. Such activities are crucial for the protection of investors and for preserving the reliability, integrity, and development of the Brazilian capital market.
NEWS
CVM Open Data Portal provides Report on the Governance Code of Publicly Traded Companies
The Open Data Portal of the Brazilian Securities and Exchange Commission (“CVM“) has released a new dataset named “Informe do Código de Governança das Companhias Abertas” (free translation: “Report on the Governance Code of Listed Companies”), containing the reports submitted in the last five years.
In addition, the structured data from Section 3 of the Reference Form, with selected financial information, has also been included. The track record since 2010 has been updated.
The goal is to concentrate all the massive amount of public information provided by the regulator in a single channel, which relies on a modern infrastructure integrated into the Brazilian Open Data Portal, thus making the search and access to datasets simpler and more transparent. Likewise, the portal also allows interaction with other public agencies and entities.
AGREEMENT
CVM and ANBIMA approve the first accreditation of a public offering coordinator through a technical cooperation agreement
In April, the CVM and the Brazilian Financial and Capital Markets Association (“ANBIMA”) approved the first accreditation of a public offering coordinator, carried out through an agreement between the institutions.
The accreditation under discussion was granted to Ortiz Partners, which is now also the first non-financial institution to be authorized to coordinate public offerings of securities.
The measure follows the rules of CVM Resolution 161. According to the Resolution, all institutions that wish to act as coordinators must apply for registration with ANBIMA for prior analysis, and subsequently forward the application to the CVM for its further evaluation and final decision.
The accreditation has been valid since CVM Resolution 161 entered into force, in January 2023, and is mandatory for all those who wish to act as coordinators of public offerings of securities.
ACCESS CVM/SRE OFFICIAL LETTER 4/2023
INSTRUCTIONS TO THE MARKET
CVM provides instructions on changes to the CVMWeb system
On April 12, 2023, the CVM’s Superintendence of Institutional Investors (“SIN“) published CVM/SIN Circular Letter 1/2023, regarding the changes in the access to the CVMWeb and related systems, which will now be carried out through the user’s GOV.BR login.
This change is in line with the CVM’s goal of consolidating the use of digital services of the federal government.
ACCESS CVM/SRE OFFICIAL LETTER 1/2023
New BDRs of ETFs from BlackRock at B3
On April 12, 2023, BlackRock announced at B3, the launching of 21 new BDRs and ETFs, 15 of them linked to equities and 6 to fixed income, all with exposure to the United States.
Only 4 BDRs are directed to all investors, including individuals. The remaining BDRs are aimed at qualified investors – those with at least BRL 1,000,000.00 invested or that can attest their knowledge of the market through professional certifications.
BDR is a certificate issued by Brazilian institutions aimed at enabling access to shares of the largest global companies and the most traded ETFs in the world. It is an alternative for portfolio diversification, as it can be easily accessed through the brokerage house systems, with no need to transfer money abroad or worry about currency exchange. In addition, the access to the product by the investor is not taxed.
S&P Dow Jones Indexes and B3 launch the S&P/B3 Corporate Bond Indexes
On April 17, 2023, S&P Dow Jones Indexes (the world’s leading index provider), and B3 S.A. – Brasil, Bolsa, Balcão (“B3“), jointly announced the launch of two new fixed income debt securities indexes for the Brazilian domestic corporate bond market (“New Indexes“).
The New Indexes, which include the “S&P/B3 Brazil IPCA Corporate Bond Index” and the “S&P/B3 Brazil Liquid IPCA Corporate Bond Index”, are intended to measure the principal exposure to incentivized debentures in the Brazilian market, by using selection criteria based on relevant fixed income rules to select and weight their components.
Third preview of the B3 Ibovespa portfolio, effective as of May, has 86 assets
On April 27, 2023, B3 announced the third preview of the B3 Ibovespa portfolio (“Third Preview“), the main index of the most traded stocks on the exchange, which will be valid from May 02, 2023 to September 01, 2023. The final portfolio was announced on May 02, 2023.
The defining factor as to whether a stock will or will not be included in the index is liquidity, that is, the capacity a given stock has to be bought or sold quickly by the investor.
Indexes allow investors to monitor the performance of portfolios made up of stocks from different segments of the economy, allowing them to diversify their investments by means of referenced financial products.
The Third Preview encompasses more than 26 indexes divided into broad indexes (such as, the IBrX 100 B3 and the IBrX 50 B3), governance indexes, by economic sector, and ESG. Among the sector indexes are the IFIX B3 (which tracks the average performance of real estate funds traded in the stock exchange), the IAGRO B3 (related to agribusiness), and others.
Public data of listed and OTC products
On April 28, 2023, B3 announced that it had implemented changes to its website in order to improve the experience of its clients and provide market information in a timely manner.
As of April 28, 2023, B3 also started releasing previous data of the following listed segment files:
- Instrument Registration (Listed);
- Consolidated Trades on the Exchange (Listed);
- Consolidated Trades on the Exchange – After Market (Listed); and
- Economic Indexes.
Use of Pre-matching becomes mandatory for checking batch trading transactions
On March 24, the use of Pre-matching became mandatory for all participants in the Special System for Settlement and Custody (“Selic“) to check transactions with more than one seller or buyer. As of such date, it is no longer possible to register batch trading transactions on the Selic’s Operating Interface (“IOS“), which will be deactivated.
This feature is now available in the production and approval Pre-matching environment. On April 07, the batch trading option was disabled in the test environment.
For the next steps, in August, the Treasury auctions will be integrated with Pre-matching, and from then on, fractional settlements will only be accepted using the platform. Registration of commands directly in Selic will only be possible for settling the total auction amount. As of October, the settlement of spot and forward transactions between different participants will be checked. Finally, in December, institutions will also be required to use Pre-matching to check the data regarding final operations with their clients.
The Pre-matching platform is a tool that enables the automatic checking of buying and selling information for government bond negotiations.
Pre-matching generates the operation commands, but does not register them in Selic. The institutions are responsible for such registration via the submission of messages through the National Financial System Network or IOS.
READ THE ANBIMA ARTICLE IN FULL
Capital markets offerings decline 38% in the first quarter
Brazilian companies raised BRL 66 billion in the capital market during the first quarter of 2023, as compared with BRL 106.7 billion in the same period of 2022, which represents a decrease of 38.3%. More than half of the 61% volume is derived from operations carried out based on CVM Resolution 160, the new rule for public offerings.
Most instruments registered a decline in comparison with last year, with the exception of hybrid products between fixed income and equities. Among fixed income instruments, debentures fell 34.5%, compared with early 2022. Still, this year’s result, of BRL 36.6 billion, is the third highest in our historical series (initiated in 2012) for the first quarter of the year. Companies in the Electricity sector led the issuance of debentures in the period, with BRL 15 billion. In the secondary market, debenture trading advanced 40% compared to the first quarter of 2022.
After eight months without fixed income operations from Brazilian companies in the foreign market, a bond offering was made in the first quarter of 2023, moving USD 1 billion.
ACCESS THE CAPITAL MARKETS NEWSLETTER
M&A TRANSACTIONS INVOLVING PUBLICLY TRADED COMPANIES
Multilaser Industrial S.A. (“MLAS3”) buys interest in startup ZiYou
Multilaser’s exclusive equity investment funds Inova V and Inova IX have acquired a 32.5% stake in the ZiYou platform for BRL 20,000,000.00, a startup established by Márcio Kumrulan, former CEO of Netshoes, with the purpose of stimulating well-being and quality of life through physical activity. The choice is part of Multilaser’s strategic investment plan, which seeks to expand its activities in the sports and fitness segment, in which it already operates through the brands Atrio and Wellness.
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Shareholders bound by Shareholders’ Agreement of Ultrapar Participações S.A. (“UGPA3”) increase their equity interest in the company
The shareholders bound by the Shareholders’ Agreement (executed on August 18, 2020, of Ultrapar Participações S.A.) increased their equity interest in the company and now hold, in aggregate, 35.4% of the total common shares issued by Ultrapar, totaling 395,247,360 shares. The equity interest attained aims to reinforce the principles that govern the actions of Ultrapar’s reference shareholders, in favor of the continuous defense of the best interests of the company and all shareholders.
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Vale S.A. (“VALE3”) signs binding agreement for the sale of 40% of its equity interest in Mineração Rio Norte S.A.
As part of its strategy to simplify its portfolio and reduce business risk, Vale concluded its main divestment program by signing a binding agreement with Ananke Ilumina S.A., an affiliate of Norsk Hydro ASA, to sell 40% of its equity interest in Mineração Rio do Norte S.A., Brazil’s largest bauxite producer and exporter, including all associated rights and obligations.
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Neoenergia S.A. sells 50% of its equity interest in Neoenergia Transmissora 14 SPE S.A. for BRL 1.2 billion
On April 25, 2023, Neoenergia S.A. and Warrington Investment Pte. Ltd. (“Warrington“) entered into a Sale and Purchase Agreement and Other Covenants (“SPA”) regarding the sale, by Neoenergia S.A., of 50% of its equity interest in Neoenergia Transmissora 15 SPE S.A. for BRL 1,200,000,000.00.
In addition to the SPA, the parties also entered, on the same date, into a development agreement providing for joint participation in future auctions of electricity transmission conducted by the National Agency of Electric Energy – ANEEL, as well as the potential acquisition by Warrington (via right of first offer) of shares representing a 50% equity interest in other (construction or operational) electricity transmission assets of Neonergia S.A.
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Companhia Energética de Minas Gerais – CEMIG (“CEMIG4”) concludes the sale of equity interest in Axxiom Soluções Tecnológicas S.A.
On April 17, 2023, Companhia Energética de Minas Gerais – CEMIG (“CEMIG”) concluded the sale of its entire equity interest of 49% in the capital stock of Axxiom Technological Solutions S.A., to Light S.A. The transaction is part of the plan for divestiture of assets not related to CEMIG’s energy activities.
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