BRAZIL Law and Practice Contributed by: André Menescal Guedes, Raissa Freire de Almeida and Bruno Paiva, André Menescal Advogados
4.11 Additional Governance Rights If a bidder acquires control of a public company in Brazil but does not reach 100% ownership, it may still exercise full managerial and voting control through mechanisms established under the Brazilian Corpo- rate Law. Once control is obtained, typically through ownership of a majority of the voting shares or equiv- alent rights, the bidder can appoint the majority of directors and officers, approve strategic policies and determine dividend distribution within statutory limits. Brazilian law does not recognise domination agree- ments or profit-and-loss transfer arrangements like those found in some European jurisdictions. However, the controlling shareholder can enter into sharehold- ers’ agreements with minority investors to regulate voting rights, governance procedures or tag-along and drag-along provisions, provided they are filed with the company. In listed companies, minorities holding at least 15% of voting shares may request cumulative voting for board elections, ensuring minimum representation. Independent directors and audit committees under B3’s corporate governance segments (such as Novo Mercado) further balance control and minority protec- tion. Thus, even without full ownership, a bidder achieving control has broad governance authority under Brazil- ian law, but must comply with disclosure, fairness and related-party transaction rules to ensure transparency It is relatively common in Brazil for bidders to secure irrevocable commitments from principal sharehold- ers of the target company to tender or vote in favour of a proposed transaction. These commitments are particularly important in listed companies with con- centrated ownership, where controlling or reference shareholders hold decisive influence over the out- come of the offer. Such undertakings are typically formalised through support or lock-up agreements, executed prior to the launch of the tender offer. They outline the sharehold- er’s obligation to tender shares or vote consistently and protect minority shareholders. 4.12 Irrevocable Commitments
with the bidder’s proposal and often include informa- tion and co-operation clauses to facilitate regulatory approvals. While generally binding, these agreements usually contain a fiduciary out or “superior offer” clause allow- ing the shareholder to withdraw support if a materi- ally better or legally mandatory competing offer arises. This flexibility aligns with CVM principles requiring fairness and equal treatment of all shareholders. In public transactions, irrevocable commitments must be disclosed as part of the tender offer documenta- tion. Their enforceability depends on compliance with securities laws, insider-trading restrictions and public disclosure rules. Overall, these instruments are a standard tool for ensuring deal certainty, while maintaining transpar- ency and competitive neutrality in Brazil’s public M&A environment. 4.13 Securities Regulator’s or Stock Exchange Process A tender offer for a listed company in Brazil must be filed with the CVM and conducted through an author- ised intermediary on B3. The CVM reviews the offering documents for compliance with disclosure, procedur- al fairness and equal-treatment rules. Although there is no formal “pre-clearance” of the business rationale, the offer cannot be launched to the market without this regulatory filing. The review period varies with complexity, but in a standard control or delisting offer the market expects a review on the order of several weeks. The CVM may request amendments, additional disclosures or valu- ation support, especially in delisting or related-party situations. The CVM does not freely set the economics of the deal, but it can challenge or require justification for the offered price in transactions that affect minor- ity protection, such as going-private or cancellation of registration. Once the offer terms are cleared for publication, the tender timeline follows the rules in the offer materi- als and applicable CVM and B3 regulations, includ- ing notice periods, auction procedures and settlement
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