BRAZIL Law and Practice Contributed by: André Menescal Guedes, Raissa Freire de Almeida and Bruno Paiva, André Menescal Advogados
shares to the target’s shareholders, the transaction must generally be accompanied by a prospectus or equivalent disclosure document in accordance with CVM Resolution No. 160/2022 (which replaced the former public offering rules). A prospectus is required whenever the securities to be delivered are offered to the public in Brazil or will become freely tradable on the Brazilian market. If the acquirer’s shares are already listed on B3, the exchange and the CVM will review the prospectus and supporting materials to ensure compliance with dis- closure and governance standards. When the acquirer is a foreign company, its shares must either be listed on a recognised foreign exchange and registered with the CVM as a foreign issuer, or be represented by Brazilian Depositary Receipts duly authorised for dis- tribution in Brazil. Certain exemptions may apply when the offer is made exclusively to qualified investors or when the shares issued are restricted securities subject to lock-up peri- ods. However, in cross-border stock-for-stock deals, parties typically prepare a simplified or dual-language prospectus to meet both domestic and international requirements. Overall, the goal of the prospectus regime is to guar- antee transparency and ensure that minority share- holders receive sufficient and symmetrical information Bidders in Brazil must include financial statements in their disclosure documents when launching a tender offer or business combination, whether the considera- tion is in cash or shares. The level of detail depends on the transaction type, the bidder’s corporate form, and whether the securities offered are publicly traded in Brazil. For publicly listed bidders, audited financial state- ments prepared in accordance with Brazilian Gen- erally Accepted Accounting Principles (BR GAAP), which are fully convergent with International Financial Reporting Standards (IFRS), must be included in the offering materials. If the bidder is a foreign company, the CVM may accept IFRS or the accounting stand- with which to evaluate the transaction. 8.3 Producing Financial Statements
ards of its home jurisdiction, provided that reconcili- ation or explanatory notes are included where neces- sary for comparability. In stock-for-stock transactions, pro forma financial information is typically required to illustrate the com- bined entity’s financial position and results. The CVM and B3 may also request interim financials if the last audited statements are older than 90 days. For cash offers, simplified financial disclosures may suffice, but the bidder must still demonstrate finan- cial capability to honour the offer, often supported by audited statements and, when relevant, confirmation from the financial intermediary responsible for settle- ment. The overarching objective is to provide shareholders with transparent, verifiable financial data to assess both the bidder’s creditworthiness and the transac- tion’s economic rationale. 8.4 Disclosure of Transaction Documents In Brazil, the principal transaction documents – such as the tender offer notice, purchase agreement and shareholder commitments – must be filed with the CVM and B3 as part of the public offer documentation. Confidential annexes may be redacted, but material terms affecting shareholders must be fully disclosed. Under Brazilian law, directors owe their duties pri- marily to the company itself, rather than directly to shareholders or individual stakeholders. Their legal obligations, defined in the Brazilian Corporate Law, include the duties of diligence, loyalty and information, requiring them to act in the company’s best interest, with the care expected of a prudent businessperson. In the context of a business combination, directors must ensure that decisions are grounded in economic rationale, fairness and transparency, particularly when evaluating control transactions that may affect minor- ity shareholders. Although the law does not explicitly impose stakeholder-oriented duties, modern govern- 9. Duties of Directors 9.1 Principal Directors’ Duties
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