BRAZIL Law and Practice Contributed by: Felipe Barreto Veiga, Rafael Teixeira, Gabriel Abdalla and Pablo Arana, BVA – Barreto Veiga Advogados
2. Overview of Regulatory Field 2.1 Acquiring a Company
However, certain sectors are subject to restrictions and/or require prior approval, including: • rural land ownership/lease (including additional limitations for real properties in border areas); • nuclear energy and certain defence-related activi - ties, which are subject to constitutional and statu - tory limitations; and • media and broadcasting, where foreign participa - tion is capped at 30% of voting capital under the constitutional framework and related rules. Foreign investments must be registered with the Cen - tral Bank for FX/foreign capital reporting purposes, and transactions in regulated industries may require sector-specific clearances and/or prior governmental authorisation depending on the activity and structure. 2.4 Antitrust Regulations Brazil operates a mandatory, suspensory pre-merger notification regime under Law No. 12,529/2011. Transactions must be notified to CADE if the appli - cable turnover thresholds are met (ie, one economic group with Brazilian gross revenue exceeding BRL750 million and another exceeding BRL75 million, in the fiscal year preceding the transaction). In these cases, closing prior to CADE clearance is prohibited and considered gun jumping. Violations may result in penalties, including fines and, in severe cases, nullification of the transaction. The review may follow a fast-track (summary) pro - cedure or, in more complex cases, a more in-depth (ordinary) investigation. 2.5 Labour Law Regulations Brazilian labour law is generally protective of employ - ees and, in the context of business transfers, provides for automatic succession of labour liabilities. In share deals, the employing entity typically remains the same and employment relationships generally continue uninterrupted. In asset deals or business transfers, the acquiring entity may assume labour liabilities under the principle of employer succession.
The primary acquisition structures in Brazil include: • share deals (quota or share purchase agreements); • asset deals; • convertible loans/notes, through which investors start their relationships with targets as creditors and, once the targets fulfil some goals, such cred - its are converted into shares or quotas; • corporate reorganisations, such as mergers, incor - porations (including incorporation of shares) and spin-offs; and • joint ventures and capital increases (including pri - mary investments and follow-on rounds). The choice of structure is typically driven by tax con - siderations, regulatory approvals, liability allocation and the financing strategy. 2.2 Primary Regulators The principal authorities involved in M&A transactions in Brazil include: • CADE (Brazil’s antitrust authority), which is respon - sible for merger control; • CVM (the securities exchange regulator – equiva - lent to the SEC in the USA), which regulates public companies, disclosure obligations and tender offers; • the Central Bank, particularly in financial services transactions and foreign exchange/foreign capital registrations; and • sector-specific agencies, depending on the indus - try concerned (eg, ANEEL, ANATEL, ANS, ANP, among others). Regulatory involvement in a given transaction will depend on factors such as the size of the deal, the industry and whether the target is a public company. 2.3 Restrictions on Foreign Investments Brazil is generally open to foreign investment and does not impose broad-based restrictions on foreign ownership.
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