BRAZIL Law and Practice Contributed by: Rafael Lacerda, Eric Nahum, Rômulo Martins and Fernando Oliveira, Lacerda Diniz Advogados
7. Takeovers 7.1 Public-to-Private
• claims periods – typically two to five years for tax or labour contingencies and one to two years for all others; • exclusions – indirect losses, lost profits, moral damages or loss of business opportunities; • deductibles/de minimis – small amounts related to recurring liabilities; and • known issues – liabilities identified or disclosed in due diligence do not give rise to additional liability. Buyers often include anti-sandbagging clauses, pre - venting claims for facts that were already known or disclosed. 6.10 Other Protections in Acquisition Documentation In addition to the warranties and indemnities already mentioned, it is common to use escrow or price reten - tion to back the seller’s obligations, especially in rela - tion to fundamental, commercial and tax warranties. Lock-up clauses may also be applied after closing, restricting sellers or key executives from selling shares or engaging in transactions that could affect the value of the company. Real guarantees, such as fiduciary transfer of shares or quotas, are also used to provide additional security to the buyer in case of default. The use of warranty and indemnity insurance is still relatively rare in Brazil, but when adopted it usually covers mainly fundamental and commercial warran - ties; in some cases, it may also cover tax issues. These protections aim to reduce the risk of the transaction and ensure business continuity, protecting the inter - ests of the buyer and the private equity fund involved. 6.11 Commonly Litigated Provisions Litigation is not the norm in private equity transac - tions, but when it does occur it mainly involves price adjustments, earn-outs and breaches of warranties (especially tax and labour warranties), and is referred to the arbitral tribunal chosen by the parties in the arbitration clause included in the transaction docu - ments. It may also involve breaches of non-competition and non-solicitation obligations, as well as non-payment by the buyer of deferred instalments of the purchase price (if applicable).
Although Brazil has relatively few listed companies and many have a defined controlling shareholder, public to private (“delisting”) transactions do occur. In practice, these processes often combine: • a control transfer (if applicable) with a tag along OPA at not less than 80% of the control price for voting shares; and • a delisting OPA supported by an independent valu - ation report. The company’s board issues a reasoned opinion, and the Investor Relations Officer must keep the market informed throughout the offer period. A delisting OPA succeeds upon acceptance by two thirds of the free float. CVM Resolution 215 (effective 1 October 2025) introduces calibrated alternatives for very low free float scenarios, while preserving minority protections. 7.2 Material Shareholding Thresholds and Disclosure in Tender Offers Under CVM Resolution No 44/2021, any investor whose participation in a listed company reaches or exceeds 5% of the outstanding shares of any class, and at each subsequent 5% increment, is required to submit a material shareholding disclosure. The disclo - sure must include: • information on the purpose of the acquisition; • any executed agreements; • whether the shareholder intends to seek control of the company; and • any other instruments that may result in additional share ownership. The 5%, 10% and 15% (and subsequent) thresholds apply to all classes or types of shares, and the dis - closure obligation also extends to derivative positions. The investor must promptly notify the issuer, which is then responsible for disclosing the information to both the CVM and B3. 7.3 Mandatory Offer Thresholds Brazilian law requires a mandatory tender offer (OPA) in specific circumstances:
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