BRAZIL Law and Practice Contributed by: Rodrigo Casarotti, Alexandre David, Ricardo Melaré and Gabriela Claro, /asbz
6.13 Securities Regulator’s or Stock Exchange Process
scrutinised and disfavoured; financing risk is typically managed outside the offer. 6.10 Types of Deal Protection Measures Brazilian law allows flexibility in deal protections, subject to approval by competent corporate bodies, pursuit of the company’s corporate interest, directors’ fiduciary duties, equal treatment and the absence of abusive conduct or conflicts with controllers. Within these limits, no-shop/non-solicit provisions, reason- able exclusivity, matching rights and proportionate break fees are generally acceptable, provided they do not prevent the board from considering a clearly superior proposal or unduly restrict shareholders. The CVM may seek clarifications or adjustments where protections raise concerns. 6.11 Additional Governance Rights Brazilian law does not provide a separate domination or profit-transfer regime. Governance rights flow from shareholding levels and shareholders’ agreements (where they exist). A holder of a majority of voting capital will typically be the controlling shareholder and can appoint most directors and set strategy within corporate-interest limits, subject to duties under the Corporations Law and CVM/B3 rules. Significant but non-controlling stakes can secure governance rights through shareholders’ agreements or by-law amend- ments (eg, board seats, vetoes on reserved matters, information rights) duly filed with the company (and with the CVM/B3 for listed entities). Minority protec- tions include rights to information, voting on specific matters, withdrawal rights in certain reorganisations, the ability to challenge abusive acts and, in some cas- es, the right to elect members to the statutory audit board ( conselho fiscal ). 6.12 Irrevocable Commitments In concentrated-ownership settings, bidders com- monly secure binding agreements with controllers or core blocs, then launch any required offers. Broader irrevocables from other shareholders are less fre- quent but can be used in more widely held compa- nies by way of support/voting agreements, provided they align with corporate and tender-offer rules and equal-treatment principles. “Fiduciary outs” are not standardised and are negotiated case by case within the OPA framework and shareholders’ rights.
Tender offers must be filed and registered with the CVM and conducted through an authorised inter- mediary on B3. The CVM and B3 review compliance with disclosure, procedure and equal-treatment rules; these entities do not “approve” commercial merits. Where rules impose pricing parameters (eg, control, delisting or free-float restoration offers), compliance is verified, including appraisal standards for price support. Timelines, acceptance periods and auction procedures are set by regulation and reflected in the registered documents. Competing offers are possible, and acceptance periods may be aligned/extended to allow comparison, though they are relatively rare where controllers have committed to a bidder. 6.14 Timing of the Takeover Offer Offers can be conditioned on merger-control and oth- er approvals if conditions and timing effects are clearly described and compliant with CVM/B3 rules. Accept- ance periods or settlement dates may be extended in specific cases, but an offer cannot remain open indefinitely. Merger-control and other reviews com- monly run in parallel, with settlement conditional on approvals. Deals below notification thresholds are generally not fileable, though CADE retains ex officio review powers. 7. Overview of Regulatory Requirements 7.1 Regulations Applicable to a Technology Company As a rule, no specific licence or prior approval is required merely to incorporate and operate a gener- ic technology or software company in Brazil. Most early-stage tech businesses can be formed and start operating with standard corporate, tax and labour registrations. Where the core activity is regulated (eg, payments/fintech, telecoms, certain health-related activities), prior approvals or licences from the relevant regulator may be required before operations begin or expand.
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