BRAZIL Law and Practice Contributed by: Caio Ferreira Silva, Thiago Braga Junqueira, Vinícius Pimenta Seixas and Rodrigo Vieira, Pinheiro Neto Advogados
generally prohibits financial institutions from con- centrating their risk on one person or a group of only related persons, and from extending credit to any person or group of related persons in an aggregate amount equivalent to 25% or more of the financial institution’s regulatory capital. There has been a trend in Brazil with respect to M&A transactions being vastly sponsored by and channelled through local FIPs. Pursuant to the current regulation in effect, FIPs cannot take on debt, except in specific cases, such as: • where FIPs are sponsored by multilateral organisations (provided that debt is limited to up to 30% of the fund’s assets); • in transactions authorised by the CVM, such as lending or borrowing securities in the capi- tal markets and taking out a loan exclusively to cover the negative net equity; and • to pay up subscribed quotas if a FIP’s quota Tender offers for listed companies in Brazil have to follow a specific set of rules provided for in the Brazilian Corporations Law (ie, Law No 6,404, of 15 December 1976, as amended) and CVM Res- olution 85, of 31 March 2022. Any “going-private tender offer” or “delisting tender offer” must be carried out at a fair price as a condition for can- celling the registration of a listed company. Moreover, any minority shareholder should gen- erally be entitled to the same treatment and have access to the same information as the purchas- er. Even if the offeror is obtaining finance from a related party, such as a minority shareholder, this should not entail additional advantages to such shareholders compared to the others. In addition, any offer for the purchase of an equi- ty interest representing a controlling stake in holder fails to do so. 9.2 Listed Targets
a listed company triggers a mandatory public offering for the purchase of the remaining vot- ing shares held by minority shareholders for at least 80% of the price offered for the controlling equity stake (subject to any potential poison pills or other specific rules established in the com- pany’s by-laws, by self-regulatory bodies and/or special listing segments of the stock exchange). Information on the purchase should also be dis- closed in a tender offer prospectus. 10. Jurisdiction-Specific Features 10.1 Other Acquisition Finance Issues Appoint a Collateral Agent Onshore Taking into account the specific requirements for creating a security interest on assets in Brazil, such as the precise and identifiable description of assets, one key factor to consider in secured or asset-based structures involving Brazilian collateral is to appoint a collateral agent estab- lished onshore, which may be able to control and take action in connection with the collateral on behalf of the creditors. Many international play- ers in the sector (including global financial insti- tutions) have a presence in Brazil and can carry out such roles. The New Guarantee Framework (Law No 14,711) codified certain rules applicable to these services, thereby providing greater legal certainty on the matter. New Regulatory Milestones The CVM has recently enacted new regulatory milestones that are expected to have a signifi- cant impact on the capital markets. These mile- stones aim to drive innovation in the market by: • improving the efficiency of negotiations among institutional investors; • promoting competition among entities that manage organised markets;
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