BRAZIL Law and Practice Contributed by: Vitor Henriques and Gabriela Sella, Franco Leutewiler Henriques Advogados
companies to raise funds and drive their M&A transactions. Furthermore, the tax reform approved by the Brazilian government favours economic and legal stability in the country, thus enhancing the level of predictability and market security, mak - ing it more attractive for foreign investments, which may also lead to an increase in M&A transactions in the coming years. 3.2 Significant Changes to Takeover Law In October 2024, the Brazilian Securities and Exchange Commission (CVM) introduced Reso - lutions CVM 215 and 216, significantly overhaul - ing the regulatory framework for public tender offers (OPAs) in Brazil, impacting takeovers in the country. These resolutions aim to modernise the process, making it more efficient and aligned with international best practices. Some of the key changes introduced relate to a new threshold for mandatory offers, simplified procedures, alternative pricing mechanisms, revised offer types and enhanced transparency and protection rules. These changes, set to take effect on 1 July 2025, reflect the CVM’s commitment to modernising Brazil’s capital markets and aligning with global standards. Market participants should familiarise themselves with these new regulations to navi - gate the evolving landscape effectively. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies It is relatively common to build a stake in the target prior to launching an offer in Brazil, either by means of acquiring shares held by the cur - rent shareholders or by purchasing a certain vol -
ume of shares of a publicly held company on the stock exchange. However, investors should be aware of disclosure provisions related to minor - ity shareholdings involving publicly held com - panies, as defined in the Brazilian Corporations Law and the CVM regulation. Also, local regula - tion involving publicly held companies imposes restrictions on stakebuilding prior to launching an offer if the ultimate intention is to acquire a majority shareholding (two-step transaction), depending on how the stakebuilding and the majority acquisition are structured. 4.2 Material Shareholding Disclosure Threshold The CVM sets forth that shareholders holding 5% or more of a class or type of shares issued by a publicly held company are required to dis - close their equity ownership. Any change in con - trolling shareholders or variation in their equity ownership causing it to exceed or fall below the thresholds of 5%, 10%, 15% and so forth of the same class or type of shares shall also be disclosed. Importantly, the CVM has intensified oversight of significant shareholding disclosures, in line with the new 2024 regulations, which aim to enhance clarity for investors and promote market transparency. 4.3 Hurdles to Stakebuilding Companies have flexibility to introduce different rules regarding stakebuilding and corporate gov - ernance, but these rules must comply with the applicable corporate laws and regulation. How - ever, the rules must now align with the new CVM regulations introduced in Resolutions CVM 215 and 216 in October 2024, which set new barri - ers for stakebuilding in publicly held companies. These regulations are designed to protect minor - ity shareholder interests and increase transpar - ency in the process of building stakes toward control acquisitions.
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