BRAZIL Law and Practice Contributed by: Vitor Henriques and Gabriela Sella, Franco Leutewiler Henriques Advogados
4.4 Dealings in Derivatives Brazil has a well-established derivatives market overseen by the CVM, and transactions involving derivatives are permitted. 4.5 Filing/Reporting Obligations In Brazil, the filing and reporting rules that are generally applicable to securities (see 4.2 Mate- rial Shareholding Disclosure Threshold ) also apply to derivatives. Derivatives backed by shares and other securi - ties involving relevant shareholding or corporate external control with potential antitrust impacts shall also be subject to the generally applicable antitrust rules and to the oversight of CADE. 4.6 Transparency In the acquisition of control over a publicly held company, the investor’s intentions and purposes shall be disclosed, in accordance with corporate and regulatory laws. Such legal and regulatory provisions aim to promote transparency, integ - rity and protection of the local market, and shall be analysed on a case-by-case basis. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal The requirement to disclose a deal varies, depending on factors such as whether the com - pany is publicly or privately held, as well as the regulations applicable to the activities of the tar - get company and its corporate documents. M&A transactions and the main terms and con - ditions involving publicly held companies are typically a material fact to be disclosed to the market, as they may impact the stock price, the investor’s decision to buy, sell or hold such stocks, or the investor’s decision to exercise any
rights inherent to being the owner of securities issued by the company or referenced to them. In this sense, when negotiations are deemed material and potentially impact the stock price or investors’ decision-making power, the deal shall be disclosed, generally at the moment when any document is signed. Transactions involving publicly held companies shall also comply with the tender offer rules and the rules related to disclosure and transparency. 5.2 Market Practice on Timing Companies typically adhere to the deadlines established in legislation and/or internal regula - tions for disclosing information. However, due to the strict oversight by the CVM, publicly held companies tend to be quite cautious and con - servative, disclosing information as soon as for - mal documents are signed. 5.3 Scope of Due Diligence The scope of due diligence in Brazil typically includes a comprehensive review of several aspects of the target’s business, legal affairs, operations, finances and other relevant areas in order to identify potential and actual liabilities, risks and opportunities to inform the decision- making process of the purchaser. Due diligence practices have evolved post-2020 to focus on evaluating the target’s resilience in the face of global economic risks, political insta - bility, and the recent tax and regulatory changes in Brazil, such as the ongoing tax reform. 5.4 Standstills or Exclusivity In Brazil, standstills and exclusivity clauses are very typical in various business transactions, including M&A deals, as they grant the purchaser more certainty over the competitive investment
294 CHAMBERS.COM
Powered by FlippingBook