BRAZIL Law and Practice Contributed by: Vitor Henriques and Gabriela Sella, Franco Leutewiler Henriques Advogados
shareholder choice and ensure fairness in the transaction process. In sectors that are regulat - ed by regulatory agencies, different public inter - ests may also impose additional restrictions on takeover offer conditions. 6.5 Minimum Acceptance Conditions In Brazil, the minimum acceptance condition for tender offers is a crucial aspect of M&A transac - tions, often governed by both legal regulations and specific provisions outlined in the by-laws of the target company. As a general rule, this condi - tion requires the acquirer to secure a majority of the outstanding shares or a higher percentage as stipulated by the company’s by-laws or relevant regulations, although the target company’s by- laws may impose different thresholds forcing the bidder to deliver a tender offer. The CVM plays a central role in regulating tender offers and setting guidelines for their conduct. For example, CVM Resolution No 215/2024 out - lines the detailed rules and procedures govern - ing tender offers in Brazil, according to which the minimum acceptance condition must be clearly specified in the tender offer documents submit - ted to the CVM and made available to share - holders. The rationale behind setting a minimum accept - ance condition at a majority or higher percent - age of outstanding shares is multifaceted. Firstly, it ensures that the acquirer attains a controlling interest in the target company, thereby consoli - dating decision-making power and influencing corporate governance matters. This control is essential for implementing strategic initiatives, driving operational changes and potentially real - ising synergies post-acquisition. Moreover, setting a minimum acceptance con - dition aligns with the principles of shareholder
protection and corporate governance. By requir - ing a substantial level of shareholder support, the condition helps to safeguard the interests of minority shareholders and prevents coercive or opportunistic takeovers that may undervalue the company or disadvantage minority sharehold - ers. In addition, the establishment of a minimum acceptance condition serves to promote trans - parency and fairness in the tender offer process. It provides clarity to shareholders regarding the threshold for acceptance and allows them to make informed decisions about whether or not to tender their shares. 6.6 Requirement to Obtain Financing A business combination in Brazil may be con - ditional on the bidder obtaining financing. How - ever, it is essential to ensure compliance with regulatory requirements and disclosure obliga - tions regarding financing arrangements. 6.7 Types of Deal Security Measures Deal security measures that a bidder can seek in Brazil include not only break-up fees, match rights, force-the-vote provisions and non-solici - tation provisions, but also other contractual and legal performance rights assuring transaction success, such as escrow and deposit require - ments and lock-up agreements. Contractual considerations to manage conjunctural risk may include well-negotiated material adverse change clauses and specific representations and war - ranties. Changes in the regulatory environment have impacted the length of interim periods, par - ticularly regarding regulatory approvals. 6.8 Additional Governance Rights A bidder who does not seek 100% ownership of a target in Brazil can seek additional govern - ance rights through board representation, the
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