BRAZIL Trends and Developments Contributed by: Mauro Cesar Leschziner and Diana Pacifico Henne, Machado Meyer
132/23. The tax reform will unify the main Bra - zilian taxes on consumption, with the purpose of simplifying and bringing transparency to the national tax system and, consequently, improv - ing Brazil’s business environment and increasing its economic growth. The implementation of the tax reform will occur gradually, as established by the transition regime of the Constitutional Amendment No 132/23. Tax specialists and the market expect that such tax reform will have a significant impact on all type of business in Brazil, directly impacting the operations and tax burden of entities of all sec - tors. In this context, it is essential that inves - tors evaluating possible transactions in Brazil also consider, during their investment analysis and due diligence process, the impact of the tax reform on the target company’s business and financial results. ESG Factors Environmental, Social, and Governance (ESG) aspects continue to play an important role in M&A transactions, not only during the due dili - gence phase, but also after closing, as investors are increasingly demanding target companies to comply with ESG policies and adopt ESG report - ing practices. The wording of the ESG policies, as well as the metrics of the ESG reporting depends largely on the due diligence findings and the sector of the target company. Additionally, the Brazilian Office of the Comptrol - ler General (CGU) issued, in November 2024, the “Integrity Program: Sustainable Practices for Pri - vate Companies” , which reflects CGU’s broader view on ESG issues and provides new guidelines for prevention of corruption and fraud in con - nection with projects with environmental impact. Private companies should review their internal policies to align with such new guidelines, and
legal due diligence for M&A deals should also factor such new integrity programmes in con - nection with ESG and regulatory compliance reviews, to the extent applicable. Changes to the CVM Rule on Public Offerings On 29 October 2024, the Securities and Exchange Commission (CVM) published CVM Resolution No 215/24, which changes the rules applicable to public offerings for the acquisition of shares of publicly held companies (tender offers). The purpose of such resolution is, among others, to simplify the proceedings applicable to tender offers. This resolution will come into effect on 1 July 2025. Below is a brief summary of the main changes set forth by CVM Resolution No 215/24. • Public tender offer for increase of participa - tion: The tender offer will become mandatory if, as a result of the acquisition of shares by the controlling shareholder or any person related to the controlling shareholder, less than 15% of the shares of the same class and type remain in the free float. • Public tender offer for cancellation of regis - tration as publicly held company: The new resolution created a different acceptance quorum (namely, simple majority of eligible shares) for publicly held companies with a low percentage of shares in the free float; ie, less than 5% of the capital stock. The quorum for acceptance of 2/3 of the eligible shares remains valid for other companies. • Automatic waiver of the appraisal report: Another relevant change concerns the automatic waiver of an appraisal report in situations in which the price of the shares subject to the tender offer can be determined based on certain alternative criteria for the calculation of the fair value as set forth in the
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