The Brazilian Securities and Exchange Commission (CVM) published the new regulatory framework for public offerings in Brazil.
The new rules come into force as of January 2023 and replace CVM Regulations 400 and 476.
We list below some of the main changes brought by the new CVM Regulation 160:
1. Extinction of the Regimes of Registered or Exempted Offerings: CVM Regulation 160 extinguishes the regime of registered public offering and public offering exempt from registration. All public offerings must be registered, observing 2 specific registration rites: automatic registration rite and ordinary registration rite.
2. Automatic Registration Rite: It includes 14 offering types, such as (i) offerings aimed at qualified and professional investors, (ii) initial and subsequent public offerings of issuers in the operational phase whose registration application has been previously analyzed by a self-regulatory entity authorized by the CVM, and (iii) subsequent offering and offerings in general of other securities by issuers that have a regular relationship with the capital market.
3. Ordinary Registration Rite: In this rite, the CVM will carry out the prior analysis to obtain the registration. This rite includes, among others, initial offerings of shares or convertible securities or securities representing shares that have not been submitted to the analysis of self-regulatory entities.
4. Number of Investors to be Accessed in “Offerings with Restricted Efforts”: The automatic rite (which will replace the offering with restricted efforts) maintains the main advantages of the offers with restricted efforts of CVM Regulation 476, and adds new ones: (i) exclusion of the limit of 75 potential investors accessed, (ii) exclusion of the restriction of 90 days for trading after the conclusion of the offer, (iii) elimination of the limit of 4 months for carrying out a new offer and (iv) elimination of the restriction on trading in the market secondary.
5. Rules for Investment Funds and Fund Managers: CVM Regulation 160 provides for a safe harbor for (i) offerings of shares of exclusive closed-end funds, (ii) subsequent offerings to shareholders of the fund itself and (iii) offerings of shares issued and admitted to trading abroad.
Regarding the figure of the fund manager, the CVM included the manager, together with the fund administrator, as an offeror in the case of an initial public offering of investment fund shares, with the manager being subject to the obligations and representations of veracity of the information disclosed applicable to offerings pursuant to CVM Regulation 160.
The new framework for public offerings will have a relevant impact on the process of IPOs, the offering of fund shares, debt offerings, manager responsibilities, among others, from 2023 onwards, being a positive step towards reducing bureaucracy in the Brazilian capital market.
