CVM issues new rules applicable to Public Tender Offers (TOs)

31/10/2024

In brief

The Brazilian Securities and Exchange Commission (“CVM”) issued on October 29, 2024, CVM Resolutions 215 and 216, revising the rules applicable to Public Tender Offers (“TO”) and simplifying related procedures.

CVM Resolution 215 replaced CVM Resolution 85, bringing a new regulatory regime for TOs. CVM Resolution 216 introduced specific changes to other existing rules, aiming to align them with the new provisions set forth in CVM Resolution 215.

CVM Resolutions 215 and 216 will come into effect on July 1, 2025.

More details

CVM Resolutions 215 and 216 were issued by the CVM after public consultations and active market participation, bringing numerous significant changes aimed at making the Public Tender Offer (TO) processes simpler, more efficient, and less costly.

Among the main innovations, the following stand out:

TO for increased participation: a TO for increased participation will be required whenever the acquisition of outstanding shares by the controlling shareholder or a related person results in a reduction of the total outstanding shares of the same class and type to below 15%.
Combination of TO for acquisition of control with TO for going-private: it will now be permitted to carry out a single TO for acquisition of control and going-private, a scenario previously prohibited.
TO for going-private: the execution of an TO for going-private will require a simple majority quorum when the number of outstanding shares of the company is less than 5% of the share capital.
Automatic waiver of valuation report: the waiver of a valuation report may occur when the price of the shares subject to the TO is determined based on alternative criteria that serve as a fair value reference.
Automatic waiver of auction requirement: the waiver of the auction requirement for the TO may occur in situations of low shareholder dispersion or when the auction costs are disproportionately high relative to the offer value.
Registration procedures: TOs may be submitted to two registration procedures, ordinary and automatic, and the submission of non-mandatory TOs, called “optional,” to CVM registration under the automatic procedure.

Additionally, the role of the intermediary has been revised, separating its obligations to ensure the settlement of the offer from other participant obligations, allowing the guarantee function to be met by alternative means.

Finally, a procedure for submitting confidential inquiries about specific cases involving TO has been established.

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