The Legal Framework of Securitizations, established by Law No. 14,430/22, defined the certificates of receivables in a broad and comprehensive way, admitting their use in securitization in the most varied sectors of the economy, which will allow the expansion and consolidation of the receivables credit market in Brazil beyond the real estate, agribusiness and financial sectors.

In the cases in which they are publicly offered or admitted for trading on a regulated securities market, certificates of receivables are classified as securities, as set forth in Article 20, § 1, of the Legal Framework of Securitizations, which fits them in the definition of Article 2º, IX, of Law No. 6,385/76 (“Capital Markets Law”).

Their public distribution in the capital market, therefore, is subject to prior registration with the Brazilian Securities Commission (CVM), as provided for in Article 19 of the Capital Markets Law, except in situations in which such registration is expressly waived in accordance with the regulatory rules issued by the Brazilian Securities Commission, according to the competence delegated to it by Articles 8,  I, and 19, § 5 of the aforementioned law.

In the regulatory sphere, issuances and offers for public distribution of securities are regulated by Instruction No. 400/03, issued by the Brazilian Securities Commission (“CVM Instruction No. 400/03”), which regulates public offerings for the distribution of securities on primary or secondary markets and aims to ensure the protection of investors and the integrity of the capital market.

CVM Instruction 400/03 requires that any public offering for the distribution of securities in the primary and secondary markets, in the Brazilian territory, addressed to individuals, legal entities, fund or universality of rights, residents, domiciled or incorporated in Brazil, be previously submitted for registration with the Brazilian Securities Commission. This is a relatively time-consuming and costly process due to the need to preparation, review and collection of various documents that are submitted for review and approval by the Brazilian Securities Commission through many protocols.

In order to facilitate issuers’ access to the capital market and reduce the time and costs of public issuances, the capital market also relies on another regulation, the Instruction No. 476/09, also issued by the Brazilian Securities Commission (“CVM Instruction No. 476/09”), which contains provisions that automatically exempt public offerings directed to a restricted number of professional investors from registration, as defined in Article 11 of Resolution No. 30/21, issued by the Brazilian Securities Commission (“CVM Resolution No. 30/21”).

In addition, this regulation allows the securities offered to be traded on the secondary market, even if the issuer is not registered with the Brazilian Securities Commission. For this, trading must be restricted to qualified investors, as defined in Article 12 of CVM Resolution No. 30/21. The regulator assumes that these investors have sufficient knowledge to assess the risks of the securities offered and, therefore, a prior review of the documentation by the regulatory entity would not be necessary.

In this sense, the well-known public offering with restricted distribution efforts, carried out under the terms of CVM Instruction No. 476/09, is widely used in the capital market. However, in view of its exceptional nature, said regulation has an exhaustive list of securities whose public offering restricted to a group of professional investors may be exempted from prior registration with the Brazilian Securities Commission. As certificates of receivables were recently created by the Legal Framework of Securitizations, they are not included in the list.

In view of this situation, on August 18, 2022, the Brazilian Securities Commission correctly issued Resolution No. 165 which equated certificates of receivables to  Certificates of Real Estate Receivables and Certificates of Agribusiness Receivables for the purposes of applying the CVM Instruction No. 476/09.

This measure, which takes effect on September 1, 2022, will allow certificates of receivables to be  automatically exempted from registration with the Brazilian Securities Commission when publicly offered to a restricted group of professional investors. The resolution, therefore, makes it possible for issuers of certificates of receivables to have easier access to the capital market, which contributes to the development of the securitization market and offers potential benefits for the expansion of this private financing instrument to various economic sectors.

The equivalence will only be valid until the entry into force of Resolution No. 160/22, issued by the Brazilian Securities Commission (“CVM Resolution No. 160/22”), which, as of January 2, 2023, will inaugurate a new regulatory framework for public offerings of securities, replacing and revoking CVM Instructions Nos. 400 and 476, with several changes in the registration processes of public offerings at the regulatory entity.

As of 2023, public offerings that are currently automatically exempted from registration under the terms of CVM Instruction 476 will be automatically registered with the Brazilian Securities Commission, through the protocol of certain documents, but without the need for prior analysis.

In this new scenario, certificates of receivables are duly covered by CVM Resolution No. 160/22, which includes these certificates using a broader language – “securitization-related securities issued by securitization companies registered with the Brazilian Securities Commission”. Thus, public offerings of these securities may be submitted to the public body through the rite of automatic registration of distribution, provided that the other applicable requirements are met.

The recently edited CVM Resolution No. 165, therefore, meets the market's need and expands the scope of CVM Instruction No. 476/09 to admit that the certificates of receivables recently created by the Legal Framework of Securitizations can be offered publicly, with automatic exemption from registration, to restricted groups of professional investors.