On October 29, 2024, the Brazilian Securities and Exchange Commission (CVM) released CVM Resolution 215, which amends the rules on public offerings for the acquisition of shares (Tender Offers) of publicly-held companies and introduces simpler procedures. The changes come into effect in July 2025.
One of the main changes implemented is related to the regime applicable to the Tender Offer for increase of participation, which becomes mandatory when, after the acquisition of shares by the controlling shareholder or a person related to him by means other than a Tender Offer, less than 15% of the shares of the same type and class remain in circulation (total earned by consulting the company's Reference Form), simplifying the previous parameter that caused many doubts in the market.
With regard to the Tender Offer for cancellation of registration, a differentiated acceptance quorum (simple majority of eligible shares) was introduced for publicly held companies with a low percentage of shares in circulation, i.e., less than 5% of the capital stock. The quorum for acceptance of 2/3 of the eligible shares remains valid for the other companies.
Another relevant point of the reform is the introduction of hypotheses of automatic waiver of the appraisal report, for situations in which the price of the shares subject to the Tender Offer can be determined based on the following alternative criteria that function as a fair value reference:
- Execution of a legal transaction for a maximum of 12 months, counted retroactively from the date of the application for registration of the Tender Offer, provided that such legal transaction cumulatively meets the following requirements:
- It has been entered between agents who are not related parties, as defined in the specific rule on the subject;
- Involves a number of shares equal to or greater than 20% of the capital stock of the target company, with reference to the capital stock on the date on which the legal transaction has been carried out; and
- It is not associated with another legal transaction as a result of which the parties involved in the transaction or persons related to them have earned or will receive other financial considerations.
- Highest unit price reached by the share of the same type and class of the shares subject to the Tender Offer, on the stock exchange with the highest trading volume of the shares issued by the target company during the period of 12 months counted retroactively from the date of the request for registration of the Tender Offer, provided that the following requirements are cumulatively observed:
- The target company is in compliance with the delivery of periodic and occasional information; and
- The shares subject to the Tender Offer have been traded in at least 95% of the trading sessions in the 12-month period mentioned above and presented a financial trading volume in an average daily amount equal to or greater than R$ 10 million.
- Price that the offeror of the Tender Offer is willing to pay, provided that it is a Tender Offer for cancellation of registration unified with Tender Offer for acquisition of control, and the number of shares whose acquisition is necessary for the success of the Tender Offer for acquisition of control is equal to or greater than 20% of the capital stock; or
- Price at which shareholders holding more than 1/3 of the shares in circulation have committed to sell such shares in the Tender Offer, provided that such sale commitment is not associated with another legal transaction by reason of which the parties involved, or persons related to them, have earned or will receive other financial considerations.
It is important to note that, even in the event of dismissal, the shareholder's right to request a review of the Tender Offcer price remains valid in the cases allowed by law.
Also, in the event of an occurrence of a fact subsequent to the disclosure of the price of the Tender Offer, the offeror must request the appraiser to update the value of the target company or proceed with the hiring of a specialized firm to the preparation of an appraisal report (in case of waiver). Presumptions of change in the value of the subject company when material facts or accounting information are disclosed were eliminated. However, the duty of the offeror to monitor whether such a change has occurred remains.
The rules regarding the appraisal report were also improved to reduce conflicts of interest. The rule now brings more details about the experience of the appraiser, defining the concept of "experience in the valuation of publicly-held companies" as the preparation of at least three appraisal reports of publicly-held companies in the ten years prior to the request for registration of the Tender Offer before CVM, by legal entities duly constituted and enrolled with CNPJ or by one of the professionals responsible for preparing the appraisal report.
The new rule introduced specific provisions on the possibility of dividing the functions currently performed by the intermediary institution between two entities, in order to separate the obligation to guarantee the settlement of the Tender Offer from other activities.
The rule requires the settlement guarantee to be provided by a financial institution and allows the other functions to be performed by another financial institution or by coordinators of public offerings. In addition, it waives the hiring of a guarantor if the offeror presents other means of guarantee, such as surety bonds. The guarantee option chosen by the offeror must ensure, before the launch, the amount necessary for the financial settlement of the Tender Offer.
In line with waivers that were already being granted by CVM, another relevant change promoted by the rule concerns the provision for automatic waiver of the Tender Offer auction when it comes to an offer intended for:
- less than a hundred shareholders; or
- less than a thousand shareholders and whose cost necessary to carry out the auction corresponds to more than 10% of the total value of the Tender Offer.
In the latter case, the Tender Offer instrument must detail the alternative procedure for shareholders' adhesion, in order to clarify points such as the manner of formalizing the adhesion and the deadline for doing so. The intermediary institution will be responsible for the operational control of the Tender Offer, including the verification of the quorum of success, when applicable, and the communication of the result of the Tender Offer to CVM.
The waiver of the auction will be automatically removed in the case of:
- communication by an interested third party of its irrevocable and irreversible commitment to interfere in the auction; or
- launch of a competitor Tender Offer.
With regard to the principles, the rule no longer presumes that the offeror and the shareholders receiving the Tender Offer act with the same interest only because they have previously expressed agreement with the price offered.
In addition, the rites of ordinary and automatic registration were created. The ordinary registration procedure applies to both mandatory and voluntary public offerings with exchange for securities, including mixed and alternative offerings.
The ordinary registration is equivalent to the registration procedure for Tender Offers provided for in the previous rule, which requires prior analysis by CVM. This rite now includes the procedure of "confidential consultations", to allow the submission of confidential questions about specific queries involving the Tender Offer.
Furthermore, the automatic registration procedure will not require prior analysis by the CVM and will be applicable to the registration of voluntary Tender Offers that do not involve exchange, now called "optional".
As a condition for their launch, such offerings must obtain registration with CVM, which will be granted immediately after the delivery of the required information and documents. CVM's intention with this mechanism is to expand the capacity to inspect and supervise optional Tender Offers that do not involve exchange.
In view of the existence of ongoing offerings and the need for market participants to adapt, CVM Resolution 215 only enters into force on July 1, 2025.
