Finance & Capital Market Newsletter – March


Posted: 04/13/2021

Madrona News – Finance & Capital Market Newsletter

CVM discloses best practices for issuers/offerors and intermediaries of public offerings

On March 1, 2021, the Brazilian Securities and Exchange Commission (“CVM”) published new Official Letter of the Securities Registry Superintendence (“SRE”) – Official Letter CVM/SRE1/2021, which brings updates and guidelines for issuers, intermediary institutions and securities providers regarding the requirements of the rules that regulate public offerings of securities.
Among the updates, the highlights are:

(i) the inclusion of recommendations when conducting offerings in CVM Instructions 400 and 476; and
(ii) the acceptance of documents by the SRE with electronic signature. Such updates seek to reduce possible deviations and reduce the need for new requirements on the part of the technical area.

News link: https://www.gov.br/cvm/pt-br/assuntos/noticias/cvm-divulga-melhores-praticas-para-emissores-ofertantes-e-intermediarios-de-ofertas-publicas

CMN updates and consolidates rules for inspection of rural credit transactions

On March 2, 2021, the Central Bank oof Brazil (“BC”) published CMN Resolution 4,895, approved by the National Monetary Council (“CMN”), which establishes guidelines for financial institutions during the monitoring and inspection of rural credit transactions , contributing to making the credit policy more efficient.

With this publication, institutions with rural credit portfolios will be able to define which inspection systems to apply. Proper control of rural credit transactions contributes to making rural credit policy more efficient, lowering the risk of application for purposes other than those envisaged in the regulations.

Institutions must adopt the new monitoring and inspection model as of July 1, 2021.

News link: https://www.bcb.gov.br/detalhenoticia/518/noticia

BC approves its Strategic Regulatory Sandbox Management Committee

The BC Collegiate Board approved, on March 3, 2021, the creation of the Strategic Management Committee for the Regulatory Sandbox (“CESB”), with the purpose of making the actions related to the projects submitted to the Regulatory Sandbox even more efficient.

CESB will be competent to decide issues such as:

(i) selecting and classifying projects;
(ii) requesting and receiving additional information;
(iii) resolving on the invitation to representatives of other public bodies and entities;
(iv) communicating the selected projects to the BC Collegiate Directorate;
(v) deciding on the need to adopt or change technical requirements;
(vi) deciding on the cancellation of the projects; and
(vii) resolving on the other matters attributed to the BC by regulation.

The Committee will be composed of seven members, heads of the following BC departments: Department of Competition and Financial Market Structure (“Decem”); Department of Strategic Management and Specialized Supervision (“Degef”); Financial System Organization Department (“Deorf”); Department of Promotion of Financial Citizenship (“Depef”); Financial System Regulation Department (“Denor”); Conduct Supervision Department (“Decon”); and Department of Information Technology (“Deinf”). In addition, a representative of the Central Bank’s Attorney General (“PGBC”) will participate, to provide the necessary legal advice.

News link: https://www.bcb.gov.br/detalhenoticia/519/noticia

CVM advises on risk factors for 555 Funds

The Superintendence of Supervision of Institutional Investors of the Brazilian Securities and Exchange Commission (“SIN/CVM”) issued, on March 8, 2021, Official Letter CVM/SIN 03/2021, with guidelines on the supervision of the compliance with the concentration limits on factors risk of investment funds, according to CVM Instruction 555.

Inadequate and incomplete processes for monitoring the concentration limits on risk factors have been identified in the supervision of SIN.

News link: https://www.gov.br/cvm/pt-br/assuntos/noticias/cvm-orienta-sobre-fatores-de-risco-de-fundos-555

CVM proposes new regime for public offerings

On March 10, 2021, CVM began a public hearing (see Public Hearing Notice SDM 02/21) on the new regulation of public offerings of securities, with the objective of increasing the chances of automatic registration procedures and promoting more agility in fundraising.

The hearing covers three drafts:

(i) Draft A: reproduces the new regime proposed for public offerings of securities, covering issues such as: exemption from registration of offerings with the CVM; rites to be followed for the registration of offerings; necessary steps for the conduct of the offering and the duties of the agents involved in it; and information to be provided to investors, among other aspects. The expected result is an increase in the chances of public offerings conducted through the automatic registration process, except for the hypotheses of prior analysis by CVM to cases that impose more risks to the market and investors;
(ii) Draft B: refers to the registration of intermediaries for public offerings, proposing a new authorization regime for the activity of intermediation of public offerings. The topic is unparalleled in the current regulatory framework, which is justified in view of the greater flexibility that is proposed for public offering regimes, exempting from prior CVM analysis.
(iii) Draft C: promotes wording adjustments in other current rules, balancing the regulation with the proposed new public offering regime.
Suggestions and comments may be sent until July 8, 2021.

News link: https://www.gov.br/cvm/pt-br/assuntos/noticias/cvm-propoe-novo-regime-para-as-ofertas-publicas

BC places public consultation rules on sustainability criteria in rural credit transactions

On March 11, 2021, the draft regulation that defines criteria applicable to enterprises financed through rural credit was put to public consultation (Public Consultation 82/2021).
The project classifies rural financing in three different categories:

(i) enterprises that cannot be financed with rural credit, due to the existence of legal or regulatory impediments;
(ii) enterprises that can be financed with rural credit, with a signal to financial institutions that the transaction represents social and environmental risk; and
(iii) enterprises that may receive the classification of sustainable operation, due to compliance with social and environmental sustainability parameters.

The criteria will be part of the Rural Credit and Proagro Operations System (“Sicor”), helping financial institutions to improve their social and environmental risk assessment processes. In addition, the financing information may be made available to any interested party by authorization of the borrower. The consultation will be available until April 23, 2021.

News link: https://www.bcb.gov.br/detalhenoticia/521/noticia

CVM updates the schedule for the admission process of participants

On March 17, 2021, the CVM updated the schedule for the admission process of participants in the regulatory sandbox. CVM received 34 participation proposals, including from foreign countries, and, as a result, the deadline for analyzing proposals and issuing a normative act that will formalize the admission of participants was approved.

News link: https://www.gov.br/cvm/pt-br/assuntos/noticias/cvm-atualiza-cronograma-de-processo-de-admissao-de-participantes