Publicly Traded Companies Newsletter – No 03 – March 2023

In this edition:

NEWS – CVM

• CVM adjusts rules for issuers and offerings
• CVM rules on CEO of Embraer S.A. for alleged insider trading practice
• CVM accepts settlement agreement with CA Indosuez Wealth (Brazil) and Officers
• CVM accepts settlement agreement proposal with an executive of Hypera S.A. 
• CVM provides guidance on requests for registration as coordinator of public offerings

NEWS B3

• Disclosure of OTC public data on the B3 website – over-the-counter market (OTC)
• State of Espírito Santo carries out an auction for the sale of ES Gás shares

NEWS – ANBIMA

• Distribution Code is updated, with advances in suitability standards and rules for intermediation offerings abroad 
• Capital market offerings retreat in February
• CVM updates guidelines for protection against money laundering 

M&A TRANSACTIONS INVOLVING PUBLICLY TRADED COMPANIES

• Kepler (“KPL3”) concludes the purchase of Procer Automação
• Sinqia (“SQIA3”) acquires 60% of Compliasset for BRL 18 million 
• Hermes Pardini (“PARD3”) acquires Diagnóstico Por Imagem Sete Lagoas
• Vale (“VALE3”) concludes the sale of CSP to ArcelorMittal (“ARMT34”) for USD 2 billion
• BTG (“BPAC11”) acquires, via OPA, BRL 12.4 million in shares of Banco BESA 
• Casino Group studies potential sale of its interest in Assaí (“ASAI3”)

NEWS

BRAZILIAN SECURITIES AND EXCHANGE COMMISSION (“CVM”)

REGULATION 
CVM adjusts rules for issuers and offerings

On March 22, 2023, CVM published CVM Resolution No. 180 to establish specific amendments to CVM Resolution No. 160 and No. 80, in order to clarify specific regulations and enable the application of automatic registration procedures in certain subsequent offerings.

Below are the amendments to CVM Resolution No. 160:

1. Clarification on the concept of Frequent Issuer of Fixed Income (“EFRF”): the concept of EFRF was amended to clarify the that the issuer will be considered an EFRF if, during the last four (4) fiscal years, it has: (a) carried out public offerings, submitted to the ordinary registration procedure of distribution, in a total amount equal to or greater than five hundred million reais (BRL 500.000.000,00) of the fixed income security that it intends to offer, including securitization securities with single backing in which it has been a debtor; or (b) at least two (2) public offerings, submitted to the ordinary registration procedure of distribution, of the fixed income security that it intends to offer, including single-backed securities in which it has been a debtor. The amendment aims to ensure that there are no doubts as to the possibility of offerings benefiting from the automatic procedure, in cases where the single-backed security debtor is an EFRF;
2. Application of the automatic procedure in subsequent offerings of closed-end fund quotas: the amendment enables the automatic procedure in subsequent public offerings for distribution of closed-end fund quotas, aimed at professional and qualified investors or the general investing public, as long as there is no change in the investment policy or expansion of the target public, or when the application for registration is previously analyzed by a self-regulating entity authorized by the CVM under the provisions of the agreement;
3. Prior analysis by a self-regulatory entity: the wording of article 27, paragraph 7 of CVM Resolution 160 was amended to (a) resolve the omission in the resolution for cases previously analyzed by the self-regulatory entity; (b) adapt any new cases of registration applications previously analyzed by the self-regulatory entity; and (c) enable the submission of the self-regulatory entity’s statement on the absence of impediment or conditions for the registration until the date of effective registration of the offering by CVM (not the date of the registration application), so that the entity’s analysis can encompass the stage when the offering is announced to the market, which takes place after the registration application at CVM.
4. Change in procedures for offering registration requests: article 37, paragraph 1 was amended so that the technical area will only contact the applicant in case the documentation submitted is insufficient.

Below are the amendments to CVM Resolution No. 80:

1. Revision of fields not required from category B companies: the revision provides clarifications on the use of the marker “X”, indicating non-requirement in items and sub-items of the “Reference Form”, without changing the content of the requirements, by (a) removing the “X” from field 1.6 (important effects of the state regulation); (b) adding the “X” in field 7.2 (information on the board of directors); (c) adding the “X” (information on stock option grant made); and (d) adding the “X” in sub-items 10.1.a.i through 10.1.a.iv (information on the issuer’s human resources);
2. Change in procedures for issuer registration applications: article 5, paragraph 2 was amended so that the technical area will only make a statement in case the documentation submitted for issuer registration application is insufficient; and
3. Exclusion of footnotes No. 90 and No. 91: the exclusion of such footnotes aims to dispel doubts when completing the Reference Form, since footnote (a) No. 90 reproduced other pieces of information in the form and delimits the period to which the information refers, so its exclusion does not negatively affect the disclosure and transparency of information on diversity, since CVM understands that the disclosure of the numbers at the end of the most recent fiscal year is enough to meet the applicable requirements ; and (b) No. 91, described the hierarchical levels in which each issuer would provide the information. However, the system already instructs on the correct submission of information.

READ THE CVM ARTICLE IN FULL

READ CVM RESOLUTION No. 80 IN FULL

READ CVM RESOLUTION No. 160 IN FULL

READ CVM RESOLUTION No. 180 IN FULL

SANCTIONING PROCEEDINGS
CVM rules on CEO of Embraer S.A. for alleged insider trading practice

On February 21, 2023, CVM ruled on Sanctioning Administrative Proceeding (“PAS”) CVM No. 19957.005573/2020-19, which investigated the possible liability of Paulo Cesar de Souza e Silvia, serving CEO of Embraer S.A. at the time, for the alleged misuse of privileged information not yet disclosed to the financial market in connection with the sale of common shares issued by the Company.

The Reporting Officer Flávia Perlingeiro, voted to hold Paulo Cesar de Souza e Silvia liable for a fine of BRL 257,420.59, which is equivalent to twice the loss prevented by the defendant at the time of the sale of the shares on January 11, 2019.

However, Officer Otto Lobo expressed an opposing position to the Rapporteur and voted for the acquittal of the defendant, based on the grounds that he had presented sufficient arguments to mitigate the relative presumption of access to and misuse of privileged information. Officers João Accioly and Alexandre Rangem followed Officer Lobo’s decision, as well as the President João Nascimento.

In view of these statements, the Collegiate Board of CVM decided, by majority vote, for the acquittal of Paulo Cesar de Souza e Silva from the charges against him.

READ THE CVM ARTICLE IN FULL

READ THE CVM REPORT IN FULL

READ THE REPORTING OFFICER VOTE IN FULL

READ THE VOTE BY OFFICER OTTO LOBO IN FULL

READ THE VOTE BY OFFICER JOÃO ACCIOLY IN FULL

READ THE VOTE BY OFFICER ALEXANDRE RANGEL IN FULL

CVM accepts settlement agreement with CA Indosuez Wealth (Brazil) and Officers

On March 21, 2023, the Collegiate Board of CVM analyzed the Settlement Agreement proposed for Administrative Proceeding (“PA”) CVM No. 19957.006371/2021-67, with CA Indosuez Wealth (Brazil) S.A. DTVM, Felipe Aben Athar Sarmento and Urbano Araújo de Moraes as proponents.

The proponents committed to pay BRL 1,370,625.00 to CVM, divided as follows: (i) BRL 685,312.50 by CA Indosuez Wealth (Brazil) S.A. DTVM; (ii) BRL 342,656,25 by Felipe Aben Athar Sarmento; and (iii) BRL 342,656.25 by Urbano Araújo de Moraes.

The proceeding was filed to investigate alleged submissions to the CVM of net assets in daily reports that did not reflect the actual liquidity of the asset portfolios, as well as the absence of measures for rectification of information incorrectly sent within the period established by the rule. In addition, the proceeding aims to investigate the reason for not disclosing policies, procedures and internal records for the liquidity of the fund portfolios to be in line with the deadlines established in the regulation (in case of payments of redemption requests and fulfillment of the fund’s obligations), as well as the lack of care and due diligence when carrying out activities.

READ THE CVM ARTICLE IN FULL

READ THE OPINION ON THE AGREEMENT IN FULL

CVM accepts settlement agreement proposal with an executive of Hypera S.A. 

At a meeting held on March 28, 2023, the Collegiate Board of CVM analyzed the Settlement Agreement proposed for PA CVM No. 19957.011788/2022-22, with Breno Toledo Pires de Oliveira, CEO of Hypera S.A., as proponent.

The PA was filed by the Superintendence of Company Relations (“SEP”) to investigate a possible violation of art. 14 of CVM Resolution 44, with respect to transactions carried out during a prohibited period.

Breno Toledo Pires de Oliveira proposed a settlement agreement to terminate the PA, through the payment of BRL 204,000.00 to CVM, and the proposal was accepted by the Collegiate Board.

READ THE CVM ARTICLE IN FULL

READ THE OPINION ON THE AGREEMENT IN FULL

CIRCULAR LETTER

CVM provides guidance on requests for registration as coordinator of public offerings 

On March 24, 2023, the CVM’s Superintendence of Securities Registration (“SRE”) published CVM/SRE Circular Letter No. 4/2023 (“Letter”), aiming to guide intermediary institutions on the application for registration as coordinator of public offerings of securities distribution, established in CVM Resolution No. 161.

By presenting new clarifications, CVM aims to reduce possible deviations and, consequently, the need for consultations with the regulator or requirements by SRE, as highlighted by the Superintendent of Securities Registration of CVM, Luis Sono.

The Letter includes new topics, in addition to those already addressed in CVM/SRE Circular Letter No. 2/2022, such as a reminder about the closeness of the deadline, information on the application for registration, access to the system by coordinators, restrictions on the number of duties held by the officers in charge and the hiring of autonomous investment agents.

READ THE CVM ARTICLE IN FULL

READ THE CIRCULAR LETTER IN FULL

B3

Disclosure of OTC public data on the B3 website – over-the-counter market (OTC)

On March 17, 2023, B3 improved its website in order to enable easier access to information. These improvements include more detailed information on the “Over-the-Counter Registration” (“OTC”) files, detailing the consolidated and the “Trade-by-Trade” OTC registrations.

Also, two new contents were included on the website: the OTC settlement file (containing the financial amounts settled in the OTC of B3, for fixed-income securities instruments); as well as the stock file (indicating the financial volume in the OTC of B3 stock, for certain fixed-income securities instruments).

In addition, a new filter was included on the website for “Trade-by-Trade” consultations and the data from this category will be published in the “Market Daily Newsletter”, in the Fixed Income chapter.

READ THE B3 ARTICLE IN FULL

State of Espírito Santo carries out an auction for the sale of ES Gás shares

On March 31, 2023, the State of Espírito Santo carried out an auction at B3 for the sale of all the shares of Companhia de Gás do Espírito Santo (“ES Gás”), the concessionaire responsible for the distribution of piped natural gas in Espírito Santo. Energisa was the winner of the auction, with a proposal of BRL 1.42 billion, and a surcharge of 7.28%. Energisa was represented by the broker Modal.

The auction included 493,691,410 nominative common shares, with no par value, and 142,474,400 nominative preferred shares, with no par value, issued by ES Gás, representing 100% of its capital stock. The bidding started at BRL 1.3 billion.

READ THE B3 ARTICLE IN FULL

Brazilian Financial and Capital Markets Association (“ANBIMA”)

Distribution Code is updated, with advances in suitability standards and rules for intermediation offerings abroad 

On March 09, 2023, ANBIMA updated the Investment Products Distribution Code, especially with respect to the rules of suitability (analysis of the investor’s profile), privacy and protection of personal data, information security and cybersecurity, and business continuity plan. The new Code establishes rules for institutions that intermediate service offerings abroad.

The amendments will enter into force in two stages: on May 08 and September 05, 2023.

As for suitability adjustments, the Code updates included rules for investment products that hold crypto assets in their portfolios. The measures will require institutions to develop a specific risk classification, considering the particular features of the products and the risks involved. The new suitability rules will enter into force on September 05, 2023.

The new updates will require institutions to comply with specific rules for intermediation offerings above, and the effort to attract clients must be carried out by the Brazilian institution, which will analyze the investor’s profile. In addition, the institutions will have to maintain a team that speaks Portuguese to advise clients who live in Brazil.

In addition, the new Code also requires institutions to develop action plans and incident response plans, in order to maintain procedures and internal records for privacy, personal data protection, as well as information and cyber security.

READ THE ANBIMA ARTICLE IN FULL

ACCESS THE UPDATED CODE IN FULL

Capital market offerings retreat in February

According to data gathered by ANBIMA, offerings by Brazilian companies in the capital markets totaled BRL 13.04 billion in February 2023, representing a 51.2% decrease of 51.2% in comparison to January 2023. Compared to February 2022, there was a decrease of 73.2%.

ANBIMA’s vice-president stated that the early 2023 landscape has been characterized by uncertainties and, as a result, issuers are waiting for a more favorable moment to resume their transactions.

Debentures lead the issuances in the capital markets, reaching BRL 6.6 billion from 19 transactions in February, a volume almost three times lower than the one registered in January of this year.

READ THE ANBIMA ARTICLE IN FULL

CVM updates guidelines for protection against money laundering 

In March, CVM updated the guidelines for prevention against money laundering, through an official letter sent to ANBIMA. The new document includes the risk assessment and the 2023-2024 plan, highlighting some risks regarding money laundering, terrorism financing and weapons proliferation (ML/TFP) in the Brazilian capital markets.

The new assessment includes:

(i) The need to identify the final beneficiary of a product or client;

(ii) The need for special attention when new service providers initiate their activities; and

(iii) The specific characteristics that must be observed by structured funds service providers.

READ THE ANBIMA ARTICLE IN FULL

READ THE CVM GUIDELINES IN FULL

M&A TRANSACTIONS INVOLVING PUBLICLY TRADED COMPANIES

Kepler (“KPL3”) concludes the purchase of Procer Automação

Kepler entered into a “Share Purchase Agreement and Other Covenants” for the acquisition of 50% plus one share of Procer Automação S/A (“Procer”). Procer is the main Brazilian player with specific focus on technologies to develop equipment to enable automation, control and remote monitoring of storage plants.

Kepler will pay BRL 5 million as a primary investment, in addition to BRL 3,617,337.00 referring to the net debt at the closing of the due diligence, totaling an amount of BRL 8,617,337.00. In addition, Kepler will pay BRL 42,216,663.00 as a secondary investment. Therefore, the total amount of the primary and secondary investment is BRL 50,834,000.00.

READ THE MATERIAL FACT IN FULL

READ THE MATERIAL FACT IN FULL

Sinqia (“SQIA3”) acquires 60% of Compliasset for BRL 18 million 

On March 7, 2023, Sinqia S.A.’s subsidiary, Sinqia Tecnologia Ltda.
(“Sinqia Tecnologia”), acquired 60% of shares Compliasset Software e Soluções Digitais Ltda. Compliasset  is a reference in regulatory compliance software. Over the Last 12 Months (“LTM”), ended on February 28, 2023, the company reported a gross revenue of BRL 6.7 million. This amount represents a growth of 40% over the LTM ended on February 28, 2022 and an EBITDA of BRL 3.1 million (50% margin).

READ THE MATERIAL FACT IN FULL

Hermes Pardini (“PARD3”) acquires Diagnóstico Por Imagem Sete Lagoas

Hermes Pardini entered into an agreement to acquire all shares owned by minority shareholders of its subsidiary Diagnóstico Por Imagem Sete Lagoas Ltda. The acquired shares represent 30% of Diagnóstico Por Imagem Sete Lagoas’s capital stock, and once the acquisition is completed, Hermes Pardini will hold 100% of the company’s capital stock.

READ THE MATERIAL FACT IN FULL

Vale (“VALE3”) concludes the sale of CSP to ArcelorMittal (“ARMT34”) for USD 2 billion

Vale S.A., together with its partners Posco Holding Inc. and Dongkuk Steel Mill Co., Ltd, have concluded the sale of their respective shares in Companhia Siderúrgica do Pecém to ArcelorMittal. According to the agreed terms, the transaction was worth USD 2.2 billion, which will be used for the early payment of the outstanding net debt of USD 2.3 billion. This transaction reinforces Vale’s strategy to simplify the portfolio, focusing on core businesses and growth opportunities, guided by disciplined capital allocation.

READ THE MATERIAL FACT IN FULL

BTG (“BPAC11”) acquires, via OPA, BRL 12.4 million in shares of Banco BESA 

As part of the unified public offering for the acquisition of common and preferred shares issued by Banco BESA (“BESA”), launched by Banco BTG Pactual S.A. (“BTG”), the Public Offering for Acquisition of Shares (“OPA”) was carried out (i) in compliance with the obligation to submit a public offering for the acquisition, in view of the sale of BESA’s control to BTG; and (ii) in order to cancel BESA’s registration as a publicly-held company. As a result of the auction, BTG acquired the shares issued by BESA, representing approximately 96.99% of its total capital stock.

READ THE MATERIAL FACT IN FULL

Casino Group studies potential sale of its interest in Assaí (“ASAI3”)

Casino Guichard Perrachon (“Casino Group”), Assaí’s controlling shareholder, has initiated the preliminary studies to possibly sell part of its interest in Assaí for an estimated amount of USD 600 million, which may be increased, depending on market conditions. As informed by Casino Group to Assaí, no final decision on the potential transaction has been made yet. The potential transaction would be implemented through a secondary public offering, which may or may not be launched, in compliance with market conditions.

READ THE MATERIAL FACT IN FULL