In recent weeks, the financial and capital markets have been facing a constant scenario of stress. And with the advancement of the government's economic measures and the uncertainties about the coronavirus pandemic, the Brazilian Securities Commission ("CVM") sought to guide market participants by publishing in its website important recommendations, as described below:
Intermediaries - Contingency plan
Under the terms of Circular Letter No. 2/2020-CVM/SMI, CVM recommends that intermediaries adopt a contingency plan due to the spread of the coronavirus. In this sense, the intermediary must be prepared for an extreme situation in Brazil, so that a contingency plan is prepared in order to be able to continue providing its services properly.
The contingency plan must be discussed and approved by the senior management of the intermediary, communicated to employees and provide for the form, content and timing of eventual communication to customers and the general public. The recommendation made by CVM in this circular aims at the maintenance by the intermediary of an adequate level of service for the stress situation experienced by the market, as well as a way to mitigate possible risks for the intermediary and its clients during this period.
Issuers/Offerors of securities - Registered public offerings
On March 13, 2020, CVM published Circular Letter No. 2/2020-CVM/SRE, in order to clarify to issuers/offerors of securities with registered public offerings that the current Brazilian scenario falls within the provisions of Article 25 of CVM Instruction 400, constituting a substantial, subsequent and unpredictable change in circumstances existing at the time of filing the distribution registration application.
Therefore, requests for modification of registered offers related exclusively to the deterioration and volatility of the investment scenario and duly substantiated will be considered automatically approved by SRE with the granting of an extension of the distribution term for an additional 90 days.
Such modifications may be immediately implemented by sending the modified documentation to SRE and disclosing a notice to the market. Finally, the provisions of article 27 of CVM Instruction 400 must be observed, so that investors who have already adhered to the offer are given the possibility to withdraw within 5 days from receipt of the communication on the modification, and new investors must be informed of the modification of the offer through the offer acceptance document.
Issuers/Offerors of securities - Possibility of discontinuing public offerings submitted for registration as well as issuer registration applications
Due to the dissemination of the coronavirus and the consequent impacts to the economic activity, CVM published, on March 16, 2020, Resolution No. 846, which changes the maximum term of interruption of the period of analysis by SRE, of requests for:
(i) registration of public offerings for distribution - for up to 180 business days (article 10 of CVM Instruction 400); and
(ii) issuer registrations that have been filed concurrently with a public offering registration application - for up to 180 business days (Article 6 of CVM Instruction 480).
Said resolution shall be reviewed within 30 calendar days from the date of its publication.
Also in relation to Resolution 846, CVM stated, under the terms of Circular Letter no. 3/2020-CVM/SRE, that the expression "decided or projected" contained in the main section of article 48 of CVM Instruction no. 400 will be considered, exceptionally, as the moment in which there is a decision, by the offeror, to resume the analysis of the application for registration of the public offering for distribution.
CVM further clarifies that when deciding to discontinue the offering, the offeror must, in addition to filing a request with CVM, communicate such decision to the market by the means applicable to the case, and must adopt the same procedure when deciding for the resumption of the offering or for its definite cancellation.
To access the full articles published by CVM related to coronavirus, click here.
The Financial and Capital Markets team is available for any clarifications and/or additional information by means of the e-mail [email protected]
