Depositary Receipt Programs In Brazil

The Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM) issued CVM Instruction No. 559, of March 27, 2015 (CVM Inst. 559/2015), which updates the rules on the approval of programs of Depositary Receipts (DR) to be traded abroad (i.e. outside Brazil) and came in full force and effect on March 30, 2015, date of its publication in the Official Gazette of the Union (Diário Oficial da União - DOU).

For the purpose of CVM Instr. 559/2015, the following terms are defined:

DR means the certificates issued abroad by a depository institution representing assets authorized in specific regulations enacted by the Brazilian Monetary Council (Conselho Monetário Nacional - CMN), hereinafter referred to as "authorized assets", deposited in specific custody in Brazil; custodian institution means the institution authorized by CVM to provide custody services; depository institution means the institution abroad that issues the corresponding DR based on the authorized assets; and sponsoring company means the issuer of the authorized assets which are object of the DR program, which must be a company headquartered in Brazil, and it is the signatory of the specific contract entered into with the depository institution to govern the issuance of DR. Regarding its authorization, the DR program requires the approval of CVM and can be ballasted on authorized assets, according to the registration category in which the issuer of securities is registered with CVM1. The approval of DR program can be requested by (i) the custodian institution; or (ii) the sponsoring company.

The DR program can be sponsored or non-sponsored. Sponsored is the program established by a single depository institution hired by the issuer of the assets constituting the ballast of the DR. Non-sponsored is the program established at the initiative of one or more depository institutions and in this case the manifestation of no objection from the issuer of the assets constituting the ballast of the DR will have to be presented.

The CVM approval for the DR program will be granted automatically. The application of automatic approval must be forwarded to the Securities Registration Superintendence (Superintendência de Registro de Valores Mobiliários - SRE) and will be accompanied by the following documents: (i) the contract between the custodian institution and the depository institution; (ii) the agreement (convênio) entered into between the administrator entities of the...