Initial Public Offerings 2019

The IPO process

The first formal procedure for a company to go public in Brazil is its application, as a publicly traded company, with the Comissão de Valores Mobiliários ("CVM"), or the Brazilian Securities and Exchange Commission. The CVM is a federal autarchy responsible for regulating and supervising the Brazilian capital market. Among other functions, it: (a) protects securities holders against fraudulent issues and illegal actions carried out by publicly traded company management members, controlling shareholders and fund managers; (b) supervises fraud or market manipulation which may give rise to artificial pricing formation in the securities market; (c) regulates disclosure requirements by market participants; and (d) ensures that all market participants adopt fair trading practices.

The legal framework rule that regulates the registration of an entity as a publicly traded company is CVM Ruling 480 dated December 7, 2009 ("ICVM 480"). The main documents required to be presented when dealing with an application are:

request letter signed by the Investor Relations Officer; minutes of the meeting of the Board of Directors or the minutes of the General Shareholders' meeting in which the Investor Relations Officer was elected; updated copy of the bylaws; financial statements and explanatory notes for the three most recent fiscal years, prepared as set forth in article 176 of Law 6.404 (Brazilian Corporation Law) dated December 15, 1976, indicating the newspapers and dates of their publication; financial statements for the last fiscal year prepared as per ICVM 480 (which should necessarily include explanatory notes, a management report, the independent auditor's opinion, declarations and confirmations of the directors attesting that they have reviewed the financial statements and a report from the audit committee, in case the company has set up a committee of such kind); minutes of all shareholders' meetings which occurred in the last 12 (twelve) month period preceding the date of application of registration with the CVM; standardised financial statements (Demonstrações Financeiras Padronizadas - DFP) for the last fiscal year; quarterly information report (Informações Trimestrais - ITR) containing information on the three-month period of the current fiscal year, provided that not more than 45 (forty-five) days have elapsed since the closure of each quarter. Such information should be accompanied by a special revision report issued by an independent auditor registered with the CVM; copies of shareholders agreements which the company is subject to; securities trading policy; disclosure policy; information on the company's securities held by its management members; disclosure report, or reference form (Formulário de Referência), prepared as per Annex 24 of ICVM 480; and registration form (Fomulário Cadastral), as per the terms of ICVM 480. The Formulário de Referência, mentioned above, is a detailed document that aims to provide information on the company. It is similar to a shelf document and requires a vast number of disclosure requirements. It is the investors' main source of information on the company, with a standardised format, and favours the rendering of information on a continuous basis. It is a dynamic document updated annually, whenever there is a public offering of securities, or within 7 (seven) days of the occurrence of specific events. The Chief Executive Officer and the Investor Relations Officer must declare that they have read and revised the Formulário de Referência, and that the information contained in it is in compliance with ICVM 480 and portrays...