The Same Trustee May Now Participate In Different Issues Of The Same Company In Brazil

The Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários) issued CVM Instruction No. 519, of January 26, 2012 (CVM Instr. 519/2012), which amends CVM Instruction No. 28, of November 23, 1983 (CVM Instr. 28/1983), dealing with the fiduciary activity performed by the debenture holders' trustee (agente fiduciário dos debenturistas) in the Brazilian capital market. The changes introduced by CVM Instr. 519/2012 are described herein.

Before commenting these changes, however, it is important to mention that, at the beginning of the current year, CVM Instruction No. 490, of January 24, 2011 (CVM Instr. 490/2011), was enacted in order to modify CVM Instr. 28/1983 and allow the same trustee to participate of issues of debentures made by any affiliate, controlling, controlled or company which is a member of the same group of the issuer1.

At that time, the Brazilian regulator decided to maintain the prohibition that the same trustee acted in different issues of the same company, in accordance with the applicable law in force on that occasion. In this regard, article 66, paragraph 3, subparagraph (a) of Law No. 6404, of December 15, 1976 (the Brazilian Corporation Law - BCL) determined that it shall not be appointed as trustee any person already performing such a task for another issue of the same company.

Subsequently, Law No. 12341, of June 24, 2011 (Law 12341/2011), modified this provision and added an exception to the general rule contained in the BCL and expressly permitted the designation of the same trustee for different issues of the same company in the cases authorized pursuant to the rules enacted by CVM. This innovation is part of several other legal provisions inserted in Law 12341/2011 that seek to encourage the issuance of debentures by the Brazilian publicly-held corporations2.

The last reform of CVM Instruction 28/1983, made by means of CVM Instruction 490/2011, has already discussed the lack of trustees vis-à-vis the increasing number of debentures operations, and now it is expected an even larger number of operations as a result of the various changes introduced in the BCL by Law 12431/2011. In this context, the permission for the same person to exercise a trustee function in various issues of the same company becomes even more relevant.

Law 12431/2011 simply did not allow that a trustee could act in different emissions of the same company. Instead, the legislator preferred to keep the prohibition, delegating...