Doing Business in Brazil

30. Capital Market

08/03/20

Under supervision and regulation of the Conselho Monetário Nacional (Brazilian National Monetary Council), Banco Central do Brasil (Brazilian Central Bank) and mainly of the Comissão de Valores Mobiliários (“CVM”, the Brazilian Securities Exchange Commission), Brazilian capital market encompasses sophisticated structures of public funding. In such ecosystem, B3 – Brasil Bolsa Balcão, previously known as BM&F BOVESPA, operates the Brazilian stock exchange and provides all the infrastructure required for trading transactions within either the exchange or over the counter environments, also managing and operating IBOVESPA, the most known real time transactions record index of Brazilian capitals market. 

Among the securities eligible for public offering under Federal Law 6.385/1976, are stocks, debentures, quotas of investments funds, futures contracts, derivatives as well as any other publicly traded titles or contracts which grant equity, partnership and/or yield rights, including those resulting from services whose earnings arise from the efforts of the entrepreneur or third parties. 

Public offerings of securities subject the issuers to the regulatory frame of both CVM and applicable laws, considering their relevant legal nature.

For instance, companies that are to issue stocks, debentures, subscription bonuses and/or any other securities representing debt or equity titles, must be incorporated as corporations (“sociedades anônimas”) according to Federal Law 6,404/9176. Also, the registration of the relevant public offering must be contracted with private and specialized agents that provide services of securities’ distribution, securitizing, custody and recording, financial and accounting audits, not to mention that the issuer entity shall follow CVM applicable rules for the capitals market. 

It is worth mentioning that the laws providing for market protection and governing the corporations set forth specific rules in regards to public offerings, transfer of control and corporate restructuring to protect minority holders, as well as governance and accounting standards – following the International Financial Reporting Standards (IFRS). 

Often used in Brazil, investment funds are a pool of resources, incorporated as an entity with a special type of joint ownership/condominium for the specific purposes of investing in financial or other assets and rights of any nature 1. Usually involved in transactions of debt and equity securitization, these vehicles raise funds from investors aiming to reinvest in securities and other assets, undertaking to pay to the investors the relevant profits under a professionally administered and managed portfolio, observing the quota redemption rules, the fund’s term and/or liquidation.

Investment funds can be structured, i.e., follow specific rules in connection with their frequency use and specialty in a determined market, such as the real estate funds, equity participation funds, and receivables-backed funds, and are usually bound to a determined period of duration and specific assets to be targeted.

Moreover, reflecting the trends of the 21st century economy, Brazilian capital markets authorities already accept and regulate equity crowdfunding transactions and, yet no specific regulation has been enacted so far, CVM started a regulatory sandbox experiment, so that such authority can define further regulation applicable to innovating solutions in the capital markets, such as public offerings of tokens and crypto assets and other business models based on innovation for the capital markets. 

Last but not least, Brazilian capital markets is welcoming to non-residents, who can directly detain ownership of the securities locally traded. For so, a representative residing in Brazil must be appointed and some specific rules set forth by the authorities above mentioned must be duly complied with throughout the period of investment. 


1 –  Under the terms of article 1,368-C of the Brazilian Civil Code (Law 10,406 of January 10, 2002).


Sahelê Montoza de Oliveira Felício

Lawyer in the Corporate Law and Contracts area of the law firm Gaia, Silva Gaede & Associados – Sociedade de Advogados in São Paulo

LLM (Contract Law) from Instituto de Ensino e Pesquisa – INSPER

Law degree from Mackenzie Presbyterian University

Gaia Silva Gaede Advogados

Rua da Quitanda, 126
BR-01012-010 São Paulo – SP
Tel (11) 3797 7400

[email protected]
www.gsga.com.br