Brazil: The "Quiet Rule" And Other Recent Changes Introduced by The Brazilian Regulator in Public Offerings

The "Quiet Rule" And Other Recent Changes Introduced by The Brazilian Regulator in Public Offerings

On April 5, 2010, the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) issued CVM Instruction No. 482, which amends the regulation on public offerings for distribution of securities set forth by CVM Instruction No. 400, of December 29, 2003.

The main purpose of the changes introduced by CVM Instruction 482/2010 is to harmonize CVM Instruction 400/2003 with: (i) CVM Instruction No. 476, of January 16, 2009, which deals with securities distributed with limited underwriting efforts; and (ii) CVM Instruction No. 480, of December 7, 2009, which establishes rules for registry of issuers of securities admitted for trading in the local regulated markets. It also reflects the aggregate experience of the regulator (CVM) in the application of CVM Instruction 400/2003 since its enactment.

In any public offerings there are conduct norms that must be followed and are expressly listed in article 48 of CVM Instruction 400/2003 as amended by CVM Instruction 482/2010. These norms are outlined below and apply to all the participants, comprising the issuing company, the offeror, the intermediary institutions (the latter since the signing of the contract) involved in any finalized or project public offering distribution, and the people working with them or advising them in any way (financial consultants, lawyers, accountants, auditors, etc.). In addition, the issuing company must also comply with the disclosure obligation of furnishing the periodical and eventual information required by CVM.

While the public offering has not been released to the market, the participants shall limit: (a) the release of information related to the offer to what is necessary for the objectives of the offer by alerting the recipients of the reserved character of the information transmitted; and (b) the use of the reserved information strictly to the purposes related to the preparation of the offer1.

Up to the publication date of the Distribution Closure Notice, the participants shall abstain from negotiating with securities issued by the issuing company or the offeror, or referenced in such securities. However, there are certain cases that constitute an exception to this general rule and are not subject to such restriction. These cases are the following: (i) execution of a stabilization plan duly approved by CVM; (ii) total or partial disposal of securities lot that is the object of firm commitment; (iii) negotiation for the account and order of third parties; (iv) transactions clearly destined to accompany a share index, certificate or receipt of securities; (v) transactions destined to protect positions assumed in total return swaps contracted by third parties; (vi) transactions made with a market maker in the terms of the current CVM regulations; or (vii) discretionary administration of third parties` portfolio. The number of admitted exceptions has been revised and increased by CVM2. Furthermore, this specific norm of conduct now applies to the controllers, controlling companies and corporations under the same control of the intermediary institutions, acting in the financial market and these entities must adopt adequate procedures to assure such norm compliance3.

The participants must present to CVM any research or public reports that they have eventually prepared about the issuing company and the transaction4. Likewise, this other norm of conduct has also been extended to apply to the controllers, controlling companies and corporations under the same control of the intermediary institutions, acting in the financial market and these entities must adopt adequate procedures to assure such norm compliance5 .

The participants shall abstain from communicating in the media about the offer or the offeror until the publication of the Distribution Closure Notice within sixty days prior to the filing of the offering registration request or since the date in which the offer was finalized or projected, whichever occurs later. This is the so-called silence period or "quiet rule". There were many doubts in the past about how this silence period should be counted and now the term has been clearly defined by CVM6. This prohibition is not applicable to any information which must be usually disclosed in the normal course of activities of the issuing company7.

From the moment the offer becomes public, when releasing information related to the issuing company or the offer, the participants must: (a) observe the principles relative to the quality, transparency and equality of access to information; and (b) clarify their connections with the issuing company or their interest in the offer, the issuing company or the securities8.

For all the effects described above, the issuing company, the offeror and the intermediary institutions shall assure the precision and adequacy of any information supplied to any investor, regardless of the medium used, with the information contained in the Prospectus. They must direct such documents and information to the CVM9.

Furthermore, CVM also determined that the administrators of the intermediary institution leading the offer, of the offeror and of the issuing company, within their legal and statutory attributions, are responsible for the compliance of all the obligations imposed to such entities by CVM Instruction 400/2003 as amended by CVM Instruction 482/201010.

Other relevant modifications made by CVM which need to be highlighted are the following:

  • The reference form (formulário de referência) instituted by CVM Instruction 480/200911 must be incorporated to the distribution Prospectus.
  • It is no longer necessary to update annually the Distribution Program.
  • The procedure for registration of any public offering submitted by the so-called "great exposure to the market issuer" (emissor com grande exposição ao mercado - EGEM)12 will be automatic and will produce legal effects after 5 business days of the date of filing of the application at CVM.
  • The rules for automatic exemption from registration of a single and indivisible lot of securities and securities issued by small and micro sized companies have been improved.

The new rules introduced by CVM Instruction 482/2010 will be valid and in full force and effect as of August 1, 201013.


1 This norm was already contained in item I of article 48 of CVM Instruction 400/2003 and has not been changed.

2 Items (v), (vi) and (vii) have been introduced by CVM Instruction 482/2010.

3 These rules are contained in new paragraphs 2 and 3 added to article 48 of CVM Instruction 400/2003.

4 This norm was already contained in item IV of article 48 of CVM Instruction 400/2003 and has not been changed.

5 Please refer to the previous note, which is also applicable in this case. These rules are contained in new paragraphs 2 and 3 added to article 48 of CVM Instruction 400/2003.

6 The "quite rule" has been established by the new wording of item IV or article 48 of CVM Instruction 400/2003.

7 This rule is contained in new paragraph 1 added to article 48 of CVM Instruction 400/2003.

8 This norm was already contained in item V of article 48 of CVM Instruction 400/2003 and has not been changed.

9 This norm was already contained in article 49 of CVM Instruction 400/2003 and has not been changed.

10 These rules are set forth by the new articles 56-A, 56-B and 56-C of CVM Instruction 400/2003.

11 The reference form must identify the independent auditors and describe selected financial information; risk factors; market risks; historic data about the issuer; the company´s activities; the economic group; relevant assets; comments of the directors; forecasts; general shareholders´ meeting and administration (corporate governance); directors´ compensation; human resources; controlling shareholders; transactions with related parties; capital stock structure; different types of securities; repurchase and treasury securities plans; securities negotiation policy; information disclosure policy; and any extraordinary business. The reference form must be updated annually within 5 months as from the closing date of the relevant fiscal year or within 7 business days as of certain facts, and delivered at the time of the registry application of any public distribution of securities. These facts, in the case of a category A issuer, include: (i) change of manager or of a member of the audit committee of the issuer; (ii) any amendment of the capital stock; (iii) issue of new securities, even if subscribed privately; (iv) change in the rights and advantages attributed to the issued securities; (v) change of the direct or indirect controlling shareholders or variations in their shareholding positions equal or exceeding 5% of the same kind or class of shares of the issuer; (vi) whenever any individual or legal entity or group of persons representing the same interest reaches the 5% threshold, provided that the issuer is aware of such change; (vii) any variation in the shareholding position of any of the persons mentioned in (vi) above exceeding 5% of the same kind or class of shares of the issuer, provided that the issuer is aware of such variation; (viii) merger, incorporation of shares, consolidation or spin off involving the issuer; (ix) alterations in the forecasts or estimates or divulgation of new forecasts or estimates; (x) signing, amendment or termination of shareholders agreement filed at the issuer´s headquarter or in which the controlling shareholder is a party regarding the exercise of voting rights or power of control of the issuer; and (xi) decree of bankruptcy, judicial recovery plan, liquidation or judicial ratification of an extrajudicial recovery plan. In the case of a category B issuer, the facts to be reported are limited to those mentioned in items (i), (iii), (v), (viii), (ix) and (x).

12 Pursuant to CVM Instruction 480/2009, the EGEM must comply with the following cumulative requirements: (a) it must have shares traded in the stock exchange for at least three years; (b) it shall have complied timely with its periodical obligations for the last 12 months; and (c) the market value of its shares in circulation shall be equal or above R$ 5 billion, pursuant to the closing quotation of the last business day of the three-month period before the date of the securities public offering distribution application request. In this context, the expression "securities in circulation" or "shares in circulation" means all the securities or shares of the issuer, other than those hold by the controlling shareholder(s), the persons linked to the controlling shareholder(s), the administrators of the issuer and those securities or shares kept in treasury. "Linked person" (pessoa vinculada) means any individual or legal entity, fund or universality of rights acting for and representing the same interest of the individual or legal entity to whom/which such person is linked.

13 The date of validity of CVM Instruction 482/2010 is mentioned in its article 13.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Walter Stuber
Adriana Maria Gödel Stuber
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions