Trading and offering foreign securities in Brazil

Author: | Published: 1 Dec 2005
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Mattos Filho Veiga Filho Marrey Jr e Quiroga Advogados


Al. Joaquim Eugênio de Lima, 447 São Paulo SP - 01403-001


+55 11 3147 7600


+55 11 3147 7770 Visit Website

The Brazilian Securities Commission (CVM) has recently issued its interpretation regarding trades with foreign securities and offerings of the same to Brazilian residents. The interpretation establishes certain restrictions applicable to activities that might configure intermediation in Brazil with securities admitted to trade only in jurisdictions outside Brazil.

Under its new interpretation, the CVM says that:

  • Brazilian law sets forth that only the members of the securities distribution system properly registered with the CVM are authorized to offer services of intermediation with securities in Brazil. The authorization to render services of intermediation of securities transactions granted by a foreign regulator does not grant the right to intermediate negotiation of securities in the Brazilian market.
  • Activities of intermediation with securities issued and negotiated abroad to Brazilian resident investors by entities constituted abroad, will be regular if (i) the business development activity by the entity is made abroad, and (ii) the transactions intermediated do not constitute public offerings in Brazil.
  • If an entity established outside Brazil intends to offer securities issued abroad to Brazilian residents, it must (a) register with the CVM as a member of the Brazilian securities distribution system, or (b) engage a member of the Brazilian securities distribution system to carry out the intermediation in Brazil. Additionally, the entity should check if the issuer of the security offered or the offering itself is subject to registration with the CVM.
  • It is necessary to register a public offering of securities in Brazil, except in the cases that the CVM regulation waives such registration. Public offerings of foreign securities in Brazil that do not fall within an exemption provided in the regulation might have to be registered with the CVM in advance.
  • For a public offer of securities issued abroad to be characterized as a public offer in Brazil, a public communication channel must be used that reaches the general public in Brazil.
  • An offering of securities issued abroad, with use of the internet, must comply with the following so-called safe harbour rules in order avoid characterization as a public offering in Brazil and therefore subject to CVM registration. The offering must (a) provide warning, clearly and easily accessible, stating that the securities are directed only to countries where the information provider is allowed to offer securities, (b) contain effective measures to prevent Brazil-resident investors accessing the offering's content, (c) contain direct or indirect indication that the offering information available online is not aimed at Brazilian investors, and (d) should not contain text to attract Brazilian resident investors, even in a foreign language.