Regulatory Alerts2014-10-25
CVM Instruction No. 530 of November 22, 2012
The Brazilian Securities and Exchange Commission (CVM) issued Instruction No. 530 to prohibit investors who sold short a stock on the pricing date or the five preceding trading days from acquiring shares during public distribution offerings. The regulation defines short sales as transactions by investors lacking ownership or holding shares via loan, and treats operations by entities under the same investment influence as those of a single investor, with specific exemptions for market makers and covered positions. Non-compliance with these acquisition bans constitutes a serious offense under the Securities Law, and the instruction entered into force upon its publication.
CVM INSTRUCTION NO. 530, OF NOVEMBER 22, 2012
Establishes rules for the protection of the price formation process in the context of public distribution offers of shares.
The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Collegiate Body, in a meeting held on November 6, 2012, based on the provisions of Articles 4, items II and V, and 8, item I, of Law No. 6,385, of December 7, 1976, APPROVED the following Instruction:
Art. 1. The acquisition of shares, within the scope of public distribution offers of shares, is prohibited for investors who have carried out short sales of the subject share on the date of the offer price setting and in the 5 (five) trading days preceding it.
§ 1. For the purposes of this Instruction, short sales are considered those carried out by investors who are not holders of the shares, or whose ownership results from a loan or another contract of equivalent effect.
§ 2. For the purposes of this Instruction, operations of the same investor are considered the short sales and the acquisitions of shares carried out in their own name or through any vehicle whose investment decision is subject to their influence.
§ 3. Investment funds whose investment decisions are taken by the same manager will not be considered as a single investor for the purposes of the provision of this article, provided that the operations are framed within the respective investment policies of each fund.
§ 4. The prohibition provided for in the caput does not apply in the following cases: I – operations carried out by legal entities in the exercise of the market maker activity of the share subject to the offer, as defined in the specific regulation; and II – operations subsequently covered by acquisition in the market of the total quantity of shares corresponding to the short position up to, at most, 2 (two) trading days before the date of the offer price setting.
CVM INSTRUCTION NO. 530, OF NOVEMBER 22, 2012
Art. 2. Considered a serious offense, for the purposes of § 3 of Art. 11 of Law No. 6,385, of December 7, 1976, is the non-observance of the provision of Art. 1.
Art. 3. This Instruction enters into force on the date of its publication.
Signed original by LEONARDO P. GOMES PEREIRA President 2