Circular Letter CVM/SRE 07/23: New Guidelines for Coordinators in Automatic Registration of Public Distribution Offers

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL
Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – CEP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brazil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4th Floor, Brasília/DF – CEP: 70712-900 – Brazil - Tel.: (61) 3327-2030/2031 www.cvm.gov.br Circular Letter No. 7/2023/CVM/SRE Rio de Janeiro, July 3, 2023. Subject: New guidelines on procedures to be observed by coordinators in applications for automatic registration of public distribution offers of securities - CVM Resolution No. 160/2022.

Dear Director,

1. This Circular Letter complements the previous Circular Letters No. 3/2022-CVM/SRE (Circular Letter CVM/SRE 03/22), published on 12/30/2022, No. 1/2023-CVM/SRE (Circular Letter CVM/SRE 01/23), published on 01/13/2023, No. 2/2023-CVM/SRE (Circular Letter CVM/SRE 02/23), published on 01/19/2023, and No. 3/2023-CVM-SRE (Circular Letter CVM/SRE 03/23), and should be read together with those documents, for the purpose of clarifying requests for registration of public distribution offers of securities that follow the automatic registration procedure provided for in art. 26 of CVM Resolution No. 160/22 (“RCVM 160”).

2. In this sense, we provide guidance on certain aspects, regarding which this technical area deemed it appropriate to issue this statement, in light of the supervision of intermediary activity in the use of the new Public Distribution Registration System, the SRE - Public Offering Registration System ("SRE System" or "System").

3. Furthermore, this Circular Letter addresses changes introduced in the System with a view to its adaptation to the end of the 180-day transition period provided for in art. 23[1] of CVM Resolution No. 161/22 ("RCVM 161"), in order to make it compliant with the rules set forth in the cited norm for the purpose of presenting Electronic Registration Requests.

System Unavailability

4. The SRE System is subject to periods of unavailability, with support for external users of the systems made available by the CVM to the market provided between 08:00 and 20:00 from Monday to Friday. Information about this support is available at https://www.gov.br/cvm/pt-br/canais_atendimento/suporte-a-sistemas.

5. In this sense, we alert that operations that are sensitive to the start of market date or even the distribution date should be presented or have the bookbuilding informed in the SRE System considering that any technological issue can only be addressed within the aforementioned hours.

6. We alert that the submission of any documentation outside the SRE System, in the case of offers conducted under the automatic distribution rite, has no validity for the purposes of compliance with RCVM 160, meaning that the registration will only be considered as granted, or even the offer will be considered on the market, once the Electronic Request Form has been presented, under penalty of irregular conduct of a public distribution offer.

New Parametrized Security

7. Given its specificities, the security "Convertible Debentures" has been parametrized in the System, with relationships with registration requests created as provided for in art. 26 of RCVM 160.

Offers involving the assignment of securities as an additional benefit

8. Certain offers are structured involving the assignment of subscription bonuses, granted to investors as an additional benefit.

9. It is necessary that this portion of the offer, the securities assigned without consideration, also be registered within the distribution.

10. However, the SRE System cannot currently handle this situation, where the issue price for the purposes of the offer is zero. In this sense, an update is under development that will allow the inclusion of the additional benefit in the Electronic Requests. Thus, we request that, until said update goes into production, coordinators inform the SRE of offers that contain this structure through suporte-sistemasre@cvm.gov.br, informing the number of the related Electronic Request.

Offers of securities with series that present distinct schedules

11. In certain offers, notably securitization products, it is common for issuances to be divided into series with the characteristic that their distribution occurs successively over a certain period of time.

12. In this sense, we highlight the regulatory provision contained in art. 48 of RCVM 160 that "The subscription or acquisition of the securities subject to the distribution offer must be carried out within a maximum period of 180 (one hundred and eighty) days, counted from the date of publication of the start of distribution announcement."

13. Thus, exclusively in cases where the offer schedule is incompatible with the aforementioned provision, i.e., the distribution of any of the series is scheduled for a period exceeding the 180-day deadline after the publication of the start announcement, we guide that the offer be segregated into distinct Electronic Requests for presentation in the SRE System, separating the series so that the schedule of the issuance as a whole complies with what RCVM 160 provides.

14. In other cases, i.e., when the entire distribution occurs within the 180 days, the Electronic Request will be unique and the schedule will detail the distribution stages by series, as is usually already done by the market.

Changes in the System to adapt to RCVM 161

15. In accordance with art. 23 of RCVM 161, a deadline was granted for intermediaries to request the registration instituted in the rule in question, as follows:

Art. 23. Coordinators who have already conducted at least one public distribution offer of securities, within the 24 (twenty-four) months prior to the date of publication of this Resolution, are authorized to conduct new public distribution offers of securities in accordance with specific regulation until they complete the process of obtaining registration, provided that the protocol of the coordinator registration request is made within 180 (one hundred and eighty) days after the entry into force of this Resolution.

16. In view of the above, from 07/01/2023 only intermediaries who have obtained the Coordinator registration, in accordance with art. 2 of RCVM 161, or have a coordinator registration request under analysis, may act as coordinators of public distribution offers.

17. We also highlight the provision contained in art. 3 of the aforementioned resolution:
    Art. 3. The following may be registered as coordinators:
    I – financial institutions; and
    II – other companies that act in the distribution of securities as agents of the issuing company.
    § 1st The legal entities referred to in item II of the caput may only act as coordinators in public offers subject to the automatic registration rite if they are subject to supervision by a self-regulatory entity that has signed a specific technical cooperation agreement with the CVM.

18. Furthermore, we point out that the coordinator registration rule does not cover the activities of (i) securitizing companies, in the case of securities of their own issuance, (ii) portfolio administrators of securities, in the case of shares of investment funds of which they are administrator or manager, and (iii) issuers with high market exposure, regarding the promissory notes of their issuance, situations which continue to be governed by specific norms[2].

19. In this context, an update was promoted in the SRE System so that it begins to function considering the set of rules pointed out above.

20. Thus, by accessing the SRE System already logged into CVMWEB, when starting an Electronic Request, a field named "Groups" will appear in the form containing a dropdown so that the institution's representative can select the status of the participant who will conduct, as Lead Coordinator, the offer in question, whether it be: (i) Full Coordinator, (ii) Securitizers, (iii) Portfolio Administrator, and (iv) Restricted Coordinator, a name given to non-financial institutions and those not under the supervision of a self-regulatory entity with an agreement with the CVM, institutions that may only act as coordinators in offers under the ordinary registration rite (art. 3, § 1 of RCVM 161, cited above), which will soon also be presented in the SRE System. Below, a screen illustrating the new feature:

21. It is worth remembering that in the dropdown shown above, the options will appear according to the participant records maintained by the institution with the CVM.

22. Through this update in the System, the Electronic Requests now incorporate the rules cited above into their logic, which previously occurred through supervision in the case of securitizers and providers of portfolio administration services, also enabling the enforcement of the new rule for public offer coordinators.

23. It should be noted that if a certain intermediary loses the status of Coordinator, in accordance with RCVM 161 (whether due to the rule contained in the aforementioned art. 23 or in the event of cancellation or suspension of its registration), its representatives will maintain access to the SRE System but without the "Open Request" functionality available in the top menu.

24. We request careful completion of the Electronic Registration Request form so that the intermediary is correctly identified within the specific offer, prior to its submission, since from such identification the System will apply the applicable rules.

25. For example, a securitizing company that identifies itself in the dropdown illustrated above as Securitizers will have the "Issuer" field automatically filled in its name, and must also observe the offering amount limit as provided for in the specific rule (R$ 120 million). On the other hand, if it has registration as a coordinator with the CVM in accordance with RCVM 160 and identifies in the Electronic Request form that in that offer it will be acting as a Full or Restricted Coordinator, such restrictions will not apply.

26. In another example, a participant who is not a financial institution, who has registration with the CVM as a provider of portfolio administration services and whose coordinator registration is not under the supervision of a self-regulatory entity, therefore acting in this condition as a Restricted Coordinator, in accordance with paragraph 21 above, can choose in the dropdown the Portfolio Administrator group or the Restricted Coordinator group. As a Restricted Coordinator, the participant may coordinate offers from any issuers, but only following the ordinary registration rite (still not available in the System). As a Portfolio Administrator, they may coordinate offers under the automatic or ordinary registration rites (the latter still not available in the system), but only for securities issued by the funds administered or managed by them.

27. Intermediaries who were in the transition rule provided for in art. 23 of RCVM 161 and have submitted a registration request to ANBIMA or to the CVM (requests filed until 7/1/2023, regardless of whether already approved or under analysis) will be considered by the System as Full Coordinators and may continue to coordinate public distribution offers under the automatic or ordinary rite (the latter still not available in the System). In the event of denial of the public offer coordinator registration request, such participants will cease to be able to present new public offer requests as coordinators, but will continue to have access to requests made prior to the denial, until the closure of all ongoing offers.

28. Intermediaries who were in the transition rule provided for in art. 23 of RCVM 161 and did not file a public offer coordinator registration request by 7/1/2023 will cease to be able to present new public offer requests as coordinators, but will continue to have access to the SRE System to alter the requests made until 7/1/2023 (end of the transition period), until the closure of all ongoing offers.

Support Contact

29. We reiterate the guidance that inquiries regarding the SRE - Public Offering Registration System should be directed exclusively to the email suporte-sistemasre@cvm.gov.br. Only electronic messages directed to this address will be answered, and it is not necessary to send a copy to any other address.

Sincerely,

LUIS MIGUEL R. SONO
Superintendent of Securities Registration

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[1]
CVM Resolution No. 161/22

Art. 23. Coordinators who have already conducted at least one public distribution offer of securities, within the 24 (twenty-four) months prior to the date of publication of this Resolution, are authorized to conduct new public distribution offers of securities in accordance with specific regulation until they complete the process of obtaining registration, provided that the protocol of the coordinator registration request is made within 180 (one hundred and eighty) days after the entry into force of this Resolution.

[2]
CVM Resolution No. 60/21
Art. 43. The securitizing company may act in the distribution of its own securitization titles, without hiring an intermediary institution, up to the value of R$ 120,000,000.00 (one hundred and twenty million reais), observed, cumulatively, that:
I – complies with the following specific CVM norms:
a) client registration, conduct, and payment and receipt of values norms applicable to the intermediation of operations carried out with securities in regulated securities markets; b) norms that provide for the duty of verifying the adequacy of products, services, and operations to the client's profile; c) norms that provide for the identification, registration, operations, communication, limits, and administrative responsibility regarding the crimes of "money laundering" or concealment of assets, rights, and values; d) norm that provides for coordinators of public distribution offers of securities, specifically regarding conduct rules; II – appoints a director responsible for distribution and for compliance with the norms referred to in letters "a", "b", and "d", observed the provision of art. 5, § 1st; and III – appoints a director responsible for compliance with the norms referred to in letter "c", who may be the same director referred to in art. 5, item II. § 1st The securitizing company that acts in the distribution of securitization titles must update the applicable fields of the Reference Form whenever there are changes. § 2nd If it acts in the distribution of securitization titles, the securitizing company cannot hire an investment advisor to act in the distribution.

CVM Resolution No. 21/21
Art. 33. The portfolio administrator of securities, a legal entity, may act in the distribution of shares of investment funds of which it is administrator or manager, provided that:
I – observes the following specific CVM norms:
a) client registration, conduct, and payment and receipt of values norms applicable to the intermediation of operations carried out with securities in regulated securities markets; b) norms that provide for the duty of verifying the adequacy of products, services, and operations to the client's profile; c) norms that provide for the identification, registration, operations, communication, limits, and administrative responsibility regarding the crimes of "money laundering" or concealment of assets, rights, and values; d) norms that provide for the exchange of information between the distributor and the administrator of investment funds; and e) norm that provides for coordinators of public distribution offers of securities, specifically regarding conduct rules; and II – appoints a director responsible for compliance with the norms referred to in item I and, in general, for the activity of distributing fund shares, who may be the same person referred to in item III of art. 4. § 1st The portfolio administrator of securities, when beginning to act in the distribution of shares of investment funds of which it is administrator or manager, must update fields 6.1.d, 8.7, 8.12, and 10.6 of Annex E. § 2nd If it is not an institution authorized to operate by the Central Bank of Brazil, the portfolio administrator of securities cannot hire an investment advisor to distribute fund shares.

Document electronically signed by Luis Miguel Jacinto Mateus Rodrigues Sono, Superintendent of Registration, on 07/03/2023, at 14:21, based on art. 6 of Decree No. 8.539, of October 8, 2015.
The authenticity of the document can be verified on the site https://super.cvm.gov.br/conferir_autenticidade, informing the verification code 1815623 and the CRC code 1AA820B6.
This document's authenticity can be verified by accessing https://super.cvm.gov.br/conferir_autenticidade, and typing the "Verification Code" 1815623 and the "CRC Code" 1AA820B6.
Reference: Process No. SRE Circular Letters 2023 SEI Document No. 1815623