CVM Orientation Opinion 41: Football Limited Liability Companies (SAF) and the Securities Market

SECURITIES COMMISSION
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Football Limited Liability Companies (SAF) and the Securities Market.

Object of this Orientation Opinion

Football Limited Liability Companies (“SAF”) were introduced into the Brazilian legal system by Law No. 14.193, of August 6, 2021 (“SAF Law”).

The SAF is the company whose main activity consists of playing football, both female and male, in professional competitions, and is primarily governed by the SAF Law and, insofar as the latter is silent, by Law No. 6.404, of December 15, 1976 (“Corporations Law”).

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In general, the SAF Law does not address general topics already regulated by the Corporations Law, focusing instead on specific rules regarding the formation, governance, control, transparency, and financing means of the football activity developed by the SAF. This arrangement reveals that the SAF is a subtype of company, a species of corporation organized under the legal structure of the Corporations Law, which allows for complementary coexistence between the commands of the SAF Law and the Corporations Law.

The SAF Law brings to the football industry mechanisms to stimulate the development of the economic activity related to football through business companies 3-4, and it is precisely this business approach that will enable the football industry to access the possibility of financing through the capital market, provided that the necessary legal and regulatory adjustments are made and the applicable requirements are observed.

“Art. 1. A Football Limited Liability Company is constituted as a company whose main activity consists of playing football, both female and male, in professional competition, subject to the specific rules of this Law and, subsidiarily, to the provisions of Law No. 6.404, of December 15, 1976, and Law No. 9.615, of March 24, 1998.
2 The SAF Law also stipulates subsidiary governance by Law 9.615, of March 24, 1998 (“Pelé Law”), which establishes general rules on sports, but does not regulate corporate or securities market topics, which fall within the competence and scope of this Agency.

The subsidiary application of the Corporations Law to SAFs does not automatically subject them to the scope of CVM’s competence. In accordance with the Corporations Law and Law No. 6.385, of December 7, 1976 (“CVM Law”), only those SAFs that: (i) request their registration as public companies; or (ii) access the capital market in order to finance, in whole or in part, their activities, through the various modalities of fundraising available in this market, will be subject to the regulation and supervision of the capital market carried out by the CVM.

Nevertheless, the SAF Law signals points of convergence between the SAFs and the capital market, making it appropriate for the CVM to manifest itself regarding some aspects that arouse the interest of SAFs, market agents, legal and financial operators, as well as professionals integrated into the football industry and society in general.

In this sense, this Orientation Opinion aims to guide investors and market participants on the use of instruments that facilitate access to the capital market by SAFs, as well as to convey the CVM’s view on how the SAF Law, the Corporations Law, and the regulation already issued by the Agency can be integrated harmoniously.

This Orientation Opinion intends to convey the CVM’s opinions on the Agency’s role regarding: (i) the regulation of SAFs that are public companies and (ii) the interpretation of the Corporations Law and the CVM Law on topics involving the SAF Law, always from the perspective of the securities market.

Thus, the opinions expressed in this Orientation Opinion should be read under the premise of their applicability only to SAFs that operate in the capital market, even if occasionally, although not by virtue of the CVM’s competence, they may express an interpretation of provisions of the SAF Law applicable to all SAFs.

Formation of SAF’s Share Capital

Article 2 of the SAF Law lists 3 (three) hypotheses for the formation of the SAF, which is promoted through: (i) transformation of the club or original legal entity into an SAF; (ii) spin-off of the football department of the club or original legal entity and transfer of its property related to the football activity; and (iii) initiative of a natural or legal person or investment fund.

Furthermore, Article 3 of the same Law provides for the possibility of transferring property from the club or original legal entity to an SAF, as follows: “the club or original legal entity may integrate its share of the share capital in the Football Limited Liability Company through the transfer to the company of its assets, such as, but not exclusively, name, brand, emblems, symbols, properties, property, fixed and movable assets, including registrations, licenses, sports rights regarding athletes and their economic repercussion.”

The formation of the SAF’s capital, in any of the modalities, must comply with the provisions of the Corporations Law, which provides, in its Article 7, the possibility of contribution in money or in any species of assets susceptible to monetary evaluation.

The evaluation of assets, tangible or intangible, including rights regarding brand, right to use stadium, arena or facilities dedicated to athlete training, economic rights involving professional athletes, among others, will be carried out, in accordance with Article 8 of the Corporations Law, by 3 (three) experts or by a specialized company.

Regarding Article 8 of the Corporations Law, it is important to emphasize that the provision deals with evaluation for the purpose of forming share capital, in the context in which multiple investors subscribe to shares and the one who contributes with assets is subject to the approval of the evaluation by the general assembly, in a deliberation in which only the other subscribers vote (Article 8, §§3 and 4). The provision does not waive accounting rules regarding the recognition of assets, requiring special attention to those of an intangible nature and generated internally, as well as situations where the club is the only participating agent in the decision to create the SAF and, consequently, its initial sole shareholder.

In order to contribute to systemic integrity and reinforce the verification procedures of the reality of the property contribution made by the holder of rights to the SAF, market agents advising the formation of SAFs, which intend to access the capital market, are guided to observe accounting standards applicable to the securities market from the formation of the SAF and to hire an auditor registered with the CVM to act in ensuring the evaluation of assets and liabilities transferred to the company.

The action of professionals regarding the evaluation of assets and liabilities should not be confused with nor dispense with the role of the independent auditor in ensuring financial statements. However, their manifestation will represent another relevant element that can contribute to a well-considered and informed decision-making process by potential investors and, in the case of an offering of securities by the SAF, must be presented as part of the set of information made available to the market.

Shares Issued by the SAF

The combination of Articles 15, §1, 16, and 16-A of the Corporations Law results in the prohibition, imposed on public companies, of issuing and maintaining more than one class of ordinary shares, except for the adoption of plural voting, in accordance with Article 110-A of the same Law, as amended by Law No. 14.195, of August 26, 2021.

The SAF Law offers a different solution for SAFs (and exclusively for these), which applies both to the SAF constituted by public subscription, in the form of Article 82 and following of the Corporations Law, a form of constitution that is uncommon, and to that which is constituted by private subscription and which subsequently opens its capital.

This is because the SAF Law establishes, in Article 2, §2, VII, that “the Football Limited Liability Company must issue ordinary shares of Class A for subscription exclusively by the club or original legal entity that constituted it”. This is, as pointed out, a special command, expressly contained in specific law, applicable only to the SAF, which overrides the restriction imposed on other public companies.

The SAF Law thus provides an authorizing exception to the general rule, of a prohibitive nature. Thus, even the SAF that registers with the CVM as a public company:
(i) must have a specific class of ordinary shares, named in its own legislation as Class A, for subscription exclusively by the constituting club or legal entity (of the SAF); and (ii) if there is an intention to issue ordinary shares for subscription by any other type of subscriber, it may create a class of ordinary shares without plural voting and, if it deems convenient, observing the provisions of the Corporations Law, another class of ordinary shares with plural voting, both distinct from Class A (which is associated with the holder of special prerogatives, provided for in the SAF Law).

The holder of Class A shares will necessarily hold the rights provided for in paragraphs 3 5 or 4 6 of Article 2 of the SAF Law, observing the percentage of participation in the share capital held by the respective club or legal entity holder, in the manner of the SAF Law itself, as well as other rights provided for in the SAF’s bylaws (which cannot dispose contrary to the content of the Corporations Law).

It should be highlighted that, prior to (i) any public offering of securities or (ii) the granting of registration of a securities issuer by the Agency, the CVM may analyze the content of any other rights provided for in the Bylaws and, whenever it verifies any violation of any nature to specific legislation and/or capital market regulation, it will require the respective amendment of the bylaws, as a condition for carrying out the public offering or for granting issuer registration. Such condition must be met prior to obtaining the registration to carry out the intended offering and/or granting the issuer registration, as a preparatory step before the CVM.

The SAF may hold only one species of ordinary share (Class A), if all ordinary shares are subscribed by the club or original legal entity, and the other shares issued by the SAF are, eventually, of the preferred species. It is further highlighted that preferred shares without voting rights cannot exceed 50% (fifty percent) of the total shares issued by the SAF, in respect of the provisions of § 2 of Article 15 of the Corporations Law.

The CVM is not responsible for supervising private transactions with shares. However, regarding transactions concluded in regulated securities markets, as well as with regard to possible repercussions on the formation of the will of SAFs, the Agency will proceed from the understanding that Class A shares cannot be alienated to third parties and, therefore, will not be admitted to negotiation on a stock exchange or over-the-counter market.

This is because the Class A share was created so that the constituting club or legal entity exercises the rights inherent to this condition – and which are therefore personal – as provided for in the SAF Law. Thus, prior to a business of sale and purchase of shares by these persons, including for the purposes and effects of its negotiation in a secondary market, the Class A share must be converted into preferred or common ordinary shares.

The acquirer of the converted share (or even if, contrary to the guidance of this Orientation Opinion, the Class A share is the subject of direct negotiation by its holder) will not acquire the rights provided for in §§ 3 and 4 of Article 2 of the SAF Law, attributed to that class of ordinary shares exclusively by virtue of the condition of its original holder, of club or constituting legal entity, provided for in the SAF Law.

On the other hand, no impediment is seen for the club or original legal entity holder of Class A shares to acquire preferred or common ordinary shares, applying to these the provisions of the Corporations Law.

Control Power and Corporate Governance

The SAF Law dedicates a specific Section to the establishment of rules regarding the control and corporate governance of the SAF, the content of which complements or overrides, as the case may be, the Corporations Law.

In this regard, the SAF Law regulates a basic governance structure, with the essential characteristics and main elements that form the panorama of functioning and business development through such companies, and it is permitted that their respective bylaws provide for complementary structures, provided that they respect the applicable legal provisions and, in the case of SAFs that intend to access the capital market, observing the CVM’s regulation.

According to Article 4 of the SAF Law, the controlling shareholder of an SAF may not hold direct or indirect participation in another SAF. The CVM therefore guides that the SAF whose securities are admitted to negotiation in a market adopt measures and controls to comply with such requirement. In this sense, it may be convenient to institute internal monitoring systems, including periodic requirements for declaration of compliance by shareholders.

In the case of a shareholder who holds more than 10% (ten percent) of the voting shares issued by an SAF and, at the same time, is the holder of any number of shares issued by another SAF, regardless of the class of share, such shareholder will have no right to voice or vote in the general assemblies of all these companies and may not participate in their administration, as provided in Article 4, sole paragraph 7 of the SAF Law.

Despite the prohibition on voice and vote, the shareholder will not be prevented from attending the assemblies, in order to, for example, monitor the discussions, presentations, and deliberations proposed. It should be noted that, in respect of the sole paragraph of Article 125 of the Corporations Law, shareholders without voting rights may attend the General Assembly.

Holders of preferred shares without voting rights or with restricted voting rights may, in accordance with Article 111, §§ 1 and 2 of the Corporations Law, come to have full exercise of such right in cases of non-payment of fixed or minimum dividends. Although this provision is applicable to SAFs, it does not waive the need for affirmative vote by the holders of Class A ordinary shares for certain matters, as provided in Article 2, §§ 3 and 4, of the SAF Law.

Consequently, even if we are facing hypotheses of full exercise of voting rights by holders of preferred shares (and even if these represent the majority of the share capital), the matters enumerated in Article 2, §§ 3 and 4, of the SAF Law cannot be deliberated without favorable manifestation by the holders of Class A ordinary shares.

Shareholders without voice and prohibited from voting in assemblies will remain authorized to exercise their other rights and prerogatives, such as, for example, (i) the essential rights of shareholders provided for in Article 109 of the Corporations Law; (ii) the right to run for and/or be elected to the Fiscal Council; (iii) the right to request the convening of assemblies, provided that the prerequisites for legitimizing the request provided for in the Corporations Law are met; (iv) the right to request the postponement of assemblies, provided that the prerequisites of the Corporations Law are met; and (v) the proposal of eventual judicial actions, including liability actions.

Regarding administration, the prohibition involves direct or indirect participations, including the formulation of indications for the composition of any administrative body, which, in accordance with Article 138 of the Corporations Law, includes the Board of Directors and the Board of Directors, but not the Fiscal Council. If the shareholder itself, classified under the sole paragraph of Article 4, or a person indicated by him, comes to be elected to the Fiscal Council, the CVM recommends special attention to the rules dealing with the requirements and impediments applicable in the election, the investee, or the exercise of the functions of the Fiscal Council.

“Sole paragraph. The shareholder who holds 10% (ten percent) or more of the voting or total capital of the Football Limited Liability Company, without controlling it, if he participates in the share capital of another Football Limited Liability Company, will have no right to voice or vote in the general assemblies, nor may he participate in the administration of these companies, directly or by a person indicated by him”.

5 §3. While the ordinary shares of Class A correspond to at least 10% (ten percent) of the voting share capital or total share capital, the affirmative vote of its holder within the general assembly will be a necessary condition for the Football Limited Liability Company to deliberate on: I - alienation, encumbrance, assignment, contribution, donation, or disposal of any real estate property or intellectual property right conferred by the club or original legal entity for the formation of share capital; II - any act of corporate or business reorganization, such as merger, spin-off, share incorporation, incorporation of another company, or transfer; III - dissolution, liquidation, and extinction; and IV - participation in sports competition over which Article 20 of Law No. 9.615, of March 24, 1998, disposes. 6 §4. In addition to other matters provided for in the bylaws of the Football Limited Liability Company, the deliberation, in any corporate body, on the following matters depends on the agreement of the holder of Class A ordinary shares, regardless of the percentage of participation in the voting or social capital: I - alteration of the name; II - modification of the identifying signs of the professional football team, including emblem, crest, brand, nickname, anthem, and colors; and III - change of headquarters to another Municipality.

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The prohibitive norms must also be observed within the scope of shareholder agreements, so that these parassocial contracts cannot be entered into in an attempt to evade compliance with the rules defined by the SAF Law. Nor is it permitted for a shareholder subject to the sole paragraph of Article 4 of the SAF Law to contribute to the formation of quorums for requesting multiple votes or separate election, even if they intend only to follow the votes of other shareholders, without influencing them.

In the SAF, the Board of Directors and the Audit Committee are organs of mandatory existence and permanent operation, unlike what is provided by the Companies Law. The SAF Law does not qualify the members of such organs, restricting itself to instituting certain prohibitions (based on positions held by such persons), which do not conflict with the rules of the Companies Law and, therefore, must be observed jointly with them.

The norms regarding requirements, impediments, investiture, remuneration, duties, and liability of administrators, as provided in Articles 145 and following of the Companies Law, apply subsidiarily to SAFs.

Thus, the following apply to SAFs organized as open companies: (i) the prohibition on holding the positions of Chairman of the Board of Directors and CEO simultaneously, except for smaller companies (Article 138, §§ 3 and 4, of the Companies Law); and (ii) the mandatory participation of independent members in the Board of Directors (Article 140, § 2, of the Companies Law).

Article 6 of the SAF Law provides that a legal entity holding 5% or more of the share capital of the SAF must inform the SAF itself, as well as the national sports administration, of the name, qualification, address, and contact data of the natural person who, directly or indirectly, exercises control or is the ultimate beneficiary, under penalty of suspension of political rights and retention of dividends, interest on equity capital, or other forms of remuneration declared, until compliance with this informational duty.

The SAF Law makes no distinction, in this case, among types of shares, so the obligation to provide information, within an SAF that is an open company, must be observed even in the case of ownership of shares without voting rights or with restricted voting, or whose percentage is reached by summing shares of different species and classes.

The obligation in question is similar to that provided in Article 12 of CVM Resolution No. 44, of August 23, 2021 (“CVM Resolution 44”), which must be complied with by shareholders of open companies. The CVM emphasizes that the obligations have distinct contents, but also that it sees no obstacle to them being simultaneously fulfilled by a single act of communication by the shareholder, if the shareholder so desires, provided that the requirements required by both norms are present in the communication.

Furthermore, the SAF that is an open company must: (i) provide the Reference Form information, updating the data upon its annual delivery and whenever the company is notified of changes; and (ii) promote, in accordance with current norms, a market communication or notice of relevant fact, as applicable, regarding the topics that arise on the matter in question, including in the case of the resumption of rights that have been suspended.

Access to the Capital Market

The capital market is an important channel for raising and applying financial resources. The essential economic function of the capital market is to connect borrowers and savers of resources, allowing market entities, through public issuance of their securities, to raise available resources from the general public.

By enabling this raising and allocation of resources, the capital market meets specific demands of investors (savers) and issuers (borrowers), generating benefits for society as a whole and a cycle of prosperity for the Country. A virtuous route is formed stimulating capital availability, liquidity for investors, companies, and other issuers, with reduced cost of capital, economic stimulation, generation of opportunities, in an environment of economic growth, with generation of employment and income.

SAFs, like companies in general, have multiple instruments in the capital market to allow raising resources from popular savings, and thereby concretize plans for debt restructuring and financing of investment projects within the football industry.

5.1. Capital Opening and Public Distributions

One of the most traditional ways to enable the appeal to popular savings, through the capital market, is the capital opening of companies, which concurrently or subsequently carry out public offerings for the distribution of securities intended for the general investing public.

The injection of resources upon capital opening allows companies to expand their businesses, reduce capital costs, and restructure liabilities and debt profiles. In return, for open companies, the rigor of transparency requirements, information disclosure, and existence of internal controls and adequate corporate governance increases.

11 The request for registration of the issuer as an open company may be submitted independently of the request for registration of a public offering of distribution of securities, in accordance with CVM Resolutions 80 and 160.

If it decides to carry out an initial public offering of shares, the SAF will be subject to the same normative framework applicable to open companies in general, embodied mainly in CVM Resolutions No. 80, of March 29, 2022, and CVM No. 160, of July 13, 2022 (“CVM Resolution 80” and “CVM Resolution 160”, respectively).

These Resolutions regulate the registration regimes for issuers of securities admitted to trading on regulated securities markets and public offerings for the primary or secondary distribution of said securities, among other aspects, especially those related to the disclosure of periodic and occasional information to the market. Obtaining such registrations, when applicable, is a condition for securities issuers to, as a rule, reach non-professional investors in the effort to raise resources publicly.

The aforementioned Resolutions also provide for the possibility of various other securities, in addition to shares, being the object of public distribution offerings. Additionally, CVM Resolution 80 and CVM Resolution 160 stipulate requirements to be observed, both in the offering itself and in the subsequent recurrent relationship of the open company with investors and the CVM, as well as any restrictions on the trading of the offered securities in regulated markets.

The SAF Law, moreover, provides for the possibility of issuing a particular species of debentures by football companies, called “debêntures-fut”, as a specific financing instrument for SAFs. The resources raised through debêntures-fut must be allocated to the development of activities or to the payment of expenses or debts related to the typical activities of SAFs.

Observing the applicable provisions, CVM Resolution 160 allows companies not registered with the CVM as securities issuers to carry out public offerings of debt titles (including debêntures-fut, in the case of SAFs) intended for professional investors.

In this case, due to the non-application of rules related to registration and information disclosure by such issuers, the securities can only be acquired by and traded between professional investors, as defined in Article 11 of CVM Resolution No. 30, of May 11, 2021.

5.2. Debêntures-Fut

Article 26 of the SAF Law regulates the debênture-fut, containing the specificities peculiar to it, for issuance exclusively by the SAF. Therefore, this type of security can only be issued by the SAF.

The debênture-fut is a species of debenture. Thus, by issuing them, the SAF must observe, in addition to its own norms and regarding what is not provided for in the SAF Law, the provisions provided in the Companies Law. When publicly offered or admitted to trading in securities markets, the SAF must also observe the regulation of this Autarchy for debentures in general.

In particular, the provisions of CVM Resolutions No. 77 (“CVM Resolution 77”) and No. 81, both of March 29, 2022, stand out, which deal, respectively, with aspects related to the acquisition of debentures of own issuance and debentureholders' assemblies.

Specifically regarding the acquisition of debentures of own issuance, Article 26, III, of the SAF Law prohibits the repurchase of debêntures-fut by the SAF or by a related party, early redemption through redemption, or pre-payment of debênture-fut by SAFs, except in the manner to be regulated by the CVM.

Since the concerns regarding repurchases of debêntures-fut are similar to those applicable to repurchases of debentures in general, and given that these were treated within the scope of CVM Resolution 77, the CVM understands that SAFs are already authorized to repurchase publicly offered debêntures-fut of their own issuance, provided they comply with the provisions of said resolution.

The authorization for repurchase of debêntures-fut does not extend to the cases of early redemption through redemption or pre-payment, which currently do not have specific regulation in market regulation beyond the informational regime (full and fair disclosure) and, therefore, remain prohibited regarding debêntures-fut.

Opportunistically, depending on the accumulated experience with the observation of market practices, the Autarchy may issue specific rules for the acquisition of debêntures-fut, as well as regulate the removal of the prohibition on early redemption of debêntures-fut through redemption or pre-payment of such titles.

The SAF, moreover, may issue other securities provided for issuance by corporations, including debentures not provided for in the SAF Law, provided it meets the applicable legal and regulatory requirements. If the SAF promotes the issuance of debentures governed exclusively by the Companies Law, the content of the debênture-fut, provided in the SAF Law, will not apply to that issuance, consequently.

In this sense, the CVM observes that the reasons presented for the veto to Article 27 of the Bill that gave rise to the SAF Law clarified that the concern was not to establish that debêntures-fut would be the only ones by which SAFs could finance themselves via the capital market, but only to not give rise to misinterpretations that SAFs could offer any securities provided for in the Companies Law or in the regulation issued by the CVM regardless of the legal and regulatory requirements applicable to such securities.

13 In accordance with the said Bill: “Article 27. The Football Company may issue, in addition to the debenture provided in this Section, any other title or security, in the form of Law No. 6.404, of December 15, 1976, or according to regulation of the Securities and Exchange Commission, created specifically for the development of football activity or not.”

14 The reasons for the veto contained the following clarifications: “There are several instruments capable of being issued in the capital market, often subject to specific regimes, which consider, among other factors, the nature of the issuer. Some examples are titles that can only be issued by financial institutions and titles or collective investment contracts provided for in item IX of the caput of Article 2 of Law No. 6.385, of December 7, 1976. Furthermore, the mention of the competence of the Securities and Exchange Commission would not be convenient from the point of view of public interest, since every open company and public issuance of securities is already under the regulation of the autarchy, so it is not appropriate to reiterate it in the specific rule of a certain economic activity, in addition to the fact that the legal mandate of the Securities and Exchange Commission, as provided in Law No. 6.385, of 1976, does not include the development of football activity.”

15 Consolidated with the changes introduced by CVM Resolution No. 158, of June 28, 2022.

5.3. Investment Crowdfunding

Another means of access to the capital market is investment crowdfunding, regulated by CVM Resolution No. 88, of April 27, 2022 (“CVM Resolution 88”).

Investment crowdfunding consists of raising resources through a public offering for the distribution of securities carried out by an issuer considered a small business company through an electronic participatory investment platform.

In this case, both the offering and the issuer are exempt from registration with the CVM, in accordance with CVM Resolution 160 (for the offering) and CVM Resolution 80 (for the issuer).

The offering in the context of crowdfunding is carried out through an electronic participatory investment platform, allowing access to the capital market with simplification of responsibilities and cost reduction, provided that requirements are met that restrict the risk of these offerings to the capital market.

16 Art. 12. Qualified investors are considered: I – professional investors; II – natural or legal persons who have financial investments worth more than R$ 1,000,000.00 (one million reais) and who, additionally, attest in writing their status as a qualified investor through a specific term, according to Annex B of CVM Resolution 30/21; III – natural persons who have been approved in technical qualification exams or hold certifications approved by the CVM as requirements for the registration of investment advisors, securities portfolio administrators, securities analysts, and securities consultants, regarding their own resources; and IV – investment clubs, provided that the portfolio is managed by one or more quota holders, who are qualified investors.

17 Civil Code: Art. 1.368-C. The investment fund is a communion of resources, constituted in the form of a special nature condominium, intended for application in financial assets, goods, and rights of any nature.

To be classified as a small business company for such purposes, the SAF must earn gross annual revenue of up to R$ 40,000,000.00 (forty million reais) in the social year prior to the offering. If it exceeds this value, the SAF may raise resources through a conventional public offering of securities.

Crowdfunding is generally associated with public offerings of equity titles, but admits the issuance of any type of security. It can be used, moreover, for the issuance of debt-representative titles (debt), whether convertible or not, as well as other modalities of collective investment contracts.

The distribution of titles offered via crowdfunding can reach the general public, not only qualified investors, but must occur exclusively through the aforementioned electronic participatory investment platform.

The CVM registers and supervises these platforms, which, since they dedicate themselves only to crowdfunding, are subject to a lighter regulatory burden than that typical of organized securities markets (stock exchanges or over-the-counter markets), in which securities previously subject to public offerings are usually traded.

Offerings carried out through crowdfunding must respect limits for the maximum raising amount and for each investor's investment. These are safety contours in return for the benefits of special regulation (such as the exemption from prior CVM analysis), which do not prejudice the issuances because they are compatible with their dimension. It is worth noting, moreover, that the limitation of contribution per investor protects the general public from the usually higher risk of these issuances.

In this sense, observing the requirements established in CVM Resolution 88, small business companies may seek, annually, a maximum raising target not exceeding R$15,000,000.00 (fifteen million reais). The limit per unqualified investor in crowdfunding investments is up to R$20,000.00 (twenty thousand reais) per calendar year. There are no limits imposed on qualified investors.

Still in the context of investment crowdfunding offerings, SAFs may evaluate the convenience of accessing the capital market through the issuance of tokenized securities, registered on distributed ledger networks (“tokens”), maintaining the other rules related to limits and conditions for access through the mechanism regulated in CVM Resolution 88.

5.4. Investment Funds

Investment funds are collective investment vehicles regulated by provisions of the Civil Code (Law No. 10.406, of January 10, 2002) and, currently, by various norms issued by the CVM consolidated in CVM Resolution No. 175, of December 23, 2022 (“CVM Resolution 175”), which will enter into force on October 2, 2023.

The investment fund is a communion of resources, constituted in the form of a special nature condominium, intended for application in financial assets, goods, and rights, according to the specific rule applicable to each category of fund, according to the Normative Annexes of CVM Resolution 175 itself.

It is a formal structure of collective investment, in which investors channel their resources to invest jointly in the financial and capital markets,

COMMISSION OF SECURITIES AND EXCHANGE
Sete de Setembro Street, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – CEP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Cincinato Braga Street, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brazil - Tel.: (11) 2146-2000 with expertise in administration, management, and other service providers and professional intermediaries.
The operation of funds follows CVM regulations and a specific bylaws for each fund, which is the fund's main document, where rules are established regarding the objective, investment policy, types of assets traded, risks involved in operations, administration fees and other fund expenses, as well as its tax regime and other relevant information.
Complying with applicable regulatory requirements, shares issued by the SAF open company and admitted to trading on an organized market may be the subject of investment by Stock Investment Fund 18, which is one of the types of Financial Investment Funds – FIF regulated by Normative Annex I of CVM Resolution 175.
In addition to the aforementioned FIF, based on the purpose to be achieved in the context of fundraising through investment funds and without the intention of exhausting the topic, it is worth mentioning other categories of investment funds that can be used by SAFs, such as: (i) Participation Investment Funds – FIP (Normative Annex IV of CVM Resolution 175); (ii) Real Estate Investment Funds – FII (Normative Annex III of CVM Resolution 175); and (iii) Credit Rights Investment Funds – FIDC (Normative Annex II of CVM Resolution 175).

5.4.1. Participation Investment Funds – FIPs
FIPs are funds whose objective is to invest in companies, through the acquisition of corporate participations, especially in limited liability companies and closed companies.

18 Normative Annex I – Financial Investment Fund. Art. 1st. This Normative Annex I to Resolution No. 175 (“Resolution”) provides for the specific rules for financial investment funds – FIF, which, due to their investment policy, can be of the following types: I – Stock Investment Funds; II – Currency Investment Funds; III – Multimarket Investment Funds; and IV – Fixed Income Investment Funds.

COMMISSION OF SECURITIES AND EXCHANGE
Sete de Setembro Street, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – CEP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Cincinato Braga Street, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brazil - Tel.: (11) 2146-2000 FIPs operate in the market segment commonly known as private equity and venture capital, which is characterized – in a tight synthesis – by investment in companies with the purpose of actively valuing them in the medium and long term, through the application of an investment thesis involving capital allocation, improvement of corporate governance and management, among others, with a view to selling with a gain at a later stage. This alienation of the FIP's participation in the SAF, which may eventually occur through an opening of the SAF's capital to public investors or to a strategic investor, can be a financing modality especially suitable for SAFs originating from clubs, which are still at a stage of low professionalization but wish to evolve in this regard. FIPs can also be used as an instrument to concentrate and coordinate investor participation in SAFs, even under the investment thesis of professionalizing the club's management, as mentioned above, allowing, in any scenario, for its unitholders to become indirect investors in the SAF. In this modality of access to the capital market, the FIP must obtain the necessary registrations and authorizations from the CVM, but not from the SAF. This structure may be suitable for situations where the SAF is not yet prepared to become an open company, but seeks to allow investors to participate in the results or management of the SAF, even if indirectly. It is important to highlight, however, that given the risks involved in this type of investment, under current regulations, only qualified investors may acquire FIP units 19.

19 Art. 4 of Normative Annex IV of Resolution 175 provides: “Art. 4 Only qualified investors may invest in the FIP.”.

5.4.2. Real Estate Investment Funds – FII
FIIs are funds whose objective is investment in real estate developments and, according to Annex III of CVM Resolution No. 175, may invest in special purpose companies, real estate receivable certificates, land, real estate units, among other modalities.
SAFs can participate in the structuring of operations involving FIIs, for example, to enable projects of interest in the real estate sector, such as the construction or renovation of a stadium or training center, through the public offering of units, with or without the acquisition of a portion of these units, together with other investors. In this model, investors can become indirect partners of the stadium or training center, receiving everything from rent to ticket sales from games and events. FIIs can also be used as an important vehicle for the acquisition of real estate receivable certificates (CRI) backed by assets issued by SAFs, as observed in section 5.5, which deals with securitization.

5.4.3. Credit Rights Investment Funds - FIDC
FIDCs are investment funds that invest in credit rights, including, but not limited to, the following being credit rights: (a) rights and titles representing credit; (b) securities representing credit; (c) receivable certificates and other securities representing securitization operations, which are not backed by non-standardized credit rights; and (d) by equivalence, FIDC units. The characteristics of this category of investment fund are addressed in the next section together with securitization operations.

5.5. Securitization
SAFs can also rely on securitization operations, whether structured through an investment fund or by issuing a type of receivable certificate, for the purpose of obtaining resources for their activities.
In such operations, companies and even clubs can anticipate the receipt of credit rights in their ownership through their assignment (with discount) to credit rights investment funds – FIDC and securitization companies.
The funds issue units and the securitization companies issue receivable certificates whose collateral is composed of the credit rights assigned by the SAF; and these units or certificates are distributed to investors in the capital market. In this context, the receipt of values related to the most different assets and activities of the SAF can be anticipated, such as, for example, receivables from advertising funds, revenues from television and streaming channel broadcasts, awards or other participations in the results of an eventual league, real estate rental, naming rights, future ticket sales revenue, or even player trading. The realization of operations involving the assignment of the receivables portfolio to FIDCs or the issuance of Real Estate Receivable Certificates – CRI or Receivable Certificates – CR, can be opportune financing alternatives for SAFs. An example could be the issuance of debt by the SAF to back the issuance of CRI in which the SAF commits, through the offering documents, to use the raised resources for the renovation, acquisition, or construction of real estate (stadium, training center, dormitories, among others). There is also the possibility that the resources raised in the issuance of CRI be used for the payment of future rents or settled in the last 24 months or even for the reimbursement of expenses with the construction, renovation, or acquisition of real estate up to 24 months before the issuance. Through the realization of securitization operations, ultimately, the investing public finances the SAF, anticipating the entry of resources into its cash flow. Although this type of operation is not exclusive to companies, having already been used by football clubs and other agents linked to this industry, it is reasonable to expect that its use from the origination of credits by SAFs will be more common and attractive to the investing public. Funds and certificates generally consist of senior and subordinated classes, with the senior ones offered to general investors and the subordinated ones reserved for the assignor or third parties who accept a higher risk/return relationship. Senior units or certificates usually confer an expectation of profitability to their holders (“benchmark”) and the subordinated ones are those that are subordinate to the others for purposes of amortization or redemption without a predetermined remuneration. Subordinated units or certificates are returned to their holder at the maturity of the issuance and with the excess remuneration of the assets that make up the collateral relative to the benchmark offered to senior investors (“spread”). Furthermore, in case of losses resulting from default, for example, subordinated issuances are the first to absorb them. Thus, in securitization, the SAF can place itself as the “sponsor” of a certain initiative, by acquiring, for example, subordinated units or certificates of an issuance, assuming a co-obligation. This means that the SAF provides security
for investors who acquire the senior units or certificates by retaining partial or substantially all the risks and benefits of the issuance. The ideal level of retention of risks and benefits should be observed by the SAF, given the possible implications of the need to consolidate the transaction in its balance sheet.

5.6. Disclosure of Information in the Context of Offerings
Regardless of the mechanism used by the SAF to appeal to popular savings, an aspect to be highlighted in public offerings of distribution of securities issued by it is its unique potential to, at the same time, gather the interest of (i) investors from the capital market with different profiles and levels of knowledge and (ii) fans, who may eventually be influenced by their passion for their favorite team – distancing the rationality of the investment decision-making process. For this reason, SAFs and those advising them in public offerings are advised to pay special attention to the description of offering and issuer risk factors, as well as the use in offering documents of clear, concise, objective, and balanced language in emphasizing positive and negative information, which will help investors form their investment decision critically. Alerts dedicated to reducing the fan's emotional bias are recommended and can be especially useful in the conscious and informed formation of the investment decision, which should not be guided by non-rational aspects of heuristics related to the feelings existing between fans and their respective football teams.

5.7. Suitability
Suitability is the duty, which applies to all intermediaries and those who act in the distribution chain of securities, to certify that the product offered is adequate to the investor's profile. In this sense, according to CVM Resolution No. 30, of 2021, distributors must observe, in addition to the client's financial situation and investment objectives, their knowledge about the offered security, especially its risks. In the context of offerings of products and services in the capital market involving SAFs, the investor who is a fan of the football team associated with that SAF presents a more favorable tendency to adhere to the offering, as they wish to contribute in some way to the growth and success of their team. Notwithstanding this being a legitimate behavior on the part of the investor, professionals who act in the product distribution chain must not exploit this passionate side for the purpose of promoting the public offering. On the contrary, the CVM reinforces the need for observance of serene and moderate language in distribution efforts and recommends that in these cases caution with promotional language be doubled. Finally, distributors must, in direct contact with investors, warn about the risks of the investment, seeking to explain its main characteristics, especially highlighting risks directly related to the issuer's profile or the structure of the operation.

Publications and Transparency
The SAF's care in communication with the public must also be present in its periodic and occasional disclosures, outside the context of public offerings of distribution of securities. As a subtype of company, the current norms applicable to open companies must also be observed by the SAF that is an open company.
The specific norms, contained in the SAF Law, do not remove any norm provided for in CVM regulation or in the Companies Law, except in what is expressly provided for and applicable only to the SAF (such as the possibility for the SAF that has annual gross revenue of up to R$78,000,000.00 to carry out all mandatory publications by law electronically, including summonses, minutes, and financial statements).

Market Communications and Relevant Facts
The Autarchy recognizes the challenge that will be faced regarding the definition, within the SAF, of the information that should be disclosed to the market.
This is because, on the one hand, the normative provisions currently contained in CVM Resolution 44 apply to the SAF that is an open company. In this sense, the SAF, its Investor Relations Director, controlling shareholders, and other directors, members of the Board of Directors, the Fiscal Council, and any bodies with technical or consultative functions, created by statutory provision, as well as any other person or entity to which Resolution 44 attributes any duty or obligation, must observe, in its entirety, the provisions of Resolution 44. On the other hand, it cannot be ignored that the activity of football is subject, not only in the country, to intense monitoring by journalists, digital influencers, fans, and other agents who generate, daily, a significant quantity of information, news, reports, accounts, and rumors, with varied purposes. Companies listed in other jurisdictions, dedicated to the activity of football, go through the same situation, and yet, in their practices, there is no daily disclosure or reaction to any matter or news involving their interests. Similarly, in Brazil, the CVM does not expect the SAF and its administrators to react to any news or rumor, especially those produced in the clearly sporting context, but it will not cease to demand that acts and facts that have the capacity to generate the effects provided for in art. 2 of CVM Resolution 44 be carefully evaluated and, when applicable, promote the appropriate manifestations.
CVM Regulatory Perimeter
The possibility of constituting SAFs is recent and its possible ramifications for the capital market have been explored in this Orienting Opinion thus far. However, there are some modalities of asset issuances that are already carried out by football clubs and that, due to their current characteristics, are not considered securities, thus remaining outside the scope of CVM's competence.

8.1. Fan Tokens
In recent years, the issuance of fan tokens by football clubs worldwide has become common. This type of token, in rule, does not fit the concept of security and serves exclusively as an instrument of engagement between its fans or for marketing, promoting interactions, offering priorities in the acquisition of products and services, and generating other types of benefits not related to the economic result of the activity. Therefore, in the absence of a link with the distribution of results and participation in a certain business, fan tokens are considered utility tokens, and therefore do not fit the concept of securities and are outside the regulatory perimeter of the CVM. Consequently, it is not possible to carry out their public offering through any mechanism regulated by the CVM, except when the same token also has characteristics that classify it as a security.

8.2. Sports Betting
Sports betting sites have multiplied, in Brazil and worldwide, and the proximity of this universe to the world of football is increasingly greater, especially in the form of sponsorship to clubs. Although, for the most part, they are located in other countries, betting sites are able to reach Brazilian citizens through the internet and their adoption and success here is increasingly common. It is important to highlight that sports betting are not investments and do not present characteristics that could classify the numerous possibilities of bets as securities, or the companies responsible for their sites as issuers of securities. Thus, the CVM reinforces that it has no competence over the activity of sports betting sites and that: (i) there is no formalization of investment when a citizen decides to make a sports bet; (ii) the different chances of result do not stem from a market regulated by the CVM; and (iii) there is no registration of the bet made in any registrar entity authorized by the CVM or by the Central Bank of Brazil.

Educational and Social Development Program (PDE)
The SAF Law institutes, in articles 28 and 29, the Educational and Social Development Program (PDE), consisting of a mandatory agreement to be celebrated with a public educational institution, to promote measures in favor of the development of education, through football, and of football, through education.
As the resources destined for the agreement may cause economic-financial effects on SAFs – and, furthermore, considering that the SAF Law does not institute objective parameters on the amount that the SAF may allocate to the agreement, it is advised that the SAF that accesses the capital market ensure transparency to the market regarding the commitments assumed and executed in relation to the agreement. In this sense, first of all, it is important that there be timely disclosure, through a market communication or notice of relevant fact, as the case may be, of the agreements celebrated, indicating, at least, the beneficiary entity, the reasons for the choice of the entity

Secondly, it is recommended that SAFs that are open companies establish internally maximum annual amounts to be used within the scope of the agreement and report these amounts, as well as the values actually spent, accompanied by considerations regarding the relevance, the manner of allowing the monitoring of the use of resources, and the social results of the agreement. The reference form and the administrative report (in the form of Art. 133 of the Corporations Law) are appropriate channels for the dissemination of such information.

Finally, it is worth noting that the instruments offered by the capital market, already exemplified in Section 5, can also serve to finance Educational and Social Development Programs. The CVM recognizes, in fact, that eventual contributions may be understood as social impact investment or investment categorized as "ESG" (referring to environmental, social, and governance factors) or any other terms related to so-called "sustainable finance," provided they have a specific destination to a certain social objective and the other characteristics of such investments are observed.

In this case, the disclosure of the investment opportunity, in addition to complying with the informational requirements provided by CVM Resolutions No. 60, 80, 160, and 175, as applicable, must describe the expected social benefit and how it will be generated, including a detailed methodology, principles, and guidelines followed for its achievement.

Final Considerations
The SAF Law has the potential to create a set of new demands and offerings of products, related to football activity, within the capital market, not explored or imagined until its conception. For this reason, the CVM issues this Orienting Opinion with the purpose of offering certain initial guidelines to agents in general.

COMISSÃO DE VALORES MOBILIÁRIOS
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brasil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brasil - Tel.: (11) 2146-2000 In parallel, the Agency, as usual, will continue to study not only the experiences carried out in the Country, but also situations involving other markets, in order to intensify its understanding of the matter and, if it deems necessary, issue new statements or even propose specific regulation for the issuers of the new football market, observed the scope of its competencies.

Finally, it is reiterated that the guidelines contained in this Orienting Opinion are intended to consolidate understandings, but do not exhaust the debates on the subject, as this is still in the construction phase, following the advent of the SAF Law.

Approved in the Collegiate Meeting of August 15, 2023.
Signed electronically by
JOÃO PEDRO BARROSO DO NASCIMENTO
President

CVM Orientation Opinion 41: Football Limited Liability Companies (SAF) and the Securities Market

Lineage: In force