[Last updated: 1 January 2025, unless otherwise noted]

6.1 Inside information

The members of a Brazilian listed company’s management have an obligation to immediately disclose to the public all "material information" that relates to the company, including all material changes to information that has already been disclosed to the public.

In this context, "material information" shall be considered as any decision of the controlling shareholder, shareholders’ meeting or any administration body of a listed company, or any other act or fact of an administrative, political, technical, managerial or economic/financial nature that has occurred or is related to the business of the company, which may considerably influence: (a) the trade price of the securities issued by the company or of the securities referenced thereto; (b) the investors’ decision to purchase, sell or keep the securities issued by the company or the securities referenced thereto; or (c) the investors’ decision to exercise any rights arising as a result of being a holder of the company's securities or of securities referenced thereto.

It is up to the company to determine if certain information qualifies as "material information". This can be a difficult exercise, and there may be gray areas as to whether certain events will need to be disclosed or not. The CVM has indicated several examples of types of information that should be considered as potentially material for the purposes of disclosure, including, but not limited to, the following:

• the execution of an agreement or contract for the transfer of the listed company’s corporate control;
• change in the control of the company, including as a result of the execution, amendment or termination of a shareholders’ agreement;
• the admittance or withdrawal of a shareholder who maintains an operational, financial, technological or administration agreement or contract with the listed company;
• authorization for the admission to trade securities issued by the listed company in any market, whether foreign or Brazilian;
• the delisting of the company;
• any merger, amalgamation or spin-off involving the company or related companies;
• the renegotiation of debts;
• the approval of stock option plans;
• any amendment to rights and advantages attached to securities issued by the company; and
• the filing for reorganization, bankruptcy or any lawsuit that may affect the economic or financial health of the company.

6.2 Public takeover bid

In the event of a potential public takeover bid, Brazilian takeover rules provide that no announcement is to be made until the disclosure of the tender offer notice. If any leaks or rumors occur at such a time, the potential acquirer and the company will be subject to the early disclosure rules summarized in 3.7.

6.3 Insider dealing and market abuse

The basic legal framework regarding insider dealing and market abuse under Brazilian law is set forth in the Corporations Law, the Securities Law and CVM Resolution No. 44 and CVM Resolution No. 62.

Violation of the laws and regulations concerning insider trading subjects the violator to both administrative penalties imposed by the CVM and criminal charges imposed by the Securities Law. Moreover, the party suffering losses due to participation in the purchase and sale of securities may claim indemnification against the insider in court.

In principle, the rules on insider dealing and market abuse remain applicable before, during and after a public takeover bid, albeit that during a takeover bid additional disclosures and restrictions apply in relation to trading in listed securities. To that effect, during the takeover offer period, the offeror, its related parties and any third party intending to interfere in offer auction to purchase shares may not:

• dispose, directly or indirectly, of shares of the same type or class as the shares that are subject to the offer, other than in the public offer auction;
• acquire shares of the same type or class as the shares that are subject to the offer in circumstances where the public offer is not intended to acquire all the free float shares of a particular class or type; and
• carry out transactions with derivatives related to shares of the same type or class as the shares that are subject to the offer.

If there is a breach of the restrictions related to the trading of shares during the public offer period, the price per share in the takeover offer shall not be less than the highest price paid by the offeror or its related parties in transactions carried out during the public offer period, added by the Selic Rate.

In addition, during the course of a takeover offer:

• the offeror, the target company, the administrators of the target company, those related to any of them and the third parties launching a competing offer (if any) shall immediately inform the market of any transaction involving, directly or indirectly, securities of the target company, and of any contracts or any other kind of agreement, including letters of intent and options, for the acquisition or disposal of securities of the target company, or executed with the company, its administrators or shareholders representing more than 5% of the shares that are subject to the offer, or their related parties;
• the target company, the administrators of the target company, those related to any of them and the third parties launching a competing offer (if any) shall immediately inform the market of any transactions with derivatives related to the shares of the target company; and
• any person or group of persons acting jointly, representing directly or indirectly 5% or more of a given type or class of shares of the target company, or of derivatives related to the target company's shares, shall immediately inform the market of:
  1. any direct or indirect variation of its holding of a given type or class of shares by more than 1%;
  2. the acquisition or disposal of rights over the shares mentioned above, including by contract and options, representing more than 1% of a given type or class; and
  3. transactions with derivatives related to shares which, taken individually or in the aggregate, represent more than 1% of a given class or type.

6.4 Common anti-takeover defense mechanisms

The table below contains a summarized overview of the mechanisms that can be used by a target company as a defense against a takeover bid. These take into account the restrictions that apply to the board and general shareholders' meeting of the target company pending a takeover bid.