Securities Law in Brazil

Introduction

Securities law in Brazil (Direito do Mercado de Capitais) governs the issuance, trading, and regulation of securities. The framework is centered on the Securities and Exchange Commission of Brazil (CVM), an independent autarchy created by Law 6.385/1976. The Corporations Law (Law 6.404/1976) provides the corporate governance foundation, while the B3 Stock Exchange operates as the primary trading venue. Brazil’s securities market is one of the largest in Latin America, with sophisticated regulation that increasingly aligns with international standards.

Institutional Framework

CVM

The Securities and Exchange Commission of Brazil (CVM) is the primary regulator of the securities market. Its powers include: (i) registration of publicly held corporations; (ii) registration of securities offerings; (iii) supervision of market intermediaries; (iv) enforcement of securities laws; (v) regulation of investment funds; and (vi) investor education.

CVM is governed by a Board composed of a President and four Commissioners appointed by the President of the Republic with Senate confirmation. CVM resolutions provide detailed regulatory requirements.

B3 Stock Exchange

B3 S.A. (formerly BM&FBovespa) is the sole stock exchange in Brazil and the central depository for securities. B3 operates regulated markets, including the Novo Mercado segment with enhanced governance standards. B3’s regulations complement CVM rules and cover listing requirements, trading procedures, and disclosure obligations.

National Monetary Council

The National Monetary Council (CMN) establishes policies affecting securities markets, including collective investment regulations and pension fund investment rules.

Securities Offerings

Public Offerings

Public offerings of securities require registration with the CVM and are governed by CVM Resolution 160/2022 (replacing Instruction 400/2003). The regulation establishes:

• Registration requirements: Issuers must file a registration statement, including a prospectus (prospecto), with full disclosure of material information
• Liability: Strict liability for material misstatements or omissions in offering documents
• Underwriting: Rules for distribution through intermediaries

Exempt Offerings

Certain offerings are exempt from registration, including: (i) offerings to qualified investors; (ii) offerings below specific value thresholds; and (iii) restricted offerings with lock-up periods. CVM Resolution 160/2022 expanded the exempt offering framework.

Market Participants

Intermediaries

Securities intermediaries (intermediários) — including broker-dealers and investment banks — are regulated by CVM and the Central Bank. Requirements include: (i) minimum capital; (ii) risk management; (iii) segregation of client assets; (iv) best execution obligations; and (v) compliance and anti-money laundering programs.

Investment Funds

Investment funds (fundos de investimento) are governed by CVM Resolution 175/2022 (replacing Instruction 555/2014). Fund types include: (i) equity funds; (ii) fixed income funds; (iii) multimarket funds; (iv) exchange-traded funds (ETFs); and (v) real estate funds (FIIs). Funds are structured as condominiums with an administrator, manager, and custodian.

Enforcement

Administrative Enforcement

The CVM may impose administrative sanctions for violations of securities laws, including: (i) warnings; (ii) fines up to R$50 million; (iii) suspension of activities; (iv) prohibition from acting as a director; and (v) revocation of registrations.

Criminal Enforcement

Securities crimes are defined by Law 7.492/1986 (the White-Collar Crimes Law). Key offenses include: (i) insider trading (uso indevido de informação privilegiada); (ii) market manipulation (manipulação de mercado); (iii) fraud in securities offerings; and (iv) unauthorized operation of a securities intermediary.

Insider trading is punishable by 1-5 years’ imprisonment. The CVM and the Federal Police investigate, and the Federal Public Prosecutor’s Office prosecutes.

Civil Enforcement

Investors may bring civil actions for damages arising from securities violations. Class actions are available under the Public Civil Action Law (Law 7.347/1985) for collective investor harm.

Corporate Governance and Listing Rules

Novo Mercado

The Novo Mercado listing segment requires: (i) 100% tag-along rights for minority shareholders; (ii) unified share classes (voting shares only); (iii) mandatory arbitration for dispute resolution; (iv) independent directors; (v) audit committee; and (vi) enhanced disclosure.

Disclosure and Transparency

Publicly held corporations must provide: (i) annual financial statements audited by independent auditors; (ii) quarterly reports; (iii) material fact disclosure (fato relevante); (iv) corporate governance reports; and (v) reference forms with comprehensive company information.

International Integration

Brazil has implemented IFRS accounting standards and Basel III capital requirements. The CVM cooperates with international regulators through the International Organization of Securities Commissions (IOSCO) and has bilateral agreements with foreign securities regulators.

Conclusion

Brazilian securities law provides a comprehensive regulatory framework that has supported the development of deep capital markets. The CVM’s robust enforcement, the B3’s governance standards, and the alignment with international norms have strengthened investor confidence. The continuing evolution of fintech regulation, digital assets, and sustainable finance represents the frontier of securities law development in Brazil.