Brazil extends fast-track listing rules to stocks, convertibles
By Guillermo Parra-Bernal
SAO PAULO, Sept 25 (Reuters) - Brazil's securities industry watchdog on Thursday allowed fast-track offerings for stocks, convertible debt and structured notes, a move that should help spur listings among small- and mid-sized companies in Latin America's largest economy.
Under the revamped Rule 476/09, certain companies will be allowed to carry out so-called restricted-effort offerings of stock and notes convertible into equity, the watchdog, known as CVM, said in a statement.
Public offerings with restricted efforts differ from standard equity offerings in that a company does not have to request registration of the plan with the CVM, only qualified investors can participate, and the deals cannot be marketed through road shows or the media.
The changes increase the number of qualified investors who can participate in an offering to 50 from 20.
Bankers, companies, government officials and lawyers see an extended Rule 476 as a way to help companies raise capital in a challenging market. Stock offerings in Brazil are having their worst year in more than a decade in yet another sign of eroding investor confidence in the nation's economy.
"The changes to Rule 476/09 reflect some of the proposals made by a committee of market participants and put under the CVM's consideration with the main goal of fine-tuning regulation so small-sized companies can access local markets for funding," the statement said.
The revamped text for Rule 476 introduces priority rights for existing shareholders in the subscription of the securities under certain terms. It also establishes the requirements for start-up companies to list shares, and it adds structured notes, known in Brazil as COEs, as an eligible asset class.
Besides the CVM, market participants that joined the discussion to broaden the scope of Rule 476 include Abrasca, a group that represents listed companies; financial bourse BM&FBovespa SA ; Anbima, the lobbying group for the investment banking and asset management industries; and the investment holding company of state development bank BNDES .
The original Rule 476 was designed to allow smaller companies to sell debt instruments, mainly senior unsecured notes, to a small group of investors without having to register the transaction with the CVM.
The rule, which was introduced in 2009, gave companies broader access to local capital markets. The new rules also state that trading of the securities can take place in bourses or over-the-counter markets 90 days after the offering. (Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn)
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