The Securities and Exchange Commission of Brazil (CVM) submitted two draft resolutions to public consultation, intended to improve the regulatory framework on Brazilian Depositary Receipts (BDRs), which was broadened to foreign issuers and non-qualified investors in 2020.
The Securities and Exchange Commission of Brazil (CVM) launched Public Audience n. 03/2021, intended to collect public contributions on two draft resolutions designed to improve the regulatory framework on Brazilian Depositary Receipts (BDRs), deposit certificates issued in Brazil that represent shares of foreign companies traded in foreign stock exchanges. As reported in the 15th edition of the Regulatory Report, CVM enacted Resolution n. 3/2020, expanding the possibilities of backed shares and securities, participation of non-qualified investors, and issuing of BDRs by foreign institutions registered by CVM.
The two draft resolutions presented in the public consultation seek to improve the regulatory framework on BDRs, in line with CVM’s observations on the current market disposition. The commission’s proposal to modernize BDR rules includes:
- broadening the definition on the companies able to have their shares as ballast;
- clarifying the expected role of foreign regulators that oversee the trading of those shares;
- revising the required criteria for levels “I”, “II”, and “III” of the current BDR framework, in order to improve investor protection;
- providing standardized rules for the registration of foreign BDR issuers by CVM; and
- enacting a framework for specific investment entities to disclose information.
Public contributions can be submitted to this e-mail address until July 30. More information can be found in the technical note (including the draft resolutions), available at CVM’s website. The public consultation comprises CVM’s 2021 Regulatory Agenda.
