Resolution n. 8/2020 of the Securities and Exchange Commission of Brazil (CVM) issued new provisions on the public distribution of two Brazilian bonds, the Financial Letter (LF, in the Portuguese acronym) and the Real Estate Secured Bill (LIG, in the Portuguese acronym). It seeks to reduce regulatory burdens while guaranteeing market protection and transparency to investors.

The Securities and Exchange Commission of Brazil (CVM) issued Resolution n. 8/2020, implementing new rules for the public distribution of Financial Letters (LFs, in the Portuguese acronym) and Real Estate Secured Bills (LIGs, in the Portuguese acronym) and altering five related CVM Instructions.

The new rules exempted LF and LIG issuing institutions of the traditional public offering steps required by CVM. Issuers are now exempt of registration within CVM if the conditions of the resolution are met, and a transparency document is sent to the receiving investor (article 3).

That document, namely the Essential Information Document (DIE, in the Portuguese acronym) and specifically organized as DIE-LF and DIE-LIG, is not required when dealing with “professional investors” or when the bond is traded in a centralized and multilateral system from specific market entities as described in the resolution.

Among the regulations modified, the Continuous Distribution Program (PDC, in the Portuguese acronym), provided by CVM Instruction n. 400/2003, was discontinued.

Entry into force is schedule to February 1, 2021. The Resolution is the result of a public hearing, whose report is available here (in Portuguese).