NOTICE TOTHE MARKET: Unified tender offers to deregister and delist from the Novo Mercado and the corporate governance special listing segments
April 10, 2012 – The ASSOCIATION OF CAPITAL MARKET INVESTORS – Amec – hereby informs the capital market’s participants that its Board of Directors approved the publishing of this notice about its position on unified tender offers to deregister and delist from the Novo Mercado and the corporate governance special listing segments, according to the following terms:
The creation of the corporate governance special listing segments is an important achievement for the Brazilian market, with significant global repercussion. The delisting of companies from the segment is a legitimate and lawful choice. The growing number of proposals to delist is a natural consequence of the expansion, maturity and sustainability of the special corporate governance listing segments. Despite that, given it’s a recent process, Amec has identified important points that companies, investors, regulators and self-regulators must be attentive to as the market evolves.
In principle, the delisting of a company from the corporate governance special listing segments is subject to a scheme that is distinct yet complementary to that of tender offers regulated by the CVM Instruction No. 361, with very different restrictions. The decision to delist from the corporate governance special listing segments is made at the shareholders’ meeting, linked to the performance of the tender offer, in which all shareholders have the right to sell their shares at fair value. On the other hand, traditional offerings regulated under the Instruction No. 361 aim to protect shareholders against the so-called “creeping tender offers” by imposing restrictions in cases where a two-thirds majority of the free float is not reached.
Based on internal debates and interaction with other entities from the capital market, Amec believes that unified offers to deregister, conducted simultaneously to the delisting from the special corporate listing segments, should be subject to stricter criteria among those listed by regulatory and self-regulatory standards. The strict compliance to these standards is the best way to protect shareholders, investors and, ultimately, the Brazilian capital market. The achievement of both goals must therefore be subject to the (1) approval at the shareholders’ meeting and (2) acceptance of the offer by more than two-thirds of the free float. If the second requirement is not met, the company should not be allowed to deregister and delist from the corporate governance special listing segment, and the acquisition of shares should be limited to one-third of the free float, in compliance with the CVM Instruction No. 361. Other interpretations would allow the so-called “creeping tender offers,” with negative impacts on the market.
If the two-thirds majority is not reached, the seller can make a second offer with the sole purpose of delisting from the corporate governance special listing segments. In this case, the company can delist regardless the percentage of the free float that accepted or rejected the tender offer – and the company is exempt from the above-mentioned quantitative limits, according to the Article 35 of CVM Instruction No. 361. A new decision to be taken at a shareholders’ meeting is necessary given the likely changes to the ownership basis after the first offer.
It’s important to highlight that the decision to be taken at the shareholders’ meeting about the delisting from the corporate governance special listing segments is subject to the country’s corporate legislation, including the Article 115 of the Law 6,404. Accordingly, shareholders who vote in favor of the company’s delisting should be able to prove, in advance, that their votes are given in the interest of the company, and not of themselves – regardless they are the controlling shareholder, the seller or a minority shareholder.
The Arbitration Chamber is the competent authority to judge the votes in favor or against the delisting from the corporate governance special listing segments. Given it’s a highly specialized body that conducts an unbiased work, it’s expected to carry out a preventive work to defend the interests of the Brazilian capital market.
Board of Directors