Following a slight recovery of 2017, Brazil's economy experienced a modest growth in gross domestic product (GDP) of 1.1 per cent in 2018. M&A activity followed this lead. According to PricewaterhouseCoopers,2 there were 658 transactions in 2018, representing an increase of 2.3 per cent compared to the 643 deals completed in 2017. Foreign investors conducted 231 transactions, representing an 8 per cent decrease comparing to the 252 deals recorded in 2017, and private equity activity was down to 136 transactions among Brazilian and non-Brazilian investors,3 compared to 147 transactions in 2017.

Major deals announced in 2018 with Brazilian involvement included:

  1. Boeing's US$4.2 billion joint venture with Embraer;
  2. Rhône Capital's acquisition of Fogo de Chão for US$560 million;
  3. Kroton Educacional's acquisition of Somos Educação for US$1.5 billion; and
  4. Suzano Papel e Celulose's merger with Fibria Celulose, with a value of 36.7 billion reais.

The results of the presidential and Congress elections in October 2018 gave the market a more optimistic outlook for M&A activities in the first quarter of 2019. Although the expectations have not been not fully met, the market was still very active and performing well: there were 233 announced transactions for a total aggregate value of 29.5 billion reais.4

Deals announced to date in 2019 include the ongoing US$905 million acquisition of Nextel Brasil by América Móvil, the acquisition of Chevron Brasil by PetroRio for US$400 million, the ongoing US$615.5 million sale by Odebrecht Mobilidade of Supervia - Concessionária de Transporte Ferroviário to Guarana Urban Mobility, the 2 billion reais sale by Odebrecht Rodovias of Concessionária Rota das Bandeiras to Farallon Capital Management, and the acquisition of 100 per cent of the capital stock of Drogaria Onofre Ltda (owned by subsidiaries of CVS Health Corporation) by Raia Drogasil SA, Brazil's largest pharmacy retail chain.


M&A are regulated mainly by the Brazilian Corporation Law,5 and rules, regulations, opinions and precedents of the Brazilian Securities Commission (CVM) (CVM Regulations), including:

  1. CVM Rule No. 319 (mergers involving public companies);
  2. CVM Rule No. 358 (disclosure of material information by public companies);
  3. CVM Rule No. 361 (tender offers);
  4. CVM Rule No. 481 (disclosure of information prior to shareholders' meetings and proxy solicitations);
  5. CVM Rule No. 561 (remote participation and voting of shareholders at shareholders' meetings);
  6. CVM Rule No. 565 (disclosure requirements for M&A transactions);
  7. CVM Rule No. 567 (disclosure requirements regarding share buyback programmes and transactions with own shares);
  8. CVM Rule No. 568 (use and disclosure of information of significant investments in listed companies);
  9. CVM Rule No. 570 (application of remote voting rules);
  10. CVM Opinion No. 34 (conflicts of interest);
  11. CVM Opinion No. 35 (fiduciary duties);
  12. CVM Opinion No. 36 (poison pills); and
  13. in the case of companies listed on the Novo Mercado or Level 2 listing segments of B3 (the São Paulo Stock Exchange), the corresponding listing rules (in addition to tax, antitrust and regulatory rules).

M&A deals involving solely closely held companies are only subject to the provisions of the Corporation Law (excluding those provisions exclusively applicable to publicly held companies), and the Brazilian Civil Code if they are limited liability companies (limitadas). Transactions that involve public companies, in addition to the CVM Regulations, are also regulated by the applicable listing rules.

Foreign investment is restricted in certain industries as follows:

  1. aviation: after several legislative initiatives in recent years to end the limitations to non-Brazilian capital on the voting capital of Brazilian airline companies, such nationality restrictions are no longer applicable after the approval of Law 13,482/19 on 17 June 2019;
  2. public services: telecommunications, electric energy distribution, gas distribution and rail transport, to name but a few public services in Brazil, are provided directly by the government (by means of state-owned companies) or by private parties who become responsible for the provision of such services through the execution of concessions agreements, permissions or authorisations As a rule, non-Brazilian investment is allowed, subject to certain restrictions (for instance, transfers of control of public service concessionaires may be subject to prior government approval);
  3. real estate: the acquisition of rural land in Brazil by foreigners is subject to certain restrictions, which may apply to Brazilian companies where the majority of the capital is held or controlled by foreigners (e.g., prior authorisation from a government authority may be required for title transfer);
  4. mining: foreign investment must be made through a Brazilian entity, with mining in national border zones being restricted (transfers of mining rights are also subject to prior government approval);
  5. oil and radioactive minerals are a Brazilian state monopoly; oil-related activities by private or state-owned companies are subject to concession or authorisation;
  6. radio and television broadcasting and journalistic companies: foreign capital is limited to 30 per cent of the company's capital; and
  7. banking: subject to the prior approval of the government, in addition to Brazilian Central Bank approval (transfers of control of financial institutions or of significant stakes therein are also subject to prior government approval).


On 2 January 2018, the new version of the Novo Mercado listing segment rules (New Rules) came into force, with certain provisions already in effect that impact on specific tender offer proceedings. Essentially, the New Rules aim to demonstrate B3's intention to simplify tender offer proceedings, adapt tender offers to the market's reality and reduce the extensive provisions once considered mandatory in the by-laws of companies listed with the Novo Mercado. The main changes can be summarised as follows.

The previous Novo Mercado rules (Previous Rules) set a relative presumption of control for any shareholder, or group of shareholders, that holds shares enough to ensure an absolute majority of the votes in the last three shareholders' meetings, even if such shares do not represent an absolute majority of the company's total voting capital. This presumption was excluded from the New Rules, and the concept of control under the Novo Mercado New Rules is aligned with the Corporation Law.

A mandatory tender offer as a result of an acquisition of control is still an obligation under the Novo Mercado. Pursuant to the Previous Rules, in the case of an acquisition of control by several different transactions, the purchaser was required to pay the difference between the price of the tender offer and the amount paid for shares acquired by the purchaser in a stock exchange in the six-month period prior to the date of such acquisition of corporate control, which is no longer necessary under the New Rules.

As to a delisting tender offer (DTO) from the Novo Mercado, pursuant to the New Rules, the prior approval of the delisting by a shareholders' meeting is no longer required. The DTO must be accepted (or the delisting consented to) by more than one-third of the free float shares,6 unless a higher quorum is set forth in a company's by-laws. Furthermore, the requirement to launch a DTO may be even waived by a shareholders' meeting installed in the first call with the presence of at least two-thirds of the free float shares and approved by the majority of holders of the free float shares attending the meeting. With respect to the price of the DTO, the rules of CVM Rule 361 will be generally applicable, as opposed to the Previous Rules, which had several specific provisions applicable only to companies listed on the Novo Mercado. The New Rules also eliminate the obligation that holders of the free float shares had to elect the appraiser that would determine the economic value of the company (for purposes of the price to be paid under the DTO) based on a list of three prospective appraisers recommended by the board of directors. Nonetheless, the price per share of the DTO must be fair (based on book value, market value of the company's assets, discounted cash flow, comparable multiples, market value or any other criteria accepted by CVM), and it can be challenged by minority shareholders with at least 10 per cent of the company's outstanding shares, according to the Corporation Law.

Concerning a tender offer for the cancellation of a company's registry as a publicly traded company, pursuant to the New Rules, it will follow the relevant proceedings set forth in CVM Rule 361, as opposed to the Previous Rules, which had a set of specific provisions applicable for such tender offer.

Finally, with respect to the board of directors' opinion, required within a time frame of up to 15 days counted as of the release of a tender offer's public notice, under the New Rules, in addition to the convenience and opportunity of a tender offer and the strategic plans of an offeror (which were already provided under the Previous Rules), the opinion must also state the available alternatives to the acceptance of the tender offer in the market, aiming to enable investors to be informed about the potential implications of choosing whether to participate in the relevant tender offer or not.


In 2018, Brazil experienced a slight downturn in foreign involvement in M&A transactions. Non-Brazilian investors saw a decrease in the number of transactions – 231 up to December 2018 – which represents a decrease of 8 per cent when compared to 252 transactions in 2017.7

Nevertheless, foreign investors took a leading role in major acquisitions announced in 2018. Examples of significant foreign investments in Brazil included the acquisition of the XL Group (and its Brazilian subsidiaries) by AXA Group for US$15.3 billion.

In November 2018, US-based Mohawk Industries acquired 100 per cent of the Brazil-based company Eliane Revestimebtos Cerâmicos SA The deal value was US$250 million.

In September 2018, Ardian acquired 40 per cent of Nuova Argo Finanziaria, which indirectly controls the management of important highways in Brazil, from Aurelia and Gavio Group for €850 million.

Also in September 2018, ExxonMobil and QPI Brasil Petróleo acquired Bloco Titã, an important oil extraction zone, from ANP for 3.12 billion reais.

In August 2018, Advent International acquired 80 per cent of Walmart Brasil for 1.9 billion reais.

In August 2018, Switzerland-based group Glencore completed its acquisition of a 78 per cent stake in the Brazil-based fuel distributor Ale Combustíveis. The deal value was 1.7 billion reais.


Some of the most active target sectors involved in announced M&A deals in Brazil in 2018 were information technology (IT), energy and power (including oil and gas), transportation, retail, financial and education.

In the IT sector, Digital Reality Inc, through its Brazilian subsidiary Stellar Participações, acquired 49 per cent of Ascenty, a large Brazilian data centre provider. The deal value was US$1.8 billion.

In the energy sector, Enel Brasil completed a tender offer for the acquisition of Eletropaulo, which is the company responsible for electricity distribution in the state of São Paulo, for 7.06 billion reais.

In the industrial sector, Omega Geração acquired 100 per cent of wind farm Assuruá, in the state of Bahia, from FIP IEER for 1.9 billion reais.

In the financial sector, Banco do Brasil acquired an assignment of claims portfolio from Votorantim for 593.8 million reais.

In the education sector, Neuberger Berman acquired 25 per cent of Uniasselvi, a distance learning institution, from Carlyle and Vinci Capital for 380 million reais.


It is common knowledge that the cost of credit in Brazil remains prohibitively expensive.

Acquisitions are usually funded via securities offerings (debt and equity) and bank loans, or via both. Private equity investment funds are also used as vehicles for funding in specific cases.

Furthermore, local financing is generally not available in all industries. Inbound cross-border investments are typically financed outside Brazil. Leveraged buyouts are not usual, although in certain cases (especially where the buyer is a local private equity fund) pre-acquisition debt is pushed down to the target following the closing (subject to certain conditions or requirements in cases in which the target is a listed company).

Security for acquisition financing normally consists of shares and assets, if any, of the target company, and guarantees of the acquiring group.


Although the alternatives implemented by the Brazilian labour reform are still being adopted with caution by companies in general, in the first year following the enactment of the labour reform, the litigation numbers reveal a more business-friendly environment, and the constitutionality of some relevant changes to the labour legislation were confirmed by the Supreme Court.

i Litigation rates

Mostly due to the chances of being considered responsible for paying a company's attorney fees in cases where a labour claim is deemed groundless, in 2018 workers had filed 35 per cent less lawsuits than they had in 2017.

ii Ratification of out-of-court agreements

Requests for the ratification of out-of-court agreements by labour judges, a procedure implemented by the labour reform, numbered more than 40,000 in the past year. This significant number reveals such mechanism was adopted as mutually beneficial tool for both workers and companies, allowing employees to receive their settlement amount within a limited period of time while granting employers legal certainty upon obtaining employees' formal release.

iii Outsourcing of services

Recent rulings of the Brazilian Supreme Court have confirmed the constitutionality of outsourcing activities irrespective of whether they are related to a contracting company's core business, cancelling a contrary presumption established by a superior labour court precedent, without prejudice to the risk of recognition of a de facto employment relationship between an outsourced worker and the contracting company should employment features be observed in the rendering of services.

Union contributions

As result of the labour reform, the payment of union contributions (not included in this legal concept are the dues related to affiliated or associated members of a union) ceased to be mandatory and became voluntary. This change in legislation created significant backlash from employer and employee unions, and as a result, labour union income has decreased 88 per cent compared to the contribution amounts of the previous year. Despite a number of lawsuits (from labour unions representing employees or employers) challenging the labour reform in this regard, based on the freedom of association right, the Brazilian Supreme Court ruled in favour of the constitutionality of the labour reform provision under which contributions to unions are not mandatory, except in the event of an employee's personal and previous written authorisation. Based on these union contribution conflicts, employment relationship negotiations have been impacted, resulting in a reduction in the number of direct collective bargaining agreements between employers and unions in relation to the years preceding the labour reform.


This section presents general matters regarding the ultimate beneficial owner (UBO) disclosure requirements taking into account the recent rules enacted by the Brazilian Internal Revenue Service (RFB).

Normative Instruction No. 1,863634, dated 27 December 20186 May 2016, issued by the RFB (NI 1,863634), regulates the information that must be provided to the RFB in order for foreign investors incorporated as entities (NRIs) to obtain a national taxpayer identification number (CNPJ), which is required for an NRI to invest in the Brazilian financial and capital markets pursuant to the mechanism set forth by Resolution No. 4,373, dated 29 September 2014, of the Brazilian Monetary Council (4,373 investment and 4,373 investor), and also for an NRI to directly invest in Brazilian-resident legal entities pursuant to the mechanism set forth by Law No. 4,131, dated 3 September 1962 (4,131 investment and 4,131 investor).

When applying for a CNPJ, any prospective NRI must provide information regarding the respective legal representative in Brazil and its shareholding chain if it reaches an individual (natural person) that is deemed to qualify as its UBO; or any of the entities listed in Paragraph 3 of Article 8 of NI 1,863634, which are exempt from disclosing the respective UBO (exempt entities).8

According to Article 8 of NI1,863634, an individual is deemed the UBO of the 4,373 or 4,131 investor if he or she ultimately, directly or indirectly, owns, controls or has significant influence over an entity, or is the individual on behalf of which a transaction is conducted. For the purposes of such rules, significant influence is deemed to exist whenever an individual owns more than 25 per cent of an entity's capital stock, directly or indirectly; or an individual directly or indirectly has, or exercises preponderance in, corporate resolutions, and has the power to elect the majority of an entity's directors, even without controlling it.

Furthermore, if the shareholding chain of a certain 4,373 or 4,131 investor reaches one of the listed exempt entities, there is no obligation to disclose the UBO. However, if there is an UBO, the RFB requires the disclosure of some personal information such as the UBO's date of birth, the UBO's country of birth and the UBO's country of residence, as presented in Annex XII of NI 1,863.

In addition to NI 1,634, the RFB issued Declaratory Act No. 09, dated 23 October 2017 (ADE 09/2017, jointly with NI 1,634 (UBO Regulation)) to further regulate the application of the UBO disclosure requirements. To do this, ADE 09/2017 also classifies the entities subject to UBO disclosure rules in three different categories: entities exempt from disclosing the UBO (group 1), entities resident abroad obliged to disclose information (group 2) and Brazilian-resident entities (group 3).

Group 1 entities correspond to the exempt entities listed by Paragraph 3 of Article 8 of NI 1,863634. Annex XII ADE 09/2017 provides that such entities are not obliged to provide information regarding the respective UBO considering their particular features, despite the information regarding the legal representative. Nonetheless, note that such waiver is only applicable if the 4,373 or the 4,131 investor qualifies as an exempt entity itself. On the other hand, group 2 entities are further categorised into three subcategories: those that obtain a CNPJ through the RFB; those that obtain a CNPJ through the Brazilian Central Bank; and those that obtain a CNPJ from CVM. The information to be presented depends on the tier that the entity is ranked in.9

Besides this information, the UBO Regulation may also require some documents to be presented to the RFB up front, depending on the qualification of the 4,373 or the 4,131 investor, which must be reviewed on case-by-case basis.

Furthermore, note that there are deadlines for presenting the information and documents requested under the UBO Regulation. Failure to comply with the UBO Regulation may result in the suspension of a CNPJ, and the consequent inability of the 4,373 or 4,131 investor to carry out transactions in Brazil.


2018 was a year of important developments in the Brazilian merger control practice. The decisions taken by the Administrative Council for Economic Defence (CADE) in certain complex M&A transactions have demonstrated that the authorities continue to tend to take a rigorous approach in the analysis of those cases. Highlights included the increasingly active role of the Department of Economics Studies in the most complex merger cases, third-party intervention in merger cases, and the analysis of complex mergers that raise portfolio or conglomerate concerns.

The year's highlights also included the publication of CADE's Remedy Guide, aimed at providing general guidelines for the negotiation and implementation of remedies, and the increasing coordination and exchange of information between CADE and foreign competition authorities in the analysis of cross-border mergers.

i CADE's Remedy Guide

On October 2018, CADE issued the Antitrust Remedy Guide (Guide), which provides guidelines for the implementation of remedies in merger cases that raise competition concerns.

In accordance with the Guide, the implementation of remedies should observe the following principles:

  1. proportionality (meaning that a remedy must be necessary, adequate and sufficient to address concerns raised by a merger);
  2. timeliness (i.e., the remedy should address a concern as quickly as possible and in any case, in a timely manner);
  3. feasibility (that is, a remedy should be subject to easy implementation); and
  4. verifiability (meaning that CADE must be able to verify its fulfilment).

The Guide also sets CADE's preferences in terms of types of remedies. In this sense, structural remedies (such as the divestiture of an asset) are preferred over behavioural ones (i.e., when the parties assume obligations, such as eliminating exclusivity clauses or maintaining non-discriminatory behaviour in supply agreements). The Guide expresses CADE's concerns regarding remedies that may be difficult to monitor: it is desirable that the parties hire monitoring trustees to help CADE keep track of the fulfilment of the obligations assumed by the parties, and remedies should preferably not require continuous monitoring. The Guide also lists questionable remedies, such as obligations to make investments and the imposition of price caps.

Although the Guide is not binding, it is based on CADE's experience and reflects the way CADE will likely approach remedies in future cases.

ii Increasingly complex analysis of M&A deals

The most recent complex cases that have been analysed by CADE show that the competition authority maintains a rigorous and sophisticated approach concerning the analysis of M&A transactions, which translated into an increasing number of cases challenged to CADE's Tribunal, and blocked or approved with remedies:

  1. nine cases were recently challenged to the Tribunal and approved with remedies: Disney/Fox; AT&T/Time Warner; Itaú/Citibank; Bayer/Monsanto; ArcelorMittal/Votorantim; Dow/Dupont; WEG/TGM; Petrotemex/PQS; Itaú/XP; Praxair/Linde;
  2. four cases were blocked in 2017 and 2018: Kroton/Estácio; Ipiranga/Alesat; JBJ Agro/Mataboi and Ultragaz/Liquigas; and
  3. two withdrawals were made due to the risk of blocking: Owens-Illinois/Nadir and Saint Gobain/Rockfibras.

Portfolio or conglomerate effects, and coordinated effects

The analysis of conglomerate or portfolio effects are increasingly important, as CADE's review becomes ever-more sophisticated. Examples include Bayer/Monsanto, BVMF/Cetip, Votorantim/Arcelormittal, Tigre/Condor and Luxottica/Essilor, all of which involved important discussions about conglomerate effects; and Reckitt/Hypermarcas, Kroton/Estácio and Essilor/Luxottica, in which portfolio effects were deeply analysed.

In addition, CADE has given a lot of attention to the analysis of coordinated effects, especially in sectors with a history of cartel convictions. Examples include Ipiranga/Alesat, Arcelormittal/Votorantim, Prosegur/Transfederal, Bradesco/HSBC and Itaú/Citibank.

Third party-complaints

CADE is paying lot of attention to third-party complaints in the context of merger control cases. Such interventions have effectively affected both the timing and the results of the analysis of such cases (see, for instance, Petrotemex/PQS and Itaú/Ticket Serviços). There have also been third-party interventions through complaints about transactions that allegedly should have been notified to CADE, either because they met the thresholds criteria, or because of their potentially negative effects in the market (see All Chemistry/SM Empreendimentos Farmacêuticos).

Increasingly active role of the Department of Economics Studies in complex mergers

The Department of Economics Studies (DEE) is part of the Brazilian competition system and is responsible for advising the General Superintendence and CADE's Tribunal in both merger review and conduct cases, as well as preparing studies to ensure CADE's technical and scientific updating. The DEE had an important role in the recent analysis of the most complex merger control cases, such as Ipiranga/Alesat, Mataboi/JBJ, Ultragaz/Liquigás, Kroton/Estácio, Areclormittal/Votorantim, Bradesco/HSBC, Reckitt/Hypermarcas and British/Iberia/Latam. In addition, the DEE has been taking an active role in its competition advocacy role, issuing studies and analyses of several sectors (such as the passenger and cargo air transport market, port services and fuel distribution).

iii Cooperation between competition authorities

CADE continues to increase its cooperation and coordination with foreign antitrust authorities in cross-border mergers. Contacts between CADE and both the European Commission and the Department of Justice (United States) have been common for a while. The main goal is to exchange information and avoid conflicting decisions in cross-border cases. However, CADE has been diversifying its contacts with other foreign authorities: for instance, it has recently engaged in exchanges with the Russian and Indian authorities (regarding the Alstom/Siemens case).

Moreover, CADE has signed several memorandums over the past few years to regulate cooperation with other competition authorities. CADE has signed memorandums establishing cooperation between CADE and the competition authorities of several different countries such as South Africa and Russia, as well as a multilateral agreement with the BRICS10 economies, in recent years.


After a decrease in 2016 compared to recent years, and following the first signs of economic recovery, M&A activity increased in 2017 and 2018. The expectations for the remainder of 2019 are mostly positive. The outlook for M&A transactions in Brazil will certainly be enhanced by the approval and implementation of reforms proposed by the new Federal Administration, especially the pension system reform. The prospect of a combination of attractive prices, less expensive credit and banks willing to approve financing will benefit the volume of transactions in Brazil.

There have also been initiatives by the federal government to foster investments and create a better investment environment in general. For instance, the Provisional Measure of the Economic Freedom aims to reduce governmental bureaucracy and the amount of interference in private parties' relations with the purpose of stimulating entrepreneurial activity in Brazil. Furthermore, in early 2019 the Ministry of Economy created an Inter-ministerial Committee for Digital Transformation, which is tasked with discussing, together with representatives of the civil society, how to create a better environment for business, entrepreneurship and innovation. Among the ideas being discussed by the Committee is a proposal for a Startups Act, which intends to reduce the obstructions to innovation and bureaucracy and enhance sustainable growth for emerging companies in Brazil.

With respect to scenarios or trends that can already be identified, it is possible to say that an important driver for M&A activity in Brazil will be the privatisation agenda, which is one of the main priorities for the government for this and following years and aims to attract the private sector to fill in infrastructure gaps. The main sectors announced to be privatised or awarded to private sector players include airports, ports, energy, railroads and roads, mining, and banking and related services. The government has already privatised 12 airports (including major hubs in northeast Brazil such as Recife) in 2019, and is in the process of doing the same for major Brazilian ports. In addition, Petrobras has a continuing significant plan to divest non-core assets, such as its sale of 90 per cent of gas supplier TAG to Engie Group for US$8.6 billion, which was signed in April 2019.

As in previous years, the current foreign exchange levels may also continue to play a role in incentivising seasoned foreign investors (especially by private equity) to take advantage of investment opportunities in the country.

Finally, there are still industries with growth and consolidation potential (e.g., utilities, healthcare and education) that may be further explored as the country's GDP continues to grow.


1 Adriano Castello Branco and Claudio Oksenberg are partners and João Marcelino Cavalcanti Júnior is a senior associate at Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados.

3 Ibid.

5 Law No. 6,404 of 15 December 1976.

6 Shares not held by the controlling shareholders, its related persons and the management, and treasury shares.

8 The following are listed as exempt entities: (1) legal entities, or their controlled companies, incorporated as publicly held company in Brazil or incorporated in countries that require public disclosure of all relevant shareholders, and that are not incorporated in favourable tax jurisdictions or submitted to a privileged tax regime; (2) not-for-profit entities that do not act as fiduciary managers and that are not incorporated in favourable tax jurisdictions or submitted to a privileged tax regime, as long as they are regulated and inspected by a competent governmental authority; (3) multilateral organs, central banks, governmental entities or those related to sovereign funds; (4) social security entities, pension funds and similar institutions, as long as they are regulated and inspected by a competent governmental authority in Brazil or in their country of origin; (5) Brazilian incorporated investment funds regulated by CVM, as long as the Brazilian Individual Taxpayers' Registry or the CNPJ of the respective quota-holders is informed to the RFB; (6) investment funds specially incorporated to manage complementary pension plan resources as well as insurance plans if regulated and inspected by the qualified public authority in its country of origin; and (7) collective investment vehicles domiciled abroad whose shares or equity holding representative securities are admitted to trading in markets regulated by an authority accredited by CVM; or collective investment vehicles domiciled abroad:(a) whose minimum number of shareholders is equal or higher to 100, provided no shareholder holds significant influence over the vehicle; (b) whose asset portfolio is managed by a professional manager registered before an authority accredited by CVM and in a discretionary manner; (c) which is subject to investor protection regulation by a regulation authority accredited by CVM; and (d) whose asset portfolio is diversified (i.e., the concentration does not amount to significant influence in the case of concentration in assets from a single issuer).

9 Annex XII provides four additional tiers for entities qualified under this subgroup – each one of the entities is required to comply with different disclosure obligations.

10 Brazil, Russia, India, China and South Africa.