GBT listed its common shares on the official list of the Luxembourg Stock Exchange and trades them on the Euro MTF market, the stock-exchange regulated market operated by the Luxembourg Stock Exchange. GBT is also listed and trading BDRs with the B3, under the symbol GBIO33. Each BDR represent one common share.
Regulation of the Brazilian Securities Market
The CVM (Comissão de Valores Mobiliários) regulates and supervises the activities of the Brazilian Securities Exchange Market and has, among other powers, licensing authority over brokerage firms and also regulates foreign investment and foreign exchange transactions, according to the provisions of the Brazilian Securities Law and Law No. 4,595, dated December 31, 1964, as amended.
These laws and other rules and regulations together set the requirements for disclosure of information applying to issuers of securities listed on stock exchanges, the criminal penalties for insider trading and price manipulation, the protection of minority shareholders, licensing procedures, supervision of brokerage firms and the governance of Brazilian stock exchanges.
Regulation of Foreign Investments in Brazil
There are no restrictions on ownership of GBT´s BDRs by individuals or legal entities domiciled outside Brazil. However, the right to convert dividend payments and proceeds from the sale of the BDRs into foreign currency and to remit such amounts abroad is subject to restrictions under foreign investment regulations which generally require, among other things, that the relevant investment be registered with the Central Bank and the CVM. Foreign investors should register their investment in the BDRs under Resolution No. 4,373 and CVM Instruction No. 560.
Under Resolution No. 4,373, non-Brazilian investors may invest in almost all financial assets and engage in almost all transactions available in the Brazilian financial and capital markets, provided that the requirements described below are satisfied.
Under Resolution No. 4,373, a non-Brazilian investor must:
- appoint at least one representative in Brazil, which must be a financial institution or another entity duly authorized to operate in Brazil by the Central Bank;
- appoint an authorized custodian in Brazil for its investment;
- register as a non-Brazilian investor with the CVM; and
- register its foreign investment with the Central Bank.
Additionally, an investor operating under the provisions of Resolution No. 4,373 must be registered with the Brazilian internal revenue service (Receita Federal). This registration process is undertaken by the investor’s legal representative in Brazil.
Securities and other financial assets held by non-Brazilian investors pursuant to Resolution No. 4,373 must be (i) registered, carried, guarded or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or the CVM, under their respective competences; or (ii) duly registered in the systems of services providers authorized by the Central Bank or by the CVM to perform clearing, settlement or registration services.
Registration of BDRs with the Brazilian Central Bank
The rules and regulations of the Central Bank require that the depositary file the relevant BDR program with the CVM and the Central Bank for purposes of enabling remittances of funds to and from Brazil in connection with the offer and sale of BDRs in Brazil, the sale of the underlying shares abroad and the payment of dividends and other distributions to holders of the BDRs. These rules and regulations further require that any such remittances be recorded with the Central Bank. The depositary is responsible for effecting any such registration.
The remittance of funds abroad in connection with the offer and sale of the BDRs in Brazil is limited to the proceeds from the sale of such BDRs in a Brazilian market regulated by the CVM, net of commissions and other related expenses.
As a general rule, the BDRs may be redeemed for the purposes of selling the underlying shares abroad. The proceeds from any such sale may not be used for other investments outside Brazil and must be repatriated within seven days from the date in which the BDRs are redeemed. Foreign investors purchasing BDRs pursuant to the provisions of CMN Resolution No. 4,373 are not subject to such a repatriation requirement, but must record any such redemption with the Central Bank.
Dividends and other distributions made to Brazilian residents in connection with the BDRs must be repatriated, but may be applied to the acquisition of additional underlying shares. Individuals domiciled in Brazil and non-financial institutions, investment funds and other investment companies incorporated in Brazil may purchase shares issued abroad by sponsors of BDR programs in Brazil for purposes of depositing such shares with the relevant custodian and request the issuance of BDRs in Brazil. The depositary is responsible for maintaining and updating the registration of the BDR program with the Central Bank, including the flow of funds in connection with redemptions and payments of dividends and other distributions.
Updated on 01/02/2019 at 02:31 pm