For companies and investors in the Brazilian capital markets, the distinction between a Material Fact (Fato Relevante) and a Market Announcement (Comunicado ao Mercado) has consequences beyond the form of disclosure. It turns on whether information is capable of materially affecting the price of securities, an investor’s decision to trade or hold them, or the exercise of rights attached to those securities. Brazil’s Securities and Exchange Commission, the CVM, is reviewing this framework through Public Consultation SDM No. 01/2025, which proposes replacing CVM Resolution No. 44 and amending certain provisions of CVM Resolution No. 80. The proposed reform is relatively targeted, as core elements of Resolution No. 44, including the concept of material information, insider trading rules, blackout periods and investment plans, remain largely unchanged. The main developments concern how information is classified and disclosed, significant shareholding reporting and the timing of certain disclosures in capital markets transactions.
Brazilian listed companies already use Market Announcements extensively for information that is relevant to the market but does not meet the threshold for a Material Fact. Resolution No. 44, however, does not currently define them as a separate category. Article 6 of the draft would formalize that practice by defining a Market Announcement as the channel for information that is not considered material but is either required to be disclosed or considered useful to market participants. The distinction between the two forms of disclosure has practical consequences, as Material Facts are generally expected to be released before or after trading hours whenever possible, and disclosure during a trading session can lead to a temporary suspension of trading. Materiality also bears on confidentiality and on the assessment of transactions carried out by persons with prior access to the relevant information.
Article 32 addresses the choice between the two disclosure channels. Materiality remains fact specific and is principally evaluated by the Investor Relations Officer and, depending on the circumstances, other persons with direct access to the information. When reviewing that decision, the CVM would start from a presumption of good faith and adequacy of the judgment exercised by those responsible for the disclosure, although its technical staff could still require information released through a Market Announcement to be disclosed as a Material Fact.
The proposed framework also addresses a recurring challenge for Brazilian listed companies: materiality is inherently a judgment call. Investor Relations Officers must assess the potential significance of information before its actual market impact is known, often in circumstances where reasonable minds may differ as to whether the regulatory threshold has been met. That uncertainty can encourage defensive disclosure practices, particularly because a classification decision made ex ante may later be scrutinized with the benefit of hindsight. By expressly recognizing Market Announcements and introducing a presumption of good faith in the review of classification decisions, the draft appears to acknowledge that legitimate judgment is involved in distinguishing information that is material from information that is merely useful to the market.
For Investor Relations Officers, the proposal does not relax their underlying duties or create a safe harbor. The basis for classification decisions, and the record supporting them, will therefore remain particularly important. The threshold for significant shareholding disclosure would continue to be based on 5% of a class or type of shares, with further reporting at 10%, 15% and successive 5% levels. Investors that do not intend to alter the composition of control or the issuer’s administrative structure would have three business days to report the position under Article 39. Investors pursuing such changes would remain subject to immediate disclosure under Article 40. Once received by the Investor Relations Officer, a significant shareholding notice would be disclosed as a Material Fact if the information is itself considered material and as a Market Announcement in other cases.
The additional period is particularly relevant to institutional investors that trade through multiple funds and jurisdictions and may face operational difficulties in consolidating positions immediately. Until the communication is made, Article 39 requires the investor to refrain from exercising voting rights and entering into voting agreements, subject to an exception for shares already held before the relevant threshold was reached. The investor’s stated purpose in holding the position also becomes more consequential. Article 38 identifies conduct that can indicate an intention to influence management or control and conduct that, on its own, does not support that conclusion. Certain exercises of shareholder rights remain compatible with a passive investment position. Articles 39 and 40 establish the corresponding reporting regimes and address subsequent changes in the investor’s stated intention. In this respect, the draft creates a rebuttable presumption that the investor’s prior statement regarding its intentions was inaccurate if, less than three months later, it announces an intention to alter the composition of control or the issuer’s administrative structure. The draft also aligns the concept of persons acting together or representing the same interest more closely with the Brazilian tender offer (OPA) regime.
The consultation also addresses a practical issue in securities offerings. Corporate approvals can currently trigger filing obligations before the viability or final terms of an offering are settled. New paragraph 7-A of Article 33 and paragraph 3-A of Article 34 of Resolution No. 80 would allow minutes of certain board and executive officer meetings dealing exclusively with securities issuances to be filed only after the issuer has assessed the viability of the offering and decided definitively to proceed. The draft replacing Resolution No. 44 also omits wording that can currently be read as requiring a Material Fact solely because a corporate body has approved an issuance intended for public distribution. An internal authorization does not necessarily mean that a transaction has reached a stage at which public announcement is appropriate.
The proposed rules do not eliminate borderline decisions, since Article 32 still requires issuers to assess materiality, and access to the three-business-day reporting period for significant shareholdings depends on the investor’s conduct and stated intention. Listed companies will therefore continue to need effective procedures for escalating potentially material information and documenting the basis for difficult classification decisions. Public Consultation SDM No. 01/2025 remains under review, and the final rule may differ from the text submitted for comment. Existing disclosure procedures therefore need not change before the new rules are enacted. If adopted substantially as drafted, the reform would bring Market Announcements expressly into the regulatory framework, refine the treatment of significant shareholding disclosures and adjust the timing of certain issuance-related filings. The reform would not eliminate the judgment inherent in materiality; rather, it would provide a clearer regulatory framework within which that judgment is exercised, while leaving the underlying test for material information unchanged.
Authors:
João Sartini– Partner (joaosartini@felsberg.com.br)
Alexandre Blois – Attorney (alexandreblois@felsberg.com.br)
Cecília Costa – Attorney (ceciliacosta@felsberg.com.br)