The Brazilian Congress is currently processing Bill 2,551/23 (Bill 2,551/23), forwarded by the federal government to simplify the procedure for issuing debentures. This will require changes to Law 6.404/76.

Bill 2,551/23 is part of the financing simplification and red tape cutting initiative prepared by the Bureau of Economic Reforms of the Ministry of Finance. According to the bill's explanatory memorandum, the proposed legislative changes seek to reduce costs related to fundraising by companies, as well as to provide more liquidity to securities and dynamism to the capital market.

The main changes proposed include:

Corporate Approvals

  • Non-convertible debentures issued by publicly-held or privately-held companies may be approved at a board of directors or executive board meeting, without the need for a general meeting (as is the case with other debt instruments).

The amendment should speed up the process of issuing debentures, especially for companies whose rules for convening and calling to order general meetings provide for longer deadlines.

Filings and other requirements

  • Exemption from the mandatory filing of debenture indentures with commercial boards.

It will be incumbent on the Brazilian Securities and Exchange Commission (CVM), for publicly-held companies, and the federal government, for privately-held companies, to regulate the form of registration and disclosure of the indenture and the corporate act approving issuance of debentures.

Quorum for resolutions at general meetings of debentureholders

With due authorization of the CVM, the quorum for resolutions to amend the conditions of the debenture indenture may be reduced if:

  • the issuer is a publicly-traded company;
  • the reduced quorum is mentioned in the call notices;
  • the reduced quorum is adopted only upon third call; and
  • the debentures are dispersed in the market, i.e. no debentureholder may hold directly or indirectly more than half of the debentures.

In addition to the aforementioned changes, Bill 2,551/23 provides for the exemption of the opening of a book of registration of debentures with the commercial registry, as well as the possibility of separating the interest charged as remuneration from the nominal value of the debentures(strip).

The basic text of the bill is still subject to amendments suggested by members of congress. The initial proposal, however, seems to simplify and streamline the process of issuing debentures, which is still undergoing adaptations resulting from approval of the new regulatory framework for public offerings, in force since January of this year.