In a meeting held on September 13, 2022, the Board of the Brazilian Securities and Exchange Commission (“CVM”) decided to allow the structuring of issues of Agribusiness Receivables Certificates (“CRA”) coverage by agribusiness credit rights arising from debt issued by an entity that is not a rural producer (“Borrower”), destined, in whole or in part, to the reimbursement of expenses incurred by the Borrower before the respective CRA issue (“CRA Reimbursement”).

The decision is based on the jurisprudence signed by the CVM on July 2, 2019, in which it was recognized the possibility of structuring the issuance of Real Estate Receivables Certificates (“CRI”) to reimburse real estate expenses incurred prior to the issuance of the CRI (“CRI Precedent”).

In a preliminary analysis of the matter, the Superintendency of Supervision of Securitization (“SSE”) expressed the understanding that (i) the issues of CRA Reimbursement had been faced and rejected by CVM in the discussions of Public Hearing SDM 01/2017; and (ii) the wording of art. 2º, §8º, of Normative Annex II of CVM Resolution 60/2021 would prohibit the issuance of CRA Reimbursement by establishing that CRA issuances backed by agribusiness credit rights characterized by their destination must observe should assist "amounts and deadlines compatible with those of the certificate issuance".

However, considering CRI Precedent, SSE reformulated their opinion, understanding that such precedent brought important reflections on the subject that had not been considered in the scope of Public Hearing SDM 01/2017, and proposed to the CVM’s Board the admission of CRA Reimbursements. That’s because, according to the SSE, “the purpose of the wording of §8 of art. 2 of Normative Annex II of CVM Resolution 60/2021 would be to ensure that the funds raised by third parties with the issuance of debt are allocated and are duly linked to a past or future operation with the rural producer or their cooperatives, whose total time of existing relationship is compatible with that of the issuance. Even the provisions that precede the aforementioned § 8º, when read together, would allow this conclusion”. In addition, SSE considered that there is no prohibition on the use of reimbursement dynamics in the provisions of Provisional Measure 1,103/2022 - currently in effect as Law 14,430/2022, which revoked and substituted the provisions of Law 9.514/1997 regarding the general regulation of CRI and CRA issues.

In this way, the SSE proposed to CVM’s Board to accept the understanding that the current normative configuration does not establish restrictions to the use of reimbursement to prove the destination of funds obtained through a CRA issue. It pondered, however, that, similarly to what was established in the CRI Precedent, that the expenses to be reimbursed by the Borrower in the scope of CRA Reimbursement issues must be supported by the following conditions:

1. are specified in detail in the securitization term and in the debt security that supports it, at least, the identification of the amounts involved and the detailing of the expenses, in addition to the identification of the rural producers of destination;

2. have been incurred by the Borrower in the 24 months prior to the closing date of the public offer of CRA Reimbursement; and

3. are subject to verification by the issuing fiduciary agent, to which all documents proving such expenses must be submitted.

CVM’s Board, following SSE’ conclusions, unanimously decided to authorize the CRA Reimbursement issues, a decision that brings new possibilities for structuring operations in the Brazilian market, expanding the sources of financing for the Agribusiness sector.

The full statement from the SSE can be accessed here.

The full statement of vote by Director João Accioly can be accessed here.

The extract from the minutes of the CVM’s Board meeting of September 13, 2022 can be accessed here.

By Matheus Zilioti