The Brazilian Securities and Exchange Commission (CVM) has revised its understanding regarding the requirement for financial statements (FS) of debtors and guarantors responsible for 20% or more of the underlying assets of Real Estate Receivables Certificates (CRI), Agribusiness Receivables Certificates (CRA), and other securitization instruments.

Upon reassessing the matter, the CVM stated that this concentration limit may be exceeded if at least one of the parties responsible for the underlying assets (debtors or guarantors) provides its audited FS to the securitization company. However, if both exceed this threshold and have audited FS, submission by both parties will be mandatory.

The regulator also clarified that if the concentration of the underlying assets involuntarily surpasses the 20% threshold during the issuance process (passive non-compliance), audited FS will not be required from the debtor or guarantor exceeding this limit.

Additionally, the CVM explicitly acknowledged that there is no restriction on individuals acting as debtors or guarantors with exposure exceeding 20% of the issuance, provided that another involved party (debtor or guarantor) submits audited FS.

In such cases, the securitization instrument’s offering prospectus must include risk factors addressing the potential absence of financial information for debtors or guarantors exceeding the 20% threshold, particularly in the case of individuals. Furthermore, it must highlight the risks associated with the lack of data necessary to assess the credit risk of a relevant debtor or evaluate the effectiveness of a guarantor’s obligation without sufficient information.