Valuation reports for mergers

For capital formed or increased with assets, arts. 8 and 170, para. 3, require a valuation by three experts or a specialised firm appointed by the shareholders' meeting. In mergers, amalgamations and spin-offs, arts. 226 to 229 require a valuation of the net assets to be transferred, and in share mergers art. 252 requires a valuation of the shares to be merged.

When a parent merges a subsidiary, art. 264 requires the justification to include a comparative exchange ratio for the non-controlling shareholders, based on the net assets of both companies. Both are valued on the same criteria and at the same date, at market prices or under another criterion accepted by the CVM for listed companies. A listed company's purchase of control of another company, when the investment is material or the price exceeds the limits in art. 256, requires prior approval or ratification by the buyer's shareholders' meeting, supported by a valuation report (art. 256, para. 1).

Law 6,404/1976, arts. 8, 170, 226 to 229, 252, 256 and 264

CVM Resolution 215 requires a valuation report on the company in tender offers made by the company itself, its controlling shareholder, a director or officer, or persons related to them, such as delisting offers and offers following an increase in the controlling shareholder's stake. Offers following a sale of control are the exception. The report is prepared by a firm that is independent of the offer and has proven experience in valuing listed companies. The firm, or one of the professionals responsible, must have prepared at least three valuation reports on listed companies in the ten years before the registration request. In specific cases the rule allows alternative pricing criteria instead of a report, such as the trading price of highly liquid shares or a recent transaction between unrelated parties.

Under withdrawal rights, reimbursement is generally paid at book value per share. The bylaws may provide for economic value instead, in which case the valuation is carried out by three experts or a specialised firm (art. 45, paras. 1 and 3).

CVM Resolution 215/2024 · Law 6,404/1976, arts. 4 and 45

The basis is set in the transaction's protocol and justification and may be book value, net assets at market prices or economic value under discounted cash flow. Reports on net assets at market prices require a valuation of each material asset and liability, including real estate, machinery and intangibles, and CBG covers all three disciplines within the same engagement.

When the basis is book value, the report is an accounting report signed by an accountant registered with the CRC. Valuers are liable to the company, the shareholders and third parties for damages caused by negligence or wilful misconduct in the valuation (art. 8, para. 6).

Law 6,404/1976, arts. 8, 224 and 225

The work starts from the transaction design, with the valuation date, the basis set in the protocol and the use of the report before the shareholders' meeting, the CVM or the commercial registry. The working papers document assumptions, sources and calculations so that any reviewer can rebuild the result.

When the transaction involves material real estate or machinery, CBG's Real Estate Appraisal and Fixed Assets teams value those assets on the same timetable, with reports signed by the licensed professionals of each field.

The shareholders' meeting appoints the experts or the specialised firm and resolves on the report. Assets cannot be contributed to the company at a value above the one assigned by the subscriber (art. 8, para. 4).

The Civil Code does not require a report, but all quotaholders are jointly liable for the accurate valuation of assets contributed to capital for up to five years from registration (art. 1,055, para. 1). The report supports the quotaholders, the commercial registry and the auditor.

It can, when the protocol adopts that basis, which is common in reorganisations within the same group. When a parent merges a subsidiary with non-controlling shareholders, art. 264 also requires the comparative calculation at market prices or under another criterion accepted by the CVM.

The valuation date is set in the protocol and usually matches the transaction's reference balance sheet. Subsequent changes in net assets follow what the protocol provides.

CBG issues fairness opinions for the board or the independent committee, provided it has not advised any of the parties on the same transaction.