Who pays?  Does ownership change?  12 responses on asset transfers from BES and Banif

Who pays? Does ownership change? 12 responses on asset transfers from BES and Banif

The custody of shares and bonds of Banco Espírito Santo (BES) and Banif passed to the bankrupt estates, thus no longer sitting in banks, where they could have costs for former investors. The change follows the revision of the Securities Code (CVM) which puts an end to the payment of bank commissions on bankrupt assets, a situation that has long been the subject of complaints by the injured parties.

To clarify what this change entails (provided for in article 64 of the CVM), the Securities Market Commission (CMVM) published a series of questions and answers in non-technical language, aimed at non-professional investors, regardless of your level of knowledge in investment or legal matters. Are the following:

1. What does article 64-A of the Securities Code provide?

O article 64-A of the Securities Code, introduced by Law no. , must be registered with the issuer or with a financial intermediary that represents it.

2. What interests does the provisions of article 64-A of the Securities Code intend to safeguard?

This rule aims to safeguard the interests of retail investors, insofar as there were retail investors who, not holding other securities registered in an account with the financial intermediary, supported the payment of commissions arising from the registration of securities of issuers in process. of insolvency, namely of credit institutions subject to bank resolution measures (such as BES – Banco Espírito Santo, SA or Banif – Banco Internacional do Funchal, SA), and which continued to bear such costs with financial intermediaries , since these values ​​were integrated in a centralized system.

3. Since when is article 64-A of the Securities Code applicable?

This standard is applicable since January 30, 2022.

4. What happens when an issuer of securities admitted to trading goes into liquidation or insolvency?

The issuer must change the way in which the securities are registered within a period of 6 months.

5. What happens in the case of issuers of securities admitted to trading that were already in the process of liquidation or insolvency on the date of entry into force of article 64-A of the Securities Code?

Issuers of securities admitted to trading that were already in the process of liquidation or insolvency on 30 January 2022 had a period of 6 months to change the modality of individualized registration of securities, ie, until 30 July of 2022.

6. What happens when these values ​​are registered at the financial intermediary where the investor has an account?

The registration of these securities with the financial intermediary where the investor has an account is cancelled, which consequently implies that they are no longer visible when the investor consults the information on the respective account with the financial intermediary.

7. With the change in the individualized registration method, does the investor cease to be the holder of the securities?

Not. The securities are no longer registered with the financial intermediary where the investor has an open account and are now registered with the issuer or the financial intermediary chosen by the issuer, maintaining the legal position in relation to its title as holder unchanged.

8. Changing the individualized registration of securities does it have any associated cost?

This amendment is exempt from the payment of any fee, emolument or commission, and therefore does not involve any cost to the holder of the securities.

9. If the investor only owns these securities, after changing the individual registration method to the issuer, will he or she have to pay custody fees to the financial intermediary?

If the procedure for changing the individual registration of securities is carried out within the stipulated deadline, the investor may have to bear custody costs:

  • If the financial intermediary charges the commissions on a monthly basis, in the month in which such securities were transferred to the individual registration account with the issuer or the financial intermediary chosen by the issuer (for example, at the beginning of August in relation to the month of July ).
  • If the financial intermediary collects commissions on a quarterly basis, in the current quarter in which such securities have been transferred to the individual registration account with the issuer or the financial intermediary chosen by the issuer (for example, at the beginning of October in relation to the 3 th quarter starting in July).

10. Do securities holders have to make a request to the issuer for it to change the individualized registration modality?

Not. The transfer of securities from the financial intermediary to the issuer (or to the financial intermediary chosen by the latter) does not depend on any acts to be performed by the respective holders.

11. Does the financial intermediary have a duty to inform the holder of the securities about this mandatory change in the individual registration?

Yup. The financial intermediary must inform the respective customers who are holders of the securities, namely, through the periodic information that refers to them.

12. How can information on these securities be obtained after registration with the issuer (or the financial intermediary chosen by the issuer)?

At least quarterly, the issuer (or the financial intermediary chosen by it) sends information to each of the non-professional investors holding the registered securities, through an extract.

Securities holders may also contact the issuer (or the financial intermediary chosen by the latter) directly.

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