Lombard loans in Brazil.
Private, securities-backed credit against Brazil-listed shares — pledged, not sold, with ownership retained.
A Lombard loan against Brazil-listed shares is credit secured by a pledge of equity listed on B3. The holder pledges the shares as collateral, draws cash against a fraction of their market value, keeps beneficial ownership and dividends subject to structuring, and recovers the position in full on repayment. It is a loan against shares rather than a sale of them: what US markets call securities-based lending, and elsewhere a share-backed loan.
- Lombard loans are arranged against shares listed on B3.
- The pledge is not a sale: ownership, dividends, and the upside stay with the holder.
- Loan-to-value is calibrated to the specific position, funded in BRL or cross-currency.
- Structured under the CVM regime, with disclosure at 5%.
Eligible collateral and venues
Lombard Financing arranges facilities against equity listed on B3 (Brasil, Bolsa, Balcão), the principal venue in Brazil. Eligibility at the position level turns on the liquidity and free float of the specific line, its volatility, and the size of the holding relative to its typical traded volume — the same variables that drive the loan-to-value.
Regulator and disclosure
Shares listed in Brazil are regulated by the Comissão de Valores Mobiliários (CVM). Substantial-shareholding disclosure is triggered at 5%, and a pledge over a large line is structured with that reporting regime in view so that the transaction remains discreet and compliant. Where a holding sits near a control or takeover threshold, the structure is arranged to avoid disturbing the position.
Whether the pledge itself has to be disclosed, and when an enforcement would become public, differs from market to market; the official rules are set side by side in share pledge disclosure rules by market.
Funding, custody, and structuring
Lombard facilities against Brazil-listed shares are typically arranged for a tenor of twelve to thirty-six months, funded in BRL or in another currency on a cross-currency basis. Throughout the facility the pledged shares are held by a qualified custodian under bankruptcy-remote arrangements, so the security is clean and the holder’s ownership is preserved.
Non-recourse, limited-recourse, and full-recourse structures are available, and the choice interacts with the loan-to-value and the pricing. A Lombard facility is not a stock loan in the securities-lending sense, where title passes to a borrower who may on-lend or short the line. Here the shares are pledged and remain the holder’s throughout, as the comparison of Lombard, margin, and stock-loan structures sets out.
| Listing venue(s) | B3 (Brasil, Bolsa, Balcão) |
|---|---|
| Regulator | Comissão de Valores Mobiliários (CVM) |
| Currency | BRL (cross-currency available) |
| Disclosure threshold | Substantial-holding disclosure at 5% |
| Principal indices | Ibovespa, IBrX 50 |
| Indicative tenor | 12–36 months, renewable by agreement |
| Recourse | Non-recourse / limited-recourse / full-recourse |
Detail by listing venue
B3 (Brasil, Bolsa, Balcão) has a page of its own, setting out how securities-backed credit is arranged against shares admitted there: the disclosure regime, the settlement and custody chain, the eligible segments, and the currency in which a loan against shares is normally drawn.
- Lombard loans against B3-listed shares — B3 (Brasil, Bolsa, Balcão), São Paulo. Regulated under the CVM regime, with disclosure at 5%; indices Ibovespa, IBrX 50.
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On this market, specifically.
The market and its listed universe
B3 is Brazil’s sole securities exchange, formed from the 2017 merger of BM&FBOVESPA and CETIP, and it carries equities, derivatives and fixed income on a single platform. The Ibovespa is the headline benchmark, with the IBrX 50 and the small-cap SMLL index beneath it.
Two structural features shape any loan against listed shares in Brazil. Listings sit in governance tiers — Novo Mercado, Nível 2, Nível 1 and the traditional segment — each carrying its own free-float and voting commitments; and outside Novo Mercado the legacy split between voting ordinary shares and non-voting preferred shares persists, sometimes bundled into units. Control is concentrated, with family blocks, state-linked vehicles and foundations sitting on many registers.
Who borrows against listed shares here
The typical concentrated Brazilian holder is a controlling family: the founding generation of an industrial, retail, agribusiness or financial group, holding through a layered vehicle and often bound by a shareholders’ agreement with cousins and in-laws. Alongside them sit founders from the 2020 and 2021 listing wave, private-equity sponsors holding post-IPO stakes, and state-linked institutional holders. What they share is a reluctance to sell down.
A control-block disposal engages the tag-along rights that the Corporations Law and the Novo Mercado rules attach to a change of control, invites a governance fight, and converts a hard-currency-linked asset into taxable domestic cash. Share-backed financing keeps the block intact while liquidity is raised against it.
Disclosure and regulation
Under CVM Resolution 44, a holder whose direct or indirect stake rises or falls through 5%, 10%, 15% or any further multiple of 5% of a class must inform the company immediately, and the company’s investor relations officer passes the notice to the CVM and B3 (Art. 12). A substantial holder in a B3-listed company therefore operates within a defined disclosure perimeter.
The nuance in Brazil is governance: a company in the Novo Mercado tier carries one-share-one-vote and full free-float commitments, which shape how much of a controlling-shareholder line is genuinely available to pledge and how enforcement would interact with that free float. A Lombard credit is arranged with the issuer’s listing tier and the CVM reporting threshold both in view, keeping the client’s disclosed position intact.
The legal form of the security
Brazilian practice offers two distinct instruments, the penhor de ações and the alienação fiduciária em garantia, and the choice matters. A penhor de ações is a true pledge under the Civil Code and the Corporations Law: the client remains owner and the pledge takes effect by registration against the shares in the issuer’s or depositary’s records.
An alienação fiduciária em garantia instead transfers resolvable title to the creditor, who returns it when the debt is paid — usually a stronger position in insolvency, but a transfer of ownership the client should understand before agreeing. Enforcement routes, and the availability of an out-of-court sale, differ between the two and depend heavily on drafting. Put the choice and the enforcement path to Brazilian counsel at the outset.
Custody and how security is taken
Brazilian listed shares are dematerialised and nominative, held through the Central Depositária da B3, which absorbed the former CBLC clearing structure; each issuer also appoints a bookkeeping institution that maintains its share register. Because the shares are book-entry and registered rather than bearer, a security interest is made visible in those records rather than by delivering paper.
In practice a pledge over listed shares is annotated against the client’s position in the depository and registrar records, so the encumbrance is recorded while beneficial ownership stays put. The mechanics differ depending on whether the parties use a pledge or a fiduciary transfer, and non-resident account structures add a further layer worth mapping with local counsel.
Currency and cross-border considerations
The Brazilian real is not freely convertible offshore. There is no deliverable BRL market outside Brazil, every conversion runs through an institution authorised to deal in foreign exchange, and the transaction must be documented against an underlying purpose.
Non-resident portfolio investment enters through the regime long known by its CMN Resolution 4,373 shorthand, since consolidated: the investor appoints a local representative, a custodian and a tax representative and registers with the CVM and the central bank, and it is that registration which underpins later repatriation of capital and remittance of dividends. Lei 14.286 of 2021 modernised the exchange framework, but the practical point stands — registration comes first, repatriation follows it.
Tax questions to put to your adviser
Brazil charges IOF, a tax on financial operations, on foreign-exchange transactions, and the treatment of an inbound loan or a repatriation depends on how the flow is classified and for how long. IOF treatment is the first question for a Brazilian tax adviser, because it is a real cost and it can be changed by decree. Ask also how interest remitted to a non-resident lender is withheld, and whether the lender’s jurisdiction or a treaty affects the answer.
Dividend treatment has been the subject of legislative reform, so the current position on distributions, and on interest on own capital as an alternative to dividends, should be confirmed rather than assumed. There is no stamp duty on share transfers.
General information only — not tax advice. Treatment turns on your own circumstances and residence, and on law that changes.
An illustrative example
Consider a controlling shareholder of a Novo Mercado company who needs cash for an unrelated business and will not sell a share, because a control disposal would engage tag-along rights and reopen a family agreement. Security is documented in Brazil over part of the block and recorded against the position in the depository, while the shareholder keeps the votes and the dividends.
Registrations with the central bank and the exchange documentation are sequenced before drawdown so that later remittances are possible, and the tax treatment of the interest is settled at the same time. The example illustrates sequencing, not size, ratio or pricing.
Illustrative only — not an offer, a quotation, or a commitment to lend.