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AdvancedBrazilian REITs · Lesson A4.4 · Module A4

Share buybacks and the rules under debate

Module A4: Events that change the fund

10 slides~4 minquiz at the end

In this lesson

  • What the law bans and what the CVM accepted
  • The math: buying back 5% at R$ 70
  • When the cash has a better use
See the slides
Pile of shredded paper

Brazilian REITs · Lesson A4.4

Can a fund buy back its own shares?

With cheap shares, buying back and cancelling can lift book value for those who stay. The rule changed recently.

Mike Haw · Wikimedia Commons · CC BY 2.0

The rule, in three dates

From banned to allowed, with conditions

  1. 1993 · Law 8,668Banthe fund can't invest in its own shares
  2. 05/20/2025 · CVMBuyback to cancel is OKit isn't the investment the law bans
  3. 09/2026 · under reviewNew rule not out yetpublic consultation SDM 06/2025

CVM Board decision, Reg. 3280/25. Buybacks to hold in treasury were rejected.

The CVM's conditions

Buybacks, with locks

  • In the fund ruleswithout it, no buyback
  • Below book valueof the previous day
  • Cancellationrepurchased shares cease to exist
  • Up to 10%of shares in 12 months

Parameters cited in the 05/20/2025 decision (CVM Resolution 175, Annex I, art. 56). Status as of 09/15/2026.

Do the math

Buying back 5% at R$ 70, book value R$ 100

50k shares×R$ 70=R$ 3.5Mleaves the cash
R$ 100M−R$ 3.5M=R$ 96.5Mnet assets
R$ 96.5M÷950kshares=R$ 101.58book value: +1.58%

Illustrative fund: 1 million shares and R$ 100M in net assets.

Price decides

Buybacks only add value below book

At R$ 70

Book R$ 101.58

  • Those who stay gain

At R$ 100

Book R$ 100

  • Neutral

At R$ 110

Book R$ 99.47

  • Those who stay lose

Buying back 5% of shares at each price. Above book value, the CVM doesn't even allow it.

Opportunity cost

The same money has other uses

  • Buy backlifts book value, if book value is realistic
  • Pay costly debtat 14% a year, R$ 3.5M cuts R$ 490k of interest
  • Distributebecomes income in your pocket
  • Investbuy an asset that earns more

Remember this

Three takeaways

  1. Allowed, to cancelSince 05/2025 the CVM accepts buybacks for cancellation, with conditions.
  2. Below book adds valueNet assets shrink less than the share count.
  3. Not always goodUnrealistic book value or costly debt waiting make another use better.

Quick quiz · 1 of 2

Buying back and cancelling shares ABOVE book value makes book value per share…

See answer

Fall. The fund pays more per share than each one represents in net assets, so those who stay split less.

Quick quiz · 2 of 2

Book value R$ 100. The fund buys back 10% of shares at R$ 80. New book value?

See answer

(R$ 100 − R$ 8) ÷ 0.9 = R$ 102.22. Per original share, R$ 8 leaves net assets and 10% of shares disappear.

Lesson complete

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Educational content, written for learners. Not investment advice.