News

NOTICE TO THE SHAREHOLDERS

SHARE CAPITAL INCREASE WITHIN THE AUTHORIZED CAPITAL LIMIT

Brasil Brokers Participações S.A. ("Company"), a publicly-held company with common shares traded in the Novo Mercado of B3 under code BBRK3, pursuant to Article 30, Item XXXII of CVM Instruction No. 480/09 ("IN 480") and CVM Instruction No. 358/02 ("IN 358"), in compliance with the guidelines set forth in the Official Letter/CVM/SEP/No. 02/2018, through this Notice to the Shareholders, announces the following to its shareholders and to the market in general:

1. The issuer must disclose to the market the amount of the increase and the new share capital, and whether the increase will be carried out through: (i) the conversion of debentures or other debt securities into shares; (ii) the exercise of the subscription rights or of the subscription bonus; (iii) the capitalization of profits or reserves; or (iv) the subscription of new shares.

The Company‘s Board of Directors, in a meeting held on this date, approved the capital increase, within the capital limit authorized, as set forth in Article 5, Paragraph 2 of the Company‘s Bylaws. The capital increase will be up to sixty-seven million, seven hundred and twenty-five thousand, seven hundred and forty-seven reais and ninety-two centavos (R$67,725,747.92), going from the current six hundred and three million, six hundred and sixty-two thousand, sixty reais and ninety-three cents (R$603,662,060.93) to six hundred and seventy-one million, three hundred and eighty-seven thousand, eight hundred and eight reais and eighty-five cents (R$671,387,808.85), through the private issue of up to one hundred and forty-four million, three hundred and ninety-seven thousand, three hundred and thirty-six (144,097,336) new common shares, all registered, book-entry and with no par value ("Capital Increase"). Thus, the share capital will go from two hundred and fifty-five million, nine hundred and two thousand, six hundred and sixty-four (R$255,902,664) shares to up to four hundred million (400,000,000) common shares, all registered, book-entry and with no par value. The payment of the new shares will be made in cash, in Brazilian currency, at the subscription.

Pursuant to Article 170, Paragraph 1, Item III of Law 6404/76 ("Brazilian Corporations Law"), the price per share for the subscription of the new shares will be of forty-seven cents (R$0.47) based on the price of the Company‘s shares traded on B3 today, May 11, 2018, with a discount of 10% (ten per cent), to make the offer attractive and enable the subscription of all the shares under the Capital Increase.

If at least eighty-five million, one hundred and six thousand, three hundred and eighty-three (85,106,383) new shares are subscribed, the partial capital increase will be approved, which will correspond to a minimum increase of forty million reais and one cent (R$40,000,000.01) ("Minimum Subscription"). In this case, the Company‘s share capital will be of six hundred and forty-three million, six hundred and sixty-two thousand, sixty reais and ninety-four cents (R$643,662,060.94), divided into three hundred and thirty- and forty-one million, nine thousand and forty-seven (341,009,047) common shares, all registered, book-entry and with no par value.

2. The issuer must detail the reasons for the increase and its legal and economic consequences.

The funds raised will be used in the equalization of the Company’s judicial liabilities, especially the payment of convictions in labor lawsuits filed by former real estate brokers. After the successful subscription of the new shares, the Company will be better positioned to take advantage of the opportunities to conclude the proceedings with losses already recognized, before final judicial enforcement.

Part of the proceeds will also be used in investments to improve the operations of the real estate subsidiaries of the Company, especially those related to technology, market intelligence and customer experience improvement.

The option to capitalize through the subscription of new shares was considered the best alternative by the Company‘s Management, given its current equity structure.

3. The issuer must provide a copy of the Fiscal Council‘s legal opinion, if applicable.

Currently the Company does not have a Fiscal Council installed.

4. In case of capital increase through the subscription of shares, the issuer must:

(i) Describe the allocation of the proceeds.

The proceeds from the Capital Increase will be use (a) to strengthen the Company’s cash position; (b) in the equalization of judicial liabilities, especially in labor lawsuits; and (c) investments focused in improving the operations.

(ii) State the number of shares issued of each type and class.

A maximum of one hundred and forty-four million, ninety-seven thousand, three hundred and thirty-six (144,097,336) and a minimum of eighty-five million, one hundred and six thousand, three hundred and eighty-three (85,106,383) new shares will be issued, all of them common, book-entry, registered and with no par value.

(iii) Describe the rights, advantages and restrictions attributed to the shares to be issued.

All new shares subscribed because of the Capital Increase will be entitled to the same rights, advantages and restrictions of the current shares of the Company‘s share capital. The new shares will have equal conditions in all the benefits to be distributed, including dividends, interest on equity and other capital remunerations, and will be entitled to one vote per common share at the shareholders‘ meetings of the Company.

(iv) State if the related parties, as established in the accounting rules addressing this matter, will subscribe shares in the capital increase, specifying the respective amounts when such amounts are already known.

The members of the Board of Directors Sidney Breyer, Luis Henrique de Moura Gonçalves, Guilherme Aché and Eduardo Marques, through the investment vehicles that they represent, as well as the Chief Executive Officer, Claudio Kawa Hermolin ("Management") undertook to subscribe and pay, in national currency, a minimum amount of eighty-five million, one hundred and six thousand, three hundred and eighty-three (85,106,383) new shares, for the total amount of forty million one cent (R$40,000,000.01), equivalent to the Minimum Subscription.

The Management‘s commitment to subscribe for and pay for the new shares is one hundred and thirty-three percent (133.25%) higher than the number of shares entitled to them by their preemptive rights.

The other related parties that hold shares in the Company, up to the moment, have not manifested themselves regarding the subscription of the shares they will be entitled to in the Capital Increase.

(v) State the issue price of the new shares.

As detailed in item 1 above, the issue price of the new shares will be of forty-seven cents (R$0.47), established without undue dilution of the shareholding of the current shareholders, pursuant to Article 170, Paragraph 1, Item III of the Brazilian Corporations Law.

(vi) State the par value of the shares issued or, in the case of shares with no par value, the portion of the issue price to be allocated to the capital reserve.

All shares issued because of the Capital Increase will not have a par value and all the proceeds will be allocated to the Company‘s share capital, with no allocation to the capital reserve.

(vii) Provide the Management‘s opinion on the effects of the capital increase, especially concerning the dilution caused by the increase.

In 2015, when the Company’s sales and results started to show a sharp decrease, the number of labor lawsuits filed by real estate brokers has skyrocketed. In 2016, this situation grew worse and, only in 2017, the volume of new lawsuits started to slow down. While in 2015 and 2016 the Company had, on average, 22 new lawsuits per month, this number fell to 17 in 2017. In the first quarter of 2018, the average was of 6 lawsuits per month. These figures indicate that there is a clear decreasing trend in the number of labor lawsuits filed against Brasil Brokers. However, part of the ongoing proceedings will generate losses to the Company. With greater availability, the Company will be able to pay these expenses and will also benefit from negotiations in cases with losses already recognized, minimizing the impact through the early payment, before the judicial enforcement. Given the volume of judicial contingencies with provisions in the financial statements, the estimated payment flow of convictions and the Company’s income estimate, the Management considers that the capitalization of up to sixty-seven million, seven hundred and twenty-five thousand, seven hundred and forty-seven reais and ninety-two cents (R$67,725,747.92) is adequate for a proper capital structure.

Improving the Company’s positions is also a priority, to be positioned not only to meet to the gradual resumption of the real estate market, but mainly to be an intermediary that generates value to the real estate businesses in which it operates. The Management understand that, to this end, it is necessary to invest in the operational improvement, adding more technology and market intelligence to the services, to increase the customer’s delight with the experience.

The Company‘s Management does not foresee any dilution of the shareholders due to the Capital Increase, which was the main premise for the price established per share under the offer.

If the shareholders exercise their right to subscribe for new common shares, registered, book-entry and with no par value, in proportion to their shareholding in the Company‘s share capital, their interests in the Company‘s capital will not be diluted and they will continue to enjoy the political and economic rights granted by the shares owned by them.

If the shareholders do not exercise their right to subscription and transfer their preemptive rights to a third party, as allowed by Paragraph 6 of Article 171 of the Brazilian Corporations Law, the shareholders will have their political rights diluted in proportion to the shares subscribed by the third parties, but their economic rights will or not be diluted to the extent of the amount to be paid to the said shareholder by the third party, through the transfer of the preemptive right.

However, shareholders who do not exercise their preemptive rights in the subscription of the new shares of the Capital Increase and do not transfer their preemptive right to third parties, their political and economic shareholding in the Company‘s share capital will be diluted. However, this dilution will not be unjustified and will be based on the terms and conditions of the Capital Increase.

(viii) State the criteria used to calculate the issue price and justify in detail the economic aspects that determined its choice.

The criterion used to establish the issue price of the new shares in forty-seven cents (R$0.47) was based on the price of the Company‘s shares traded on B3 today, May 11, 2018, with an additional discount of 10% (ten per cent), as set forth in Article 170, Paragraph 1, Item III of the Brazilian Corporation Law.

Among the alternatives provided for in Article 170, Paragraph 1 of the Brazilian Corporations Law, the Company understands that the price on the stock exchange is the best representation of the price that the investors are willing to pay for the Company‘s shares.

The goal of the discount is making this an attractive deal in comparison to the several other investment opportunities available, to encourage the largest possible number of shareholders to adhere to the Capital Increase.

According to CVM Instruction No. RJ2010/16884, the definition of the price to issue the shares considered the higher value amount believed to allow the subscription of all the shares under the Capital Increase. Thus, it was considered similar transactions carried out by other companies, the current challenges of the Company and of the real estate market, as well as the current political and macroeconomic scenario of the country, so that as many shareholders as possible are attracted to participate in the Capital increase.

Given the liquidity of the Company‘s shares and its current base os shareholders, the Management understands that the discount of ten per cent (10%) is adequate to encourage the subscription of the Capital Increase and maximize the Company‘s funding.

(ix) If the issue price has been established at a premium or discount in relation to the market value, identify the reason for the premium or discount and explain how it was established.

To encourage the largest possible number of shareholders to adhere to the Capital Increase, the issue price of the share was set at a discount of ten per cent (10%) in relation to the closing price of the shares of the Company traded at B3 today, May 11, 2018.

Considering the political and macroeconomic moment of the country, the recent public data of the real estate market, the financial situation of the Company, the liquidity of its shares and its current shareholder‘s base, the Management understood that a discount of ten per cent (10%) was adequate to encourage the subscription of all shares under the Capital Increase, maximizing the Company’s funding.

(x) Provide a copy of all reports and studies that supported the definition of the issue price.

Not applicable.

(xi) State the price of each of the types and classes of the issuer‘s shares in the markets in which they are traded, identifying:

(a) Minimum, average and maximum price of each year, for the last 3 (three) years.

(b) Minimum, average and maximum price of each quarter, for the last 2 (two) years.

(c) Minimum, average and maximum price of each month, for the last 6 (six) months.

(d) Average price over the last 90 (ninety) days.

The average price over the last 90 days is of sixty-five cents (R$0.65) considering the period between February 10, 2018 and May 11, 2018, including this date.

(xii) State the issue price of the shares in capital increases carried out in the last three (3) years.

Issue of seventy million (70,000,000) shares, as approved at the Board of Directors’ Meeting, held on June 13, 2017, at the issue price of one real and eleven cents (R$1.11).

(xiii) Present the potential percentage of dilution resulting from the issue.

The maximum percentage of dilution for the shareholders who do not subscribe to any new share under the Capital Increase will be of 36.76%, considering the approval of the total amount of the Capital Increase - sixty-seven million, seven hundred and twenty-five thousand, seven hundred and forty-seven reais and ninety-two cents (R$67,725,747.92).

The minimum percentage of dilution for the shareholders who do not subscribe to any new share under the Capital Increase will be of 25.55%, considering the approval of the Capital Increase with the Minimum Subscription - forty million real and one cent (R$40,000,000.01).

The tables below show the maximum and minimum percentages of dilution:

(xiv) State the terms, conditions and method of subscription and payment of the shares issued.

Pursuant to Article 171 of the Brazilian Corporations Law, all shareholders who of the Company on May 18, 2018 will have a period of thirty (30) days to exercise their preemptive rights to subscribe the shares resulting from the Capital Increase, starting on May 21, 2018 and ending on June 19, 2018, including this date ("Subscription Period").

The shareholders who choose to exercise their preemptive right at the book-entry level, must do so by signing a subscription form, according to the template provided by Banco Itaú S.A., the financial institution responsible for the custody services of the Company, and submitting the documents described in item 5 of this Notice to the Shareholders in specialized agencies.

Shareholders who choose to exercise their preemptive rights through the custodian agents of the holders of subscription rights at the Central Depository of Assets of B3 ("Central Depository") must comply with the operating procedures, deadlines and rules stipulated by B3.

(xv) State if the shareholders will have preemptive rights to subscribe the new shares issued and detail the terms and conditions to which this right is subject.

Pursuant to Article 171 of the Brazilian Corporation Law, the Company‘s shareholders will have preemptive rights in the subscription of the new shares to be issued under the Capital Increase, in proportion to their shareholding in the Company on June 19, 2017, observing the trade carried out up to and including this day.

If considered the maximum amount of the Capital Increase, each existing common share will give its holder the right to subscribe up to 0.5812040359 new registered common shares, with no par value, so all shareholders may subscribe new shares representing 58.12% of the number of shares held on May 18, 2018.

From May 21, 2018, including this date, the shares issued by the Company will be traded "ex-rights" of subscription.

Pursuant to Article 171, Paragraph 6 of the Brazilian Corporations Law, shareholders entitled to preemptive rights in the Capital Increase may freely transfer these rights to third parties.

Holders of shares issued by the Company deposited in the book-entry scope may trade their preemptive rights in the Capital Increase (which includes the right to subscribe shares remaining unsubscribed), through signing a transfer form, pursuant to the Template provided by Banco Itaú S.A., a financial institution responsible for the custody services of the Company, and submitting the documents described in item 5 of this Notice to the Shareholders in specialized agencies.

Holders of shares issued by the Company deposited in B3‘s Central Depository of Assets may trade their preemptive rights in the Capital Increase (which includes the right to subscribe shares remaining unsubscribed) at B3, under the code BBRK1, through its respective custody agents, observing the procedures and terms of the Central Depository of Assets and their respective custody agents.

The fractions arising from the exercise of the preemptive rights will be disregarded.

(xvi) State the management‘s proposal for the treatment of any shares remaining unsubscribed.

After the conclusion of the Subscription Period, if there is any number of shares remaining unsubscribed, even if the Minimum Subscription has already been reached, a Notice to the Shareholders will be issued on the opening of a period of five (5) business days for the subscription and apportionment of any shares remaining unsubscribed.

The subscriber must, at the time of subscription, request the reservation of any shares remaining unsubscribed during the period to exercise the preemptive right. The subscriber that requires the reservation of the shares remaining unsubscribed may subscribe the shares remaining unsubscribed, pursuant to Article 171, Paragraph 7, Item "b" of the Brazilian Corporations Law, pursuant to the following formula ("First Apportionment"):

TS = As * (S/TAs)

Where:

TS means the total amount of the shares remaining unsubscribed that may be subscribed by the subscriber.

As means the number of shares effectively subscribed by the subscriber during the Period for the Exercise of the Preemptive Rights.

S means the total amount of shares remaining unsubscribed available for subscription.

TAs means the total amount of shares effectively subscribed during the Period for the Exercise of the Preemptive Rights, by all subscribers who have requested the reservation of the shares remaining unsubscribed.


In addition to the number of shares remaining unsubscribed to which the subscriber is entitled, calculated in proportion to the preemptive rights exercised, pursuant to Article 171, Paragraph 7, Item "b" of the Brazilian Corporation Law, the subscriber may, when subscribing to unsubscribed shares in the First Apportionment, request an additional number of shares ("Second Apportionment"), limited to the number of shares available. Thus, the number of shares subscribed during the period for the subscription of the remaining unsubscribed shares may be even higher than the amount of remaining unsubscribed shares that each shareholder will be entitled up to the limit of the available remaining unsubscribed shares.

If, during the Second Apportionment, the number of requests exceeds the total amount of unsubscribed shares, a proportional apportionment will be carried between the subscribers interested in the shares remaining unsubscribed, pursuant to Article 171, Paragraph 7, Item "b" of the Brazilian Corporations Law. The proportion of shares remaining unsubscribed to be allocated in the apportionment will be calculated by multiplying (i) the number of shares effectively subscribed by the subscriber during the period for the exercise of the preemptive rights and during the First Apportionment by the (ii) number resulting from the division of◉(a) the total number of shares remaining unsubscribed available for subscription by the (b) total number of shares effectively subscribed during the period for the exercise of the preemptive rights and during the First Apportionment by all subscribers that are still interested in the shares remaining unsubscribed, pursuant to the formula below:

TS’ = As’ * (S’/TAs’)

Where:

TS′ means the total amount of shares remaining unsubscribed that may be subscribed by the subscriber.

As means the number of shares effectively subscribed by the subscriber during the Period for the Exercise of the Preemptive Rights and during the First Apportionment.

S means the total amount of shares remaining unsubscribed available for subscription.

TAs′ means the total amount of shares effectively subscribed during the period for the exercise of the preemptive rights and during the First Apportionment, by all subscribers who are still interested in the subscription of the shares remaining unsubscribed.

The subscription right for the remaining unsubscribed shares may not be traded, sold or transferred.

Given the possibility of approving the capital increase partially subscribed and considering that the Management has assured the Minimum Subscription, at the end of the Second Apportionment, it will not be carried out the auction for the remaining shares provided for by Article 171, Paragraph 7, Item "b" of the Brazilian Corporations Law.

(xvii) Detail the procedures that will be adopted if the partial approval of the capital increase is allowed.

Once the Minimum Subscription has been reached and after concluded the round for subscribing shares unsubscribed by the subscribers who request a reservation of the shares remaining unsubscribed at the time of the subscription, according to the procedure described in item (xvi) above, a Meeting of the Board of Directors will be held to approve the Capital Increase, even if partially subscribed, without the need to amend or change the Company‘s Bylaws.

Considering that the Capital Increase may be approved, even if partially subscribed, as long as the Minimum Subscription is reached, the subscriber, pursuant to Article 31 of CVM Instruction No. 400/03 ("IN 400"), may, at the time of subscription, restrict its subscription to (i) the subscription of all shares under the Capital Increase; or (ii) a proportion or minimum amount of shares under the Capital Increase, established at the subscriber‘s own discretion, but that may not be lower than the Minimum Subscription.

According to Article 31, Paragraph 1 of IN 400, the subscriber who restricts its subscription under the terms of item (ii) above, must, at the time of acceptance, indicate whether, if the expected condition is met, it wants to receive all the shares subscribed or the amount equivalent to the proportion of the total amount of shares effectively subscribed and the number of shares originally offered in the Capital Increase, assuming that, in the absence of such indication, the subscriber is interested in receiving all the shares subscribed.

Up until the approval of the Capital Increase, it will not be possible to trade the subscription receipts of subscribers who have exercised the restricted subscription under the terms set forth above. The Company will not be responsible for any losses arising from the trade of such receipts, since they are subject to future and eventual conditions.

Considering that the subscribers will be allowed to restrict their subscription of the Capital Increase by stating this in the fields included in the subscription form, it will not be granted an additional period for the withdrawal of the investment decision after the end of the rounds of shares remaining unsubscribed, even if the Capital Increase has been partially subscribed.

Accordingly, once the Minimum Subscription has been reached and a round for subscription of shares unsubscribed has been concluded, the Company‘s Board of Directors shall approve the Capital Increase, within the limit authorized by Article 5, Paragraph 2 of the Company‘s Bylaws.

(xviii) If the issue price of the shares is wholly or partially paid in goods.

Not applicable.

5. Documentation for the subscription of shares and transfer of rights to shareholders under the book-entry scope.

(a) Individuals. Identity Card, Individual Taxpayer‘s Registry of the Ministry of Finance (CPF/MF) and proof of address.
(b) Legal Entity. A simple copy of the articles of incorporation or bylaws and the minutes of the meeting or shareholders‘ meeting that elected the members of the Board of Directors, duly filed at the Trade Board or at the Registry of Legal Entities, and proof of address.
(c) Representation. If represented by proxy, it will be necessary to present the respective power of attorney granting authority with a recognized signature.
For questions or further information from the Bookkeeping Agent:

Phones:
3003-9285 (capital and metropolitan areas)
0800 7209285 (other locations)

The service hours are on weekdays from 9 a.m. to 6 p.m.

Specialized Itaú Agencies:
Belo Horizonte: Av. João Pinheiro, 195 - Subsolo - Centro
Rio de Janeiro: Av. Almirante Barroso, 52- 2º andar - Centro
São Paulo: R. Boa Vista, 176 - 1º Subsolo - Centro
Salvador: Av. Estados Unidos, 50 - 2º andar - Comércio

6. Additional Information

Additional information on the Capital Increase may be found at CVM‘s website (www.cvm.gov.br), at B3‘s website (www.b3.com.br), at Itaú‘s website (www.itau.com.br/securitiesservices/investidores/) or at the Investor Relations Department of the Company, through the email address ri@brbrokers.com.br.

Rio de Janeiro, May 11, 2018.