Equities: the stock market, B3, share classes and payouts

08/20/2026 •0•0

This lesson opens the equities module by explaining the shift from creditor to shareholder, the differences between common and preferred shares, tag-along rights, primary and secondary markets, the Ibovespa, shareholder payouts (dividends, JCP and bonus shares), stock splits and reverse splits, cum and ex dates, and the new tax

Written byLeon Diniz

Translated byEditorial

Revised byEditorial

For six lessons, you have been a creditor: lending to the government, banks and companies, always under an agreed compensation rule and with a set repayment date. Today, that foundation disappears. When you buy a share, you are not lending to the company: you are buying a piece of it. You become a partner.

And partners have no guarantees. There is no contracted rate, no maturity date, no R$ 1,000 at the end. There is a share of the profits -- if there are any -- and a stake in a business that can multiply in value or wither away. In this lesson, we map out this new world: the types of shares, how B3 works, and the aspect every beginner underestimates: shareholder distributions, their dates, rules and taxes -- including the tax change that took effect in 2026 and that most available materials have yet to update.

1. From creditor to partner: what really changes

The difference between buying a debenture and a share in the same company comes down to three contrasts:

Cash flows: creditors have cash flows promised by contract; partners are entitled to what is left over -- profit -- after every creditor has been paid.

Term: debt matures; a share has no maturity date. You exit whenever you want by selling it to another investor at the market price.

Queue: if the company is liquidated, shareholders are last in line -- paid after employees, taxes and all creditors (remember the subordinated debenture from Lesson 6? Shareholders rank behind even that).

In exchange for giving up guarantees, partners get what no creditor has: unlimited upside. Shareholder returns come from two sources, and remember this breakdown because it will shape the next four lessons: share-price appreciation + distributions received.

In a company's liquidation, where do shareholders rank in the payment priority order?

Answer: Last, after all creditors, including subordinated creditors -- shareholders own the residual claim: they get whatever is left in good times and nothing until everyone else has been paid in bad times. It is precisely this residual claim that explains the higher risk and higher expected return of equities.

2. Common shares, preferred shares and units: not all shares are alike

In Brazil, the same company may have more than one "class" of share -- and the last digit of its trading code, or ticker, tells you which is which:

2.1 Common shares (ON) -- ending in 3

They grant voting rights at shareholder meetings: one share, one vote in board elections, the approval of financial statements and major decisions. They are the shares for those who seek (or contest) control. Examples: PETR3, VALE3, ITUB3.

They also come with the most important protection for minority shareholders: tag-along rights. If control of the company is sold, the buyer is legally required to extend an offer to minority ON holders of at least 80% of the per-share price paid for the controlling block. It is the right to ride along in the sale -- without it, the controlling shareholder could sell at a high price while minority shareholders were left empty-handed.

2.2 Preferred shares (PN) -- ending in 4 (and 5, 6...)

They generally give up voting rights in exchange for economic preferences: priority in receiving dividends and/or capital repayments, as set out in the company's bylaws. Tag-along rights for PN shares are not legally mandatory -- they exist only if the bylaws provide for them. Examples: PETR4, ITUB4, BBDC4.

Historically, many PN shares are more liquid than the ON shares of the same company (the classic case is PETR4), which matters for investors trading volume.

2.3 Units -- ending in 11

Packages combining ON and PN shares under a single code (such as SANB11). Note: the 11 ending is also used for real estate funds and ETFs -- the number does not guarantee that it is a unit.

An investor wants voting rights at shareholder meetings and the legal minimum protection of 80% of the controlling shareholder's price in the event control is sold. They should buy...

Answer: Common shares (ending in 3) -- voting rights and the statutory 80% tag-along right are the ON package. PN shares trade voting rights for economic preferences and have tag-along rights only if the bylaws provide them.

3. Where the game takes place: primary market, secondary market and B3

3.1 Primary market: money goes into the company

This is when a company issues new shares and investors' money goes into the company's coffers: an IPO (its stock-market debut) and follow-ons (subsequent offerings). It is the direct intermediation discussed in Lesson 1 in its purest form -- the company raises capital to grow without taking on debt.

3.2 Secondary market: investors trade with one another

Everything else -- daily trading on B3 -- is the secondary market: shares change hands between investors, and not a cent goes into the company's coffers. That does not make it any less important: the secondary market provides liquidity to the primary market. No one would buy an IPO if they could not sell later.

3.3 The barometer: Ibovespa

The Ibovespa is the Brazilian stock market's main index: a theoretical portfolio of B3's most heavily traded shares, weighted essentially by the market value of shares in public circulation and reviewed every four months. When a newspaper says "the market rose 2%," this is what it means -- and it is the natural benchmark for equities, playing the role that the CDI does for fixed income.

In a primary follow-on, a company issues new shares that are acquired by investors. The proceeds from this transaction go...

Answer: Into the issuing company's coffers -- in the primary market, money goes into the company (through the issuance of new shares). When shareholders sell shares that already existed, the offering is secondary and the money goes into their pockets, not the company's.

4. Shareholder distributions: when being a partner pays

Shareholder distributions are the benefits a company pays out to its shareholders. The three that matter are:

4.1 Dividends

A portion of net income distributed in cash. In Brazil, the Corporations Law established the concept of a mandatory dividend (a percentage of profit defined in the bylaws -- if they are silent, the law sets rules that in practice lead to standards such as the well-known 25%).

And here is the update that changes the game: dividends received by individuals had been fully exempt from income tax since 1996. Under Law 15.270/2025, starting in 2026 the exemption was capped: payments of up to R$ 50,000 per month, per paying company remain exempt; above that, 10% withholding income tax applies to the total received that month from that source, withheld by the company itself (with transitional rules for profits earned through 2025 and adjustment mechanisms in the annual tax return). In practice, little changes for small investors; for major shareholders and business partners, everything has changed.

4.2 Interest on equity (JCP)

A uniquely Brazilian feature: the company compensates shareholders as if it were paying "interest" on invested capital. The key is taxation: JCP is a tax-deductible expense for the company's income tax purposes (reducing the tax it pays), while individual shareholders pay 15% withholding income tax when they receive it. Dividend: the company cannot deduct it, while shareholders are subject to the capped exemption rule. JCP: the company deducts it, while shareholders pay 15% withholding tax. That is why so many companies use both.

4.3 Stock dividends

A distribution of new shares, proportional to each shareholder's position, typically through the capitalization of reserves. You end up with more shares -- but read the next section before celebrating.

4.4 Stock splits and reverse splits: more shares, same pie

Stock split: each share becomes several (1 becomes 10), and the price adjusts in the same proportion (R$ 100 becomes R$ 10). The goal is to lower the per-share price and increase liquidity. Reverse split: the opposite -- several shares become one, typically to move the stock out of "penny stock" territory.

The key point for both exams and real life: neither creates or destroys value. Your pie does not change in size; only the number of slices changes. Anyone who "buys a split because the share became cheap" has confused unit price with value.

4.5 The calendar: cum date and ex-date

Every distribution has a record date. Those holding the shares through the cum date receive it; those buying on or after the ex-date do not -- and the share price opens lower after adjustment on the ex-date, roughly reflecting the value of the distribution. There is no free lunch: a dividend is not money that appears out of nowhere; it is money that comes out of the share price and goes into your pocket.

A company announced dividends with an ex-date of September 15. An investor who buys the shares ON September 15...

Answer: Will not receive those dividends, and the opening price will already be adjusted -- the entitlement belongs to those who held the shares through the cum date (the previous trading session). On the ex-date, the share begins trading "net" of the distribution: buying it is neither an advantage nor a loss; it simply means entering after the cutoff.

A company carried out a 1-for-5 stock split. A shareholder who owned 100 shares at R$ 50.00 each now has...

Answer: 500 shares at R$ 10.00, maintaining the same R$ 5,000.00 invested -- the split multiplies the slices and divides the price in the same proportion. The position's market value: exactly the same. More slices, same pie.

Updated exam trick question: "dividends are income-tax exempt for individuals" was true through 2025. Since 2026 (Law 15.270/2025), the exemption applies up to R$ 50,000 per month per paying company; above that, 10% is withheld at source. And JCP has never been exempt: 15% withholding income tax from the start. Be wary of outdated material -- including old civil-service exam questions.

5. And when you sell: capital gains tax

To complete the tax picture for individual shareholders under the general rules currently in effect: gains on the sale of shares are subject to 15% income tax on ordinary transactions (swing trades) and 20% on day trades (bought and sold on the same day). Ordinary sales of up to R$ 20,000 per month are tax-exempt -- the small investor's relief valve (the exemption does not apply to day trades). Calculating and paying the tax (via DARF) is the investor's own monthly responsibility, with prior losses eligible for offset under the rules.

“Creditors know how much they will receive and pray that they do. Partners do not know how much they will receive and work to make it a lot.”

- Classic contrast between debt and equity

6. Tying it all together

The key takeaways from the lesson:

A share is ownership: no guarantee, no maturity date, last in line -- in exchange for unlimited residual upside. Return = appreciation + distributions.

ON (ending in 3) = voting rights + statutory 80% tag-along rights; PN (ending in 4) = economic preferences without voting rights; units (11) = packages.

Primary market (IPO/follow-on) capitalizes the company; secondary market (trading on B3) provides liquidity among investors; the Ibovespa is the theoretical portfolio that serves as a barometer and benchmark.

Distributions: dividends (exempt up to R$ 50,000/month per source; 10% above that, since 2026), JCP (deductible for the company, 15% withholding tax), stock dividends; splits/reverse splits do not create value; those who buy on the ex-date do not receive the distribution -- it has already come out of the price.

Sale at a profit: 15% (20% for day trades), with an exemption for ordinary sales up to R$ 20,000/month.

In the next lesson, we tackle the trillion-dollar question: what is a stock WORTH? Enter the Gordon model - which, as you will see, is an old acquaintance: the present value of cash flows, as in fixed income, except with uncertain, perpetual cash flows - and the multiples the market uses every day (forward P/E!).

Classroom discussion exercise

The wise guy from the WhatsApp group. Let's think this through together.

In the "Investidores Raiz 🚀" group, cousin Jorge - who has "been making a living from the stock market for 8 months" - sent a string of voice messages containing five gems. Your group assignment: identify the error (or partial truth) in each statement and correct it technically, as if you were replying in the group.

I. "Buy PETR4 instead of PETR3; it's the same company and it's cheaper - like it's on sale."

II. "Company X's stock fell 50% yesterday, but relax: it was just a 1-for-2 split. Anyone who held it lost half their money, tough luck."

III. "Company Y announced a hefty dividend, with the ex-dividend date tomorrow. Buy TODAY at the closing auction, lock in the dividend, and sell the day after tomorrow - free money, no risk."

IV. "Dividends in Brazil are tax-exempt. They always have been and always will be; it's in the Constitution."

V. "Interest on equity and dividends are the same thing for shareholders. Companies only choose between them because of accounting fussiness."

Discussion guide: for each voice message, (a) what is wrong (or incomplete)? (b) which lesson concept corrects it? (c) is there any useful grain of truth?

Guidance for the instructor: I - A lower unit price does not mean greater value: PETR3 and PETR4 are different share classes (voting rights + statutory tag-along rights vs. preferences), with historically different liquidity and prices; "cheap" would only make sense under a value analysis (Lesson 10). II - A split does not destroy value: twice as many shares at half the price = the same equity value; the "50% drop" is a technical adjustment, not a loss. III - The strategy captures the dividend, but the share price opens lower on the ex-dividend date: the distribution "gain" is offset in the share price, leaving transaction costs and market risk across the two trading sessions - there is no free money (and the income-tax adjustment on any potential gain makes the math worse). IV - Wrong twice: it was never in the Constitution, and since 2026, Law 15,270/2025 has imposed 10% withholding tax on amounts above R$ 50,000 per month per paying company; amounts below that remain exempt - Jorge is working from 2024 material. V - They are not the same for individual shareholders: interest on equity is subject to 15% withholding tax; dividends have a capped exemption. For the company, interest on equity is deductible - the choice is legitimate tax planning, not fussiness. Closing point: every one of Jorge's gems turns a lesson concept upside down - and the class has just reviewed the entire lesson by correcting their cousin.

Exercises

1) (Original question - CESGRANRIO style) Under Brazilian law, common shares in companies listed on B3 grant their holder:

A) voting rights at general shareholders' meetings and, if control of the company is sold, the right to sell their shares for at least 80% of the per-share price paid for the controlling stake.

B) priority in receiving dividends and a full Income Tax exemption.

C) voting rights only at meetings deliberating on dividend distributions.

D) a guarantee that the company will repurchase the shares at their issue price.

E) priority in capital reimbursement, with no voting rights.

2) (Original question - CESGRANRIO style) On B3, the trading codes PETR3, PETR4, and SANB11 correspond, respectively, to:

A) common share, preferred share, and unit.

B) preferred share, common share, and ETF.

C) common share, unit, and preferred share.

D) unit, common share, and preferred share.

E) preferred share, unit, and common share.

3) (Original question - CESGRANRIO style) A transaction in which an already listed company issues new shares and directs the funds raised to its own treasury is characterized as:

A) a primary offering in the primary market.

B) a secondary offering in the secondary market.

C) regular exchange trading.

D) a share repurchase for treasury stock.

E) a reverse stock split.

4) (Original question - FGV style) A company announced dividends of R$ 2.00 per share, with an ex-dividend date set. Regarding the distribution process, it is correct to say that:

A) shareholders holding the stock through the cum-dividend date will receive the distribution, and the share price tends to open lower on the ex-dividend date.

B) investors who buy on the ex-dividend date will receive the distribution because settlement occurs later.

C) the share price tends to rise by R$ 2.00 on the ex-dividend date, reflecting the distribution.

D) the distribution is credited to anyone holding the shares on the payment date, regardless of the cum-dividend and ex-dividend dates.

E) the dividend is added to the purchase price for custody purposes.

5) (Original question - FGV style) Regarding interest on equity (JCP), it is correct to say that it:

A) is deductible when calculating the paying company's Income Tax and is subject to 15% income-tax withholding when received by an individual.

B) is income-tax exempt for individuals, like dividends of any amount.

C) cannot be paid by companies that also distribute dividends.

D) is a non-deductible expense for the company but tax-exempt for the shareholder.

E) is subject to 10% withholding tax only when it exceeds R$ 50,000 per month.

6) (Original question - CESGRANRIO style) Under Law No. 15,270/2025, from 2026 onward, profits and dividends paid by the same legal entity to the same individual resident in Brazil:

A) are subject to 10% withholding tax when they exceed R$ 50,000 in a month, while payments up to that limit remain exempt.

B) became fully exempt from Income Tax, with no limit.

C) became subject to 15% withholding tax, regardless of amount.

D) are taxed exclusively in the annual tax return, at a rate of 27.5%.

E) became subject to declining IOF tax during the first 30 days.

7) (Original question - CEBRASPE style, judge the statement) Judge the statement: "In a stock split, shareholders hold a larger number of shares at a proportionally lower unit price, so the market value of their position remains unchanged."

( ) True ( ) False

8) (Original question - CEBRASPE style, judge the statement) Judge the statement: "The Ibovespa is a theoretical portfolio made up of the most liquid and representative stocks in the Brazilian market, and appreciation in the index guarantees a minimum return equivalent to that of funds that use it as a benchmark."

( ) True ( ) False

Answer Key

1) A - The legal package attached to common shares: voting rights + 80% tag-along rights. Dividend and capital-reimbursement priority (options B and E) are the domain of preferred shares - and a full Income Tax exemption has no longer been the absolute rule since 2026.

2) A - A final 3 = common share; a final 4 = preferred share; a final 11 = unit (in SANB11's case). Keep in mind that codes ending in 11 also include real estate funds and ETFs - the number is an indicator, not a guarantee.

3) A - Issuing new shares with the proceeds going to the company's treasury = a primary offering. If shareholders were selling existing shares, it would be a secondary offering - even within a follow-on offering.

4) A - The entitlement belongs to those holding the shares through the cum-dividend date; on the ex-dividend date, the price opens net of the distribution. A dividend is not created out of thin air: it comes out of the share price and goes into your pocket.

5) A - The two signatures of interest on equity: deductible for the company, 15% withholding tax for individuals. It is exactly the inverse mirror image of a dividend - and why companies combine the two.

6) A - The new rule: exemption up to R$ 50,000 per month per paying source; above that, 10% withholding tax on that source's monthly amount, withheld by the company. The other options mix rates and regimes from other instruments.

7) True - A split multiplies the slices and divides the price in the same proportion: identical equity value. There is no gain or loss - just a more accessible share lot and, in theory, greater liquidity.

8) False - The first part is correct (a theoretical portfolio of the most actively traded stocks), but an index guarantees returns to no one: it merely measures average market performance. Equities have no minimum return - not even when the benchmark rises.

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