CVM PUBLISHES NEW GUIDANCE ON THE RULES FOR INVESTMENTS MADE BY THE SPECIAL SOCIAL SECURITY REGIMES (RPPS)
The Superintendency of Institutional Investor Relations (SIN) of the Securities and Exchange Commission (CVM), together with the Social Security Secretariat of the Ministry of Finance (SPREV), released, on February 08, 2019, Joint Circular Letter No. 3, whose purpose is to provide guidance to market participants on the application of the new Resolution of the National Monetary Council - CMN No. 4,695 (CMN Resolution 4,695), which regulates the investments made by the Special Social Security Systems (RPPS).
The CVM deemed it necessary to reiterate that managers and administrators that do not meet the new criteria established in CMN Resolution 4695 are prohibited, in their duty of diligence, from accepting the investment of funds of quotaholders characterized as RPPS, in any capacity.
In view of this, the aforementioned letter points out that such applications include:
(i) Acquisition of quotas through the secondary market;
(ii) subscription in a new registered or exempted offering;
(iii) payment of capital for investments, coverage of fund expenses or investments of any nature;
(iv) payment in full by the quota holders themselves, even when a public offering of quotas is not characterized;
(v) contribution of resources, such as a debit note, even if earmarked
(vi) the fund managers/administrators, to cover ordinary and/or extraordinary expenses, including in funds with insufficient cash; and
(vii) any allocation of funds, in any form, directly or indirectly, and under any denomination.
The governmental agency adds that the RPPS that have signed quota subscription notices prior to the amendment of CMN Resolution 4695 "may continue to pay in funds in the funds, to the extent of the subscription made, provided that the limits and conditions set forth in the then-current wording of CMN Resolution 3922 of 2010 are met, at the time of the commitment made.
Thus, in the cases in which the RPPS has assumed subscription commitments, duly evidenced, signed prior to 11/29/2018, whose funds have not been paid in by that date, it may pay in the funds, up to the limit of the subscription commitment.
Furthermore, the CVM reiterated that the RPPS that invested in investment funds on a date prior to the publication of CMN Resolution 4,695/18, which do not comply with the provisions of said resolution, may not make new investments, under any form or denomination.
To access the full CVM/SIN/SPREV Circular Letter 03/2019, click here.
Barcellos Tucunduva Advogados law firm is available to clarify any doubts related to the matter.
