On Friday (13/12/2024), the Brazilian Securities and Exchange Commission ("CVM") published Joint Circular Letter No. 2/2024/CVM/SIN/SSE ("Letter"), providing additional interpretations from the Superintendence for the Supervision of Institutional Investors ("SIN") and the Superintendence for Securitization and Agribusiness ("SSE") on the provisions of CVM Resolution No. 175. The new letter complements previous letters, clarifying common doubts raised by investment fund administrators and managers.
Among the main points addressed in the letter are:
- Distribution Fee for Manager-Distributors: In cases where the manager acts as the exclusive distributor of the quotas of its funds, the provision for the attribution of a maximum distribution fee does not apply.
- Migration from a single-class fund to a multi-class structure: Reorganization via a unilateral act is possible for funds created under rules prior to CVM Resolution 175 that are adapted to a single-class or multi-class fund structure. The adaptation of fund regulations must necessarily provide for the class structure, as provided for in art. 48 of the General Part of RCVM 175.
- Creation of Classes: The possibility of creating new classes by unilateral act of the administrators is restricted to the premise that the new class will be captured by new investments, without there being any transfer of shareholders, assets, rights and obligations belonging to an already active class of the fund. Funds adapted or set up in accordance with RCVM 175, whose regulations only provide for a single class, can only be changed to provide for multiple classes by means of approval at a General Meeting.
- Financial Investment Funds (FIFs), Equity Investment Funds (FIPs) and Index Funds: The reorganization of these types of fund into subclasses, in the following cases (i) for classes regulated by previous instructions at the time of adaptation to RCVM 175; (ii) for RCVM 175 classes originating from the adaptation of stock funds; and (iii) for classes set up under the new regulations can be carried out without the need for approval at a shareholders' meeting, provided that (1) the investment conditions originally agreed with investors are maintained, such as, for example, investment/redemption/amortization criteria and the class' investment policy; and, additionally, (2) there is no increase in fees for the fund's shareholders.
- International ETFs: International ETFs are classified as a separate type of asset and are not subject to the requirements for foreign investment funds or vehicles. Local classes intended for the general public or qualified investors and which can invest up to 100% abroad must only comply with the requirements of articles 41 and 43, §1, I and II, when investing their funds in International ETFs, and the requirements of articles 43, §1, III and §2 do not apply.
- Temporary Procedures for Transformations: Guidance was provided on processes such as spin-offs and transfers of classes between funds, detailing operational steps and deadlines for compliance.
These guidelines aim to offer greater clarity and standardization to the market, guaranteeing legal and operational security for participants. To access the full letter click here.
For further information, please contact our Capital Markets team at our office(mercadodecapitais@btlaw.com.br).
