BRAZIL Law and Practice Contributed by: Ihury Bastos Pereira Darmont, Filipe Starzynski, Karyn Yoshisaki, Ariel Goldstein and Artur Marangoni Cabral Fagundes, Darmont Advogados
ment fund, and a resource manager, responsible for performing the acts necessary for the management of the fund’s asset portfolio. Under the terms of CVM Resolution No 21 of 25 Feb - ruary 2021, as amended (“Resolution No 21”), in order to be authorised to operate by the CVM, fiduciary administrators and resource managers must, among other requirements, have their headquarters in Brazil; have as part of their corporate purpose the exercise of securities portfolios management and must be regu - larly constituted and registered with a Corporate Tax - payer Identification Number; must assign responsibili - ty for securities portfolios management to one or more statutory directors authorised to perform the activity by the CVM; assign responsibility for compliance with internal rules, policies, procedures, and controls to a statutory director; must establish and maintain human and computational resources appropriate to the size and area of activity of the legal entity; and, for resource managers specifically, must assign responsibility for risk management to a statutory director. 2.9 Rules Concerning Service Providers As mentioned above, the fiduciary administrator and resource manager of an investment fund in Brazil must have their headquarters or domicile in Brazil, as appli - cable. In general, the CVM requires that investment fund ser - vice providers that perform regulated activities have their headquarters or at least a branch in Brazil and maintain a minimum structure, with internal policies and controls compatible with their size and the activi - ties they perform. Furthermore, pursuant to Resolution No 175, it is worth mentioning that such a rule assigns to the fidu - ciary administrator and the resource manager, whom it refers to as essential service providers of the invest - ment fund, the authority to hire certain service provid - ers. In this regard, the fiduciary administrator is respon - sible for hiring, among others, and depending on the type of investment fund, duly qualified and authorised third parties to provide the following services: (i) treas -
ury, control, and processing of assets; (ii) book-entry of quotas; and (iii) an independent audit. The resource manager, in its turn, is responsible for contracting, on behalf of the fund, with duly qualified and authorised third parties, the following services: (i) intermediation of transactions for the asset portfolio; (ii) distribution of quotas; (iii) investment consultancy; (iv) risk rating by a credit risk rating agency; (v) closed- class market maker; and (vi) co-management of the asset portfolio. 2.10 Anticipated Changes for Funds Resolution No 175 was published recently. Moreover, there have been several tax changes to the fund mar - ket, all equally recent, such as Law No 14,754/2023 and Brazilian Central Bank Resolution No 5,111, of 21 December 2023, which provides definitions of “Investment Entity” ( Entidade de Investimento ) and “Credit Rights” ( Direitos Creditórios ) for the purposes of interpreting and applying the provisions established in Law No 14,754/2023 regarding the application or non-application of the come-quotas regime to FIDC and FIP. In this regard, no further legal changes are expected in the near future, without prejudice to the CVM issuing new official letters containing clarifications on these rules, as it has been doing. As a rule, in Brazil there is no formal and regula - tory established figure for promoters and sponsors of investment funds. However, if they do exist, they may be predominantly Brazilian, such as local asset managers, investment banks, originators, securitisa - tion companies and incorporators, for example, with recurring participation by non-resident investors in the structures. In terms of strategy, local domiciles predominate in FIDCs and FIIs/Fiagros, while foreign sponsors appear mainly in PE/VC structures or co-investments with local asset managers. 3. Fund Managers 3.1 Origin of Promoters/Sponsors of Alternative Funds
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