BRAZIL Law and Practice Contributed by: Ihury Bastos Pereira Darmont, Filipe Starzynski, Karyn Yoshisaki, Ariel Goldstein and Artur Marangoni Cabral Fagundes, Darmont Advogados
3.7 Outsourcing of Investment Functions/ Business Operations In Brazil, asset managers cannot outsource their duties to the fund. What may occur is the existence of a co-manager in the fund’s structure and, if this is the case, the contract must clearly define the duties of each asset manager, including, at a minimum, the specific market in which each asset manager operates and the class or classes of shares subject to co-man - agement, in accordance with CVM Resolution No 175. On the other hand, CVM Resolution No 175 estab - lishes that asset managers must hire, on behalf of the fund, third parties duly qualified and authorised to provide the following services: (i) intermediation of transactions for the asset portfolio; (ii) distribution of shares; (iii) investment consulting; (iv) risk rating by a credit rating agency; v) closed-end market making; and (vi) co-management of the asset portfolio. 3.8 Local Substance Requirements This is a regulated activity that requires accreditation and authorisation from the Brazilian Securities and Exchange Commission to be performed. Fiduciary administrators and asset managers must comply with CVM Resolution No 21, which provides for the professional exercise of managing investment funds, an activity which is divided into two categories: fiduciary administration and asset management. Asset managers are legally responsible for investment decisions, for defining fund limits, and for hiring ser - vices such as distribution of quotas, investment con - sultancy, and risk rating by a credit risk rating agency, among others. The fiduciary administrator is respon - sible for the fund’s administrative activities, such as accounting, including treasury, control, and process - ing of assets. Both the fiduciary administrator and the asset man - ager must be headquartered in Brazil and are subject to minimum requirements regarding infrastructure, human resources, internal controls, segregation, Chi - nese Wall rules, and information disclosure, among others.
There is no specific minimum capital/equity require - ment for asset managers. 3.9 Change of Control In Brazil, mergers, sales, restructurings or changes of control involving the asset manager (or its parent company) do not, as a rule, require prior approval by the CVM, but they do impose updating and disclosure obligations, and the asset manager must maintain a public page with an updated Reference Form and reflect relevant corporate events (mergers, changes in control, etc), to the extent that they are public. On the other hand, in the case of ANBIMA, when mergers, sales, restructurings or changes of control involving the asset manager occur, the asset man - ager must apply for a new membership with ANBIMA, which will request all relevant documents for the appli - cation in order to assess whether the change will pose any risk to the continuity of the company’s activities. On the fund side, the replacement of the asset man - ager or changes to the regulations normally depend on approval at a shareholders’ meeting, subject to the quorums and exceptions provided for in CVM Reso - lution No 175. In addition, material facts related to the operation of the fund must be disclosed to quota holders and on the CVM website, and the administra - tor must maintain an updated list of service providers (including the asset manager) with the CVM. 3.10 AI and Use of Data In Brazil, there is no “special AI” rule for asset manag - ers. However, the use of artificial intelligence, predic - tive models, and big data must comply with the guide - lines provided by CVM and ANBIMA on the subject, as well as Law No 13.709 - Lei Geral de Proteção de Dados . 3.11 Anticipated Changes for Fund Managers There are none at present. 4. Investors 4.1 Types of Investors in Alternative Funds In Brazil, the appetite for alternative investments remains strong, driven by the search for risk premiums
45 CHAMBERS.COM
Powered by FlippingBook