BRAZIL Law and Practice Contributed by: Ihury Bastos Pereira Darmont, Filipe Starzynski, Karyn Yoshisaki, Ariel Goldstein and Artur Marangoni Cabral Fagundes, Darmont Advogados
Registration of Distribution of Open- and Closed- End Funds With regard to the registration regime for fund dis - tributions, there are relevant distinctions between open-end and closed-end funds. Offers of open-end fund shares, in general, do not require prior registra - tion with the CVM. About the registration regime for public offerings of closed-end funds, CVM Resolution No 160 provides for different applicable registration modalities. Offers may be registered by means of: • automatic registration, upon filing of standardised documentation; • automatic registration with prior analysis by an entity authorised by the CVM; or • ordinary registration, with technical analysis and formal approval by the CVM itself. Initial and subsequent offerings directed exclusively to qualified or professional investors, in general, may fol - low the automatic procedure. On the other hand, initial offerings aimed at the retail public require registration with prior analysis, either by an authorised entity or by the CVM itself, as the case may be. CVM Resolution No 160 also establishes specific cas - es for exemption from registration of offers of closed- end fund shares, provided that certain conditions are met. Ongoing Obligations Applicable to Distributors Distributors are subject to various ongoing obligations throughout the distribution process, including, but not limited to: • verification of the suitability of the product to the investor’s profile, in accordance with CVM Resolu - tion No 30; • investor registration and identification procedures, as well as assessment of risks related to the pre - vention of money laundering and terrorist financing (PLD/FTP), pursuant to CVM Resolution No 50, of 31 August 2021 (“CVM Resolution No 50”); • in the case of open-ended funds, custody and fil - ing of investment orders; and • in the case of closed-ended funds offered under CVM Resolution No 160, submission to the CVM, by the fifteenth business day after the end of each
and certain Multimarket Funds that invest in alterna - tive assets in a regulated manner. With regard to institutional investors, including open supplementary pension entities (EAPCs), closed sup - plementary pension entities (EFPCs) and Special Social Security Regimes (RPPSs), although there are no general restrictions on allocation to alternative funds, the actual possibility of investment is subject to compliance with specific regulations issued by the Brazilian National Monetary Council and its respec - tive supervisory bodies (such as SUSEP and PREVIC), which impose technical, operational and governance requirements. In practice, these rules limit the scope of vehicles accessible to these entities. In summary, local investors may invest in alternative funds established in Brazil, provided that the regula - tory requirements applicable to the type of investor are met. 4.4 Rules Concerning Marketing of Alternative Funds Intermediaries Authorised to Distribute Funds The public distribution of investment fund units in Bra - zil, whether structured locally or abroad, is subject to specific regulatory rules, which require the use of intermediaries duly authorised by the CVM, such as brokerage firms and securities distributors. In addi - tion, fiduciary administrators and asset managers who do not qualify as members of the distribution system may distribute shares of the funds they administer or manage, provided they comply with CVM standards and applicable self-regulation rules. Such intermediaries must be formally contracted to perform the function of distributor, as determined by current regulations. In general, there is no prohibition on the distribution of quotas by authorised intermediaries, provided that the fund’s target audience segmentation – retail, quali - fied or professional – is respected in accordance with the fund’s regulations and applicable regulations. The offer must adhere to the investor profile, subject to the suitability regime established by CVM Resolution No 30 of 11 May 2021 (“CVM Resolution No 30”).
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