BRAZIL LAW AND PRACTICE Contributed by: Alan Campos Elias Thomaz, Juliana Sene Ikeda, Ricardo Barretto Ferreira da Silva and Camila Sabino Del Sasso, Campos Thomaz Advogados
diversify sources of capital, reduce exposure to bank credit and access longer-term funding. Corporate debt issuance through debentures, com - mercial notes and structured credit funds (such as fundos de investimento em direitos creditórios FIDCs) has grown in volume and complexity, supported by a maturing institutional investor base and international participation. The equity market also plays an essential role, with initial public offerings and follow-on offerings attracting both domestic and foreign investors dur - ing favourable market cycles. In addition to traditional instruments, private equity funds ( fundos de investi- mento em participações FIPs) and real estate funds ( fundos de investimento imobiliário FIIs) continue to drive capital formation in the infrastructure, energy and technology sectors. A key regulatory milestone was the enactment of CVM Resolution 175/2023 (ICVM 175), which overhauled the rules governing investment funds in Brazil. The reform consolidated and modernised previous regula - tions, introducing greater flexibility in fund structures, clearer segregation of liability among quota classes and better governance standards. Alongside recent initiatives by CVM and B3 to enhance ESG disclosure and corporate governance, this reform underscores Brazil’s continued progress towards transparency, investor protection and international integration. 5.2 Securities Regulation The regulation of securities in Brazil is primarily grounded in the Corporation Law and the Capital Markets Law (Law No 6,385/1976), which created the CVM as an autonomous regulatory authority. The CVM supervises issuers, intermediaries, investment funds and market participants, ensuring transparency, integrity and fair competition across all capital market activities. Listed companies must comply with strict disclosure and reporting rules covering financial statements, material facts and changes in ownership or control. Trading based on privileged information, market manipulation and non-disclosure of relevant events is subject to administrative sanctions. Enhanced gov - ernance requirements under B3’s Novo Mercado and Level 2 listing segments also require companies to
maintain independent directors and equal rights in tender offers, among other protections. Foreign investors are allowed full access to the Brazil - ian capital markets but must observe certain registra - tion and reporting requirements. Every non-resident investor must (i) appoint a local representative and custodian, (ii) register the investment with BACEN through the electronic foreign investment system, and (iii) open a dedicated foreign-investor account for foreign-exchange and tax purposes. These registrations serve mainly to facilitate taxation, currency conversion and repatriation of funds, and do not constitute prior regulatory approval. However, foreign investors are subject to the same disclosure, ownership and market conduct rules as domestic investors. Foreign portfolio investors are also required to comply with Brazil’s anti-money laundering (AML) and ultimate beneficial ownership disclosure stand - ards, and must ensure that all transactions are execut - ed through authorised intermediaries operating under CVM and B3 oversight. Together, these requirements aim to balance market openness with investor accountability, allowing full participation by foreign investors while safeguarding transparency and stability in Brazil’s capital markets. 5.3 Investment Funds Foreign investors structured as investment funds may freely invest in Brazilian securities or acquire equity in local companies, provided they comply with regis - tration and reporting obligations before the CVM and BACEN. The main regulatory framework governing such entities is CVM Resolution 175/2023, which uni - fied and modernised the treatment of all fund catego - ries, including private equity (FIPs), real estate (FIIs), and receivables funds (FIDCs). Foreign funds are not required to obtain prior authori - sation to make FDI in Brazil, but they must appoint a local representative and custodian and register their positions under the appropriate system – RDE-IED for equity participation and RDE-Portfolio for securities transactions.
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