BRAZIL Law and Practice Contributed by: Guilherme Bueno Malouf, Luciana Costa Engelberg, Bruna Marrara and Thales Saito, Machado Meyer Advogados
investors, and a 12-month lock-up period will apply if they are traded to retail investors). 2.1.3 Limited Liability Liability is limited to the value of the quotas held by each investor, provided that such limitation is expressly provided in the fund’s by-laws. Other - wise, quota holders will be liable for any negative equity of the fund, meaning they could be called to invest more in the fund than their original com - mitted capital. Due to the provisions in the fund’s by-laws, the liability of quota holders is specified in the annexes for each class of quotas. As a result, a single fund can establish various classes of quotas with either unlimited or limited liability. CVM Resolution 175 also regulates the proce - dures to be observed by administrators and managers upon the verification that the net equity of a class of quotas with limited liability is negative. 2.1.4 Disclosure Requirements Pursuant to CVM regulations, investment funds must disclose a variety of information to CVM, the market or the quotaholders. Information disclosed to quota holders must be comprehensive, equitable and simultaneous. The following materials must be made available on electronic channels and the website of the administrator, the distributor (during distribution) and, if applicable, the managing entity of the organised market where the quotas are traded: • the updated fund by-laws; • an updated essential information sheet ( lâmina ), if any; • the performance history; • the voting policy; and
• a description of the applicable taxation. Any marketing materials and other information provided to investors in public offerings must be: • true, complete, consistent and not mislead - ing; • written in simple, clear, objective and concise language; and • useful for investment evaluation. The information – which must be accompanied by an indication of sources and differentiated from interpretations, opinions, projections and estimates – cannot guarantee or suggest the existence of a guarantee of future results or risk exemption for the investor. The administrator of the fund is responsible for disclosing the following: • the value per quota and the net worth of the open-ended funds (daily or at a frequency compatible with the liquidity of the fund); • a statement containing information on the fund and the quota holder (monthly or at oth - er intervals as provided in the fund’s by-laws) to each quota holder, including the balance and value of the quotas at the beginning and the end of the period; • general information about the fund, including regarding the portfolio; and • the performance statement of the fund, pur - suant to the requirement of CVM regulations. The administrator shall also submit other docu - ments to CVM and (where applicable) to quota holders and to the organised market where the quotas are admitted for trading, such as daily and monthly newsletters, quarterly and biannual statements regarding the portfolio composition and diversification, the annual accounting state -
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