BRAZIL Law and Practice Contributed by: Guilherme Bueno Malouf, Luciana Costa Engelberg, Bruna Marrara and Thales Saito, Machado Meyer Advogados
3.3.3 Local Regulatory Requirements for Non- Local Managers Please see 2.3.2 Requirements for Non-local Service Providers . 3.3.4 Regulatory Approval Process Please see 3.1.2 Common Process for Setting Up Investment Funds . 3.3.5 Rules Concerning Pre-Marketing of Retail Funds Please see 2.3.5 Rules Concerning Pre-market- ing of Alternative Funds for more information. 3.3.6 Rules Concerning Marketing of Retail Funds Please see 2.3.6 Rules Concerning Marketing of Alternative Funds . 3.3.7 Marketing of Retail Funds Please see 3.2.3 Restrictions on Investors . 3.3.8 Marketing Authorisation/Notification Process Please see 2.3.8 Marketing Authorisation/Noti- fication Process for more information. 3.3.9 Post-Marketing Ongoing Requirements Please see 2.3.9 Post-marketing Ongoing Requirements for more information. 3.3.10 Investor Protection Rules Please see 3.2.3 Restrictions on Investors and 2.3.10 Investor Protection Rules . 3.3.11 Approach of the Regulator Please see 2.3.11 Approach of the Regulator . 3.4 Operational Requirements As described in 3.1.1 Fund Structures , each retail fund is allowed to invest in certain types of assets.
Like alternative funds, retail funds must also engage a custodian, which shall be an entity duly authorised by CVM. Upon becoming quota holders, all investors must confirm, through the formalisation of an adhesion and risk acknowledgement term, that they had access to the entire content of the by- laws and the essential information sheet, if appli - cable, and that they are aware of the risk factors related to the fund. The administrator and the asset manager are not allowed to borrow or grant loans on behalf of the fund, except in cases authorised by CVM or specific cases set forth in the regulations. Investment funds may use their assets to pro - vide guarantees for their own operations, as well as lend and borrow financial assets, provided such loan operations are processed exclusively through services authorised by the Brazilian Central Bank or CVM. The fiduciary administrator is required to have a manual regarding its valuation practices for both liquid and illiquid assets available on its website. Also, all investment funds must follow interna- tional accounting standards. ETFs may carry out lending transactions with respect to the securities of the portfolio in the manner regulated by CVM and in accordance with the limits and conditions set forth in the ETF’s by-laws. Resolution CVM 175 sets forth the possibility of the manager/administrator borrowing to cover for negative equity of a class of quotas. 3.5 Fund Finance Please see 3.4 Operational Requirements .
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