CVM Resolution No. 175 published on December 23, 2022, by the Brazilian Securities Commission (CVM), is considered an important regulatory milestone in the universe of Brazilian investment funds and will come into effect on April 3, 2023.
The new normative set aims at a better systematization and unification of the rules related to investment funds, through 16 chapters, which regulate from the constitution to the liquidation of the funds. The project makes the regulation of funds compatible with the innovations introduced by Law No. 13,874/2019 (Economic Freedom Law).
The methodology of the new regulatory framework adopts a general part, with rules applicable to all categories of funds, complemented by specific provisions contained in the Normative Annexes of the Resolution. So far, the annexes deal only with Financial Investment Funds (FIF) and Receivables Investment Funds (FIDC), but the trend is that other categories of investment funds will also receive specific annexes.
Many innovations were brought by the resolution and, among them, we highlight the following:
- Segregated Patrimony
One of the innovations brought by CVM Resolution No. 175 is the possibility that investment fund regulations may provide for the existence of different classes of shares with segregated assets for each class in the same portfolio.
This option permits the gathering in the same fund of different investment strategies (it is possible that a FIF creates a class focused on stocks and another on fixed income, for example) and different shareholder profiles.
It is worth noting, however, that the creation of a new class capable of altering the tax regime of the fund or of its other classes is prohibited. This way, only share classes regulated by the same normative annex can coexist in the same portfolio.
- Limited liability of shareholders
Another highlight is the need for the regulations to provide about the liability of the shareholders, which now may be limited to the value of their subscribed shares, and the suffix “Limited Liability” should be added to the denomination of the share class that adopts this rule.
Upon joining an investment fund that opts for the unlimited liability regime, the shareholder shall certify that he is aware of the risks by signing a Term of Awareness and Assumption of Unlimited Liability, which indicates that the shareholder may respond for eventual negative equity.
- Civil Insolvency
In addition, the resolution brought to the universe of investment funds the institute of civil insolvency, applicable to classes of investment funds in which there is a limitation of liability of the shareholders.
Upon verifying that the equity of the share class is negative, the administrator must prepare a plan for the resolution of the negative equity, in conjunction with the manager, and present it to the shareholders’ meeting.
If the plan is not approved, the shareholders will have the option to (i) cover the negative equity, by means of contribution of resources, of their own or of third parties; (ii) spin off, merge or incorporate the class into another fund that has already presented a proposal analysed by the providers of essential services; (iii) liquidate the class that is with negative equity, as long as there are no remaining obligations to be honoured by its assets; or (iv) determine that the administrator file for judicial declaration of insolvency of the class of shares.
It seems that the regulatory framework will be able to bring greater efficiency to the investment fund industry, without compromising investor protection. João Pedro Nascimento, president of the CVM, emphasizes that the purpose of the set of rules is to bring innovation and modernization to the regulatory environment in the capital markets.
Our team is available for additional clarifications, as well as to assist in matters related to the new regulatory framework for investment funds in Brazil.
Gustavo Flausino Coelho – gustavo@bastilhocoelho.com.br
Shayenne Buarque de Freitas – shayenne@bastilhocoelho.com.br