Investment Funds and Structured Fiance Newsletter – September 2023

The Investment Funds and Structured Finance Newsletter provides information on the main administrative acts, rules, and legal texts regarding the regulation of the investment funds, asset management, and structured operations.

This newsletter is for informative purposes only, and should not be used for decision making.
Specific legal advice can be provided by one of our lawyers.

The English version of the Investment Funds and Structured Operations Newsletter is a summarized version of the Portuguese version, in which we highlight the news most relevant to our international clients. If you want to access a specific article that was not translated into the English version, please contact us.

HIGHLIGHTS 

1. The new Regulatory Framework for Investment Funds enters into force
2. Regulations for hiring digital influencers are published
3. ANBIMA updates investment funds regulation and extends sustainability rules

HIGHLIGHTS

The new Regulatory Framework for Investment Funds enters into force

On October 02, 2023, Brazil’s Securities and Exchange Commission (“CVM”) Resolution No. 175, dated December 23, 2022, entered into force and, as described below, provided for numerous changes in comparison with its original text.

In December 2022, Demarest released a complete analysis of the changes introduced by CVM Resolution No. 175, which can be accessed here (Portuguese text only).

Subsequently, the CVM published circular letters to clarify certain provisions of CVM Resolution No. 175, such as: (i) Joint Circular Letter CVM/SIN/SSE 1/2023; and (ii) Circular Letter CVM/SIN 2/2023, in addition to the conventions below. Resolutions were also published to amend CVM Resolution No. 175, such as CVM Resolution No. 181, dated March 28, 2023 (our analysis can be accessed here), in addition to what is discussed below.

During the month of September, the CVM: (i) published Joint Circular Letter CVM/SIN/SSE 2/2023; (ii) published Circular Letter CVM/SSE 8/2023; (iii) edited CVM Resolution No. 187, dated September 27, 2023; (iv) published Circular Letter CVM/SIN 6/2023; and (v) published Joint Circular Letter CVM/SIN/SSE 3/2023 (our analysis can be found below).

Regulations for hiring digital influencers are published

On September 13, 2023, the new regulations for hiring digital influencers to advertise investment products were released.

These regulations aim to provide investor transparency regarding relationships between distributors and influencers. Influencers must clearly inform whenever their publications are sponsored or launched in collaboration with institutions.

In addition, institutions are co-responsible for the content of the contracted publications and must ensure that influencers hold the necessary certifications. All trade agreements must be governed by contracts detailing the means of disclosure, product description, remuneration, and any other relevant information. The regulations were updated after a public hearing that included the participation of influencers and are part of the Brazilian Financial and Capital Markets Association (“ANBIMA”) program called “ANBIMA in Action”, which aims to improve financial market practices.

For more information, access the news about the ANBIMA and the regulations under discussion.

ANBIMA updates investment funds regulation and extends sustainability rules

The Administration Code for Third-Party Funds has undergone several changes to ensure compliance with the new fund regulations (CVM Resolution No. 175).

The changes encompass regulations for funds investing abroad, expansion of sustainability regulations for real estate funds and Private Equity Investment Funds (“FIPs”), and a revision of the classification of real estate funds. The new version will be called the “Administration and Management Code for Third-Party Funds” (“Code”), and emphasizes the role of the funds manager as one of the market’s essential service providers.

Regarding sustainable investments, ANBIMA provides for these regulations in the “Regulations and Procedures for Administration and Management of Third-Party Assets”, which were applicable only to credit rights investment funds (“FIDCs”), funds of funds (fixed-income funds, equity funds or multi-market funds), index funds (“ETF”), among others, and now they must also be considered by FIPs and real estate investment funds (“FIIs”).

This code establishes, among other things, that financial institutions can identify funds that have as primary objective the premise of sustainable investment through the inclusion of the “IS” suffix (which stands for “sustainable investment” in Portuguese). In addition, funds adopting ESG criteria can be identified as part of a broad investment strategy, because they have diverse objectives and take ESG factors into account. In these cases, the IS suffix cannot be used. Instead, the following sentence must be incorporated “This fund integrates ASG matters into its management” in their respective sales materials. Also, for every type of identification chosen, the code under discussion provides for further regulations that range in terms of restriction, and also involve the manager of these funds. FIPs and FIIs must be adapted to the new requirements by December 29, 2023.

The Administration Code for Third-Party Funds highlighted another topic: investments in crypto assets. The Code changed the adaptation time frame in this regard, requiring the adaptation to the new provisions to be made until the first amendment to the regulations, and no later than December 2024.

For more information, access the news about ANBIMA.