The Asset Management Review: Brazil
Overview of recent activity
Brazil has been subject to important regulatory changes in recent years with regard to asset management activities by virtue of several new regulations issued by the National Monetary Council (CMN), the Brazilian Securities Commission (CVM) and the Central Bank of Brazil (CBB) aimed at modernising and optimising the regulatory framework in light of recent market practices.
As further detailed below, noteworthy CVM regulations include:
- CVM Instruction No. 539 of 13 November 2013, which established the suitability rules related to securities distribution;
- CVM Instruction No. 554 of 17 December 2014, which established the new classification of qualified and professional investors;
- CVM Instruction No. 555 of 17 December 2014, which established the new general regulatory framework applicable to investment funds; and
- CVM Instruction No. 558 of 26 March 2015, which established the new rules applicable to the professional management of securities portfolios.
On 6 February 2020, the CVM issued Instruction No. 619, amending CVM Instruction No. 592 of 17 November 2017, which sets forth the requirements and ongoing compliance obligations that investment advisers shall be subject to in order to obtain and maintain investments advisory licences.
Effective as of 1 June 2020, CVM Instruction No. 619 establishes the possibility of investment advisory entities located outside of Brazil obtaining recognition from the CVM. Once recognised, the foreign entity would be able to carry out cross-border securities advisory activities as though the entity was duly licensed in Brazil.
Private equity funds, which are subject to specific regulation by the CVM, have also been subject to a new regulatory framework by means of the enactment of CVM Instruction No. 578 of 30 August 2016 (see Section VI).
The CMN in turn has updated its regulation on foreign investments in Brazil with the issuance of Resolution No. 4,373 of 29 November 2014. In addition to modernising and simplifying the rules applicable to foreign investments, the new rule also implements new mechanisms to increase the volume of foreign investments in Brazil.
Within their respective areas of authority, on 27 March 2015, the CBB enacted Circular No. 3,752 and the CVM enacted Instructions Nos. 559 and 560, which further regulate foreign capital in Brazil, especially with regard to the registration of non-investors and investments in equity and debt securities via depositary receipts. More recently, the CVM enacted CVM Instruction No. 585 of 5 April 2017 with the purpose of facilitating the offering of foreign securities in Brazil through Brazilian depositary receipts.
It is also worth highlighting CVM Instruction No. 568 of 17 September 2015, which, inter alia, amended the rules applicable to reporting obligations involving significant ownership in publicly held companies, including specific calculations for holdings through derivatives and convertible instruments.
There has been an attempt to diversify and facilitate the possibility and variety of investment opportunities by the Brazilian authorities. These new rulings effectively introduce the new regulatory framework applicable to all market participants.
General introduction to the regulatory framework
The Brazilian financial system can be divided in three tranches: normative agencies, supervisory agencies and market participants.
From a general perspective, federal laws applicable to the capital markets in Brazil contain general provisions with the purpose of establishing what the Brazilian capital markets comprise, which entities may be agents of the market, and the different independent agencies that have powers to oversee it and the limits of their authorities.
The normative agencies are responsible for enacting the general regulations and guidelines of the financial system under their respective areas of authority. Such normative agencies are the CMN, which is the main normative agency of the Brazilian financial system; the National Private Insurance Council (CNSP), for the insurance, capitalisation and open-ended private pension segments; and the National Supplementary Pension Council, for private pension funds.
The supervisory agencies are generally responsible for monitoring and enforcing regulations and the compliance of relevant market participants (financial institutions, stock exchanges, investment funds, portfolio managers, etc.). They are responsible for regulating, supervising, developing and controlling their corresponding segments of the financial system. Such supervisory agencies are the CBB, the CVM, the Private Insurance Authority (SUSEP) and the National Supplementary Pension Authority (PREVIC).
The supervisory agencies also have normative functions. For instance, Law 6,385 of 7 December 1796 (the Securities Market Law), which created the CVM, delegates authority to the CVM to, inter alia, establish the regulations governing the activities of asset managers, advisory entities and investment funds.
In summary, the regulations setting forth the specific set of rules that each player and transaction has to comply with are CVM instructions, CBB circulars and CMN resolutions.
The structure of the Brazilian financial and capital markets is also composed of a self-regulatory agency, the Brazilian Financial and Capital Markets Association (ANBIMA), which created a set of rules with increased corporate governance for its associates (e.g., asset managers, banks and brokerage firms) to comply with.
In this regard, ANBIMA issued a new set of rules on 4 May 2018 establishing the best practices to be adopted by its associates regarding asset management. The new Code for Regulation and Best Practices for Asset Management replaced the Code for Investment Funds; it has been in force since 2 January 2019 and was amended on 23 May 2019.
i Portfolio management and securities advisory services
Local professional management and administration of securities portfolios can only be carried out in Brazil by a natural person or a legal entity duly authorised by the CVM. The natural person must be resident in Brazil, and the legal entity must be organised and headquartered in Brazil.
Portfolio management activities in Brazil are distinguished by two types of portfolio managers with different areas of expertise: fiduciary administration, with direct or indirect responsibility for the custody and controllership of assets and liabilities and, generally, for the supervision of the markets; and asset management, with responsibility for the decision-making process of investments. This distinction is duly reflected by CVM Instruction No. 558, which establishes that portfolio managers, depending on the activities performed, shall request their registration under the fiduciary administrator category, under the asset manager category, or under both.
Additionally, CVM Instruction No. 558 introduced some other significant changes to rules applicable to the management of securities portfolios. The following changes are noteworthy: assignment of certain responsibilities to statutory officers; possibility of distribution of quotas of investment funds under management; and improvement of rules of conduct and information duties.
Regarding the new information duties required from portfolio managers, they must now publish their internal policies and manuals on the internet, as well as disclose and keep an updated reference form similar to a prospectus applicable to listed companies.
In addition, portfolio managers must file the annual version of their reference form with the CVM by 31 March of each year.
In addition to asset management activities, it is possible to seek a securities advisory licence with the CVM that only authorises the holder to provide non-discretionary investment recommendations, as per CVM Instruction No. 592. By virtue of an innovation introduced by CVM Instruction No. 592, asset managers accredited with the CVM pursuant to CVM Instruction No. 558 are no longer automatically authorised to provide securities advisory services, with a separate and specific licence for carrying out non-discretionary investment advisory activities being necessary.
In addition, CVM Instruction No. 592 also established that such two activities cannot be carried out by the same person and, in the case of legal entities, a physical segregation between the two is required.
More recently by virtue of an innovation established by CVM Instruction No. 619 investment advisory entities located outside of Brazil may obtain a recognition from the CVM that will allow the entity to carry out cross border securities advisory activities as though the entity was duly licensed in Brazil.
To obtain this recognition, the foreign entity must comply with the requirements and obligations set forth in CVM Instruction No. 592 and must also: (1) be authorised to carry out its businesses and be supervised by a competent authority in a jurisdiction that has signed a mutual cooperation agreement with Brazil or that is a signatory to the multilateral IOSCO Memorandum of Understandings concerning Consultation and Cooperation and the Exchange of Information; (2) appoint a legal representative in Brazil with powers to receive service of process; and (3) comply with Brazilian anti-money laundering and suitability rules.
ii Investment funds
Portfolio management in Brazil is usually carried out through investment funds. Under local regulations, investment funds are considered as a pool of resources incorporated under the form of a condominium (i.e., they are not corporate organisations) intended for investments in financial instruments and securities, as well as in any other assets traded in the financial and capital markets, according to the terms and conditions established in their by-laws.
A condominium is a type of unincorporated entity in which two or more persons hold joint title to certain assets, being attributed a notional part (quota).
A condominium has no legal personality apart from that of its owners. Even though funds do not have a legal identity under Brazilian law, orders for the purchase and sale of securities are carried out in its name.
Investment funds can be divided into closed-ended and open-ended funds.
Generally, open-ended funds are characterised by the possibility of quota holders to redeem their quotas at any time, and a prohibition, as a general rule, on quotas being assigned or transferred.
Closed-ended investment funds, on the other hand, do not allow the redemption of quotas at any time, except in the case of liquidation of the fund; and their quotas may be transferred by means of a term of assignment and transference, or through a stock exchange or over-the-counter (OTC) market.
The creation, management and operation of most investment funds in Brazil is currently regulated by CVM Instruction No. 555, which became effective on 1 October 2015. However, certain types of funds are subject to specific regulations, including, inter alia, receivables investment funds (FIDCs), real estate investment funds (FIIs) and private equity funds (FIPs), as further detailed in Section VI.
CVM Instruction No. 555 has introduced relevant changes to the Brazilian investment fund industry, including:
- a new classification of investment funds;
- a clearer obligations for portfolio liquidity management;
- a higher threshold for offshore investments by investment funds;
- no minimum investment being required for investing in foreign investment funds;
- new rules regarding performance fees; and
- all communication with quota holders may be carried out electronically.
As a general rule, the distribution of fund quotas must be carried out by duly qualified entities pertaining to the Brazilian securities dealership system. As mentioned above, however, CVM Instruction No. 558 authorises portfolio managers, even if they are not accredited as a securities distributor, to distribute quotas of managed funds (i.e., they are not authorised to distribute quotas of third-party funds).
iii Investor classification
To improve and structure the market, CVM Instruction No. 554 establishes three categories of investors in the Brazilian financial and capital markets, each requiring their own appropriate level of regulation. The rules set forth the criteria for an investor to be characterised as a qualified and as a professional investor. Retail investors are, therefore, those investors that do not fall under the previous categories (by exclusion).
Pursuant to CVM Instruction No. 554, the following shall be considered professional investors:
- financial institutions and other entities authorised to operate by the CBB;
- insurance companies and capitalisation societies;
- open and closed-ended pension funds;
- individuals or legal entities that hold financial investments in an amount in excess of
10 million reais;
- investment funds;
- investment clubs managed by a professional manager;
- portfolio administrators and securities consultants authorised by the CVM in relation to their own monies; and
- non-resident investors.
Likewise, the following shall be considered qualified investors:
- professional investors;
- individuals or legal entities that hold financial investments in an amount in excess of 1 million reais;
- individuals that have been approved in specific certification examinations; and
- investment clubs managed by quota holders.
CVM Instruction No. 554 came into effect on 1 October 2015, jointly with CVM Instruction No. 555.
iv Foreign investment considerations
Pursuant to CVM Instruction No. 555, investment funds have different limits of investment in offshore assets depending on their target public, as detailed below. In general, these limits were increased when compared with the limits imposed by the previous rule, CVM Instruction No. 409 of 18 August 2004.
|Classification||Limit (per cent)|
|Fixed-income investment fund – foreign debt||100 (unlimited)|
|Funds targeted exclusively to professional investors||100 (unlimited)|
|Funds targeted exclusively to qualified investors that meet certain additional requirements||100 (unlimited)|
|Funds targeted exclusively to qualified investors that do not meet the above-mentioned conditions||40|
|Funds targeted to the public in general (retail)||20|
Funds targeted exclusively to professional investors may invest 100 per cent of their assets offshore. As explained above, there is no minimum investment required from investors to acquire quotas of such funds, but they must be professional investors.
It is important to stress that Brazil still has very strict controls on foreign exchange transactions (i.e., on the inflow and outflow of funds to and from the country). According to the Brazilian foreign exchange regulations, all exchange transactions must be carried out through an authorised exchange entity in Brazil.2
With regard to foreign investment in the Brazilian capital and financial markets, CMN Resolution 4,373 establishes that they must be duly registered with the CBB and the CVM, as well as meet other requirements established therein. As a general rule, the investment must be made in organised capital markets (e.g., stock exchanges and OTC markets).
In addition to investing in the Brazilian capital and financial markets, foreign investments can also be made directly in the form of equity of Brazilian companies. These investments shall also be registered with the CBB under the Electronic Registration System – Foreign Direct Investment.
v Offering of foreign securities
Under Brazilian law, the offering of foreign securities is subject to regulation that affects the possibility of offering such products on a public basis in Brazil.
The public offering of securities in Brazil is primarily regulated by the Securities Market Law and CVM Instruction No. 400 of 29 December 2003, as amended. According to these regulations, as a general rule, public offerings must be previously registered with and authorised by the CVM.
Foreign securities are generally not eligible for registration in Brazil. Therefore, in order for foreign entities to offer their products in Brazil, they shall adopt certain procedures to avoid their public disclosure in Brazil.
Brazilian law does not provide a definition of what constitutes a private placement of securities. Consequently, the concept of private placement is based on what would not constitute a public offering under Brazilian law, and therefore would not require registration with the CVM.
Individuals or legal entities resident in Brazil are permitted to invest abroad, provided that information relating to such assets owned abroad is fully disclosed to the CBB and the Brazilian tax authorities. The obligation to disclose to the Brazilian authorities the existence of assets owned abroad lies exclusively with the owners of such assets.
Nevertheless, specific entities of the Brazilian financial system, such as pension plans, insurance and reinsurance companies, governmental entities, banking companies and investment funds, have certain limitations when it comes to investing abroad (e.g., rules regarding portfolio diversification and asset concentration limits per investor and type of asset). The main rules regarding foreign investment restrictions by Brazilian entities are detailed in Section II.iv, and Section VI.
Common asset management structures
The regulatory framework for investment funds (the main vehicle for investments in Brazil) recently underwent important amendments.
With the objective of streamlining and updating the structure of the investment fund industry, CVM Instruction No. 555 has modified the main existing types of investment funds. The new structures permitted by CVM Instruction No. 555 are as follows:
|Classification||Main risk factor||Possible subcategories|
|Fixed-income investment fund||Variation of interest rate, price indices or both|
|Shares investment fund||Price variation of equity securities traded in the organised market|
|Exchange investment fund||Price variation of foreign currency or the variation of exchange coupons|
|Multimarket investment fund||Various risk factors (for operators with different strategies and in different markets)|
Other important types of funds not regulated by CVM Instruction No. 555 are further detailed in Section VI.
Main sources of investment
The Brazilian investment fund industry is placed in the top 10 asset management industries in the world, with around US$1 trillion distributed in approximately 20,000 investment funds. This also represents more than 50 per cent of the national GDP.
The Brazilian investment fund industry experienced a scenario of domestic interest rates falling, which resulted in a substantial increase on the investments in more sophisticated vehicles such as stocks funds, hedge funds, ETFs, structured funds (FIPs, FIDCs e FIIs), pension funds and funds investing abroad.3
The Brazilian fund industry is getting closer to global tendencies as we observe the rise of digital platforms, the advance of regulations and the increase of allocations abroad.
This industry is still greatly concentrated in fixed-income investments, largely because of the high interest rates maintained in previous years, in addition to the country's long-term investor concentration profile, such as government and private pension funds, which has culminated in fixed-income investment funds accounting for 38.4 per cent of the Brazilian fund industry's equity.
Nevertheless, as expected, there has been an increase in the diversification of local portfolios due to the current tendency of interest rates going to lower levels, having decreased from 6.5 per cent per annum in May 2018 to 2.25 per cent per annum in July 2020.
After being expected by market participants for a long time, a new regulatory framework for the investment fund industry was recently implemented, along with the entering into force of CVM Instructions Nos. 554, 555 and 558.
Ten years after the enactment of CVM Instruction No. 409, the new regulations have been designed to bring more efficiency, transparency and competitiveness to the fund industry. They also mark the maturity of the local market, demanding stricter structures, transparency and professionalism from market participants.
In addition, the regulator has demonstrated a better understanding of the market's dynamic, thus creating and regulating new sought-after investment opportunities. This could prove essential for making the Brazilian market more attractive to international investors, paving the way for continuous growth of the industry.
On the other hand, the new regulations have also made investment in foreign markets more accessible to Brazilian investors, and an increase of investment funds aimed at investing offshore can be noted.
There is potential for development in other specific sectors governed by the CVM; for example, FIPs and securities advisory services, by virtue of the new rules being implemented, shall contribute to the process of aligning the local rules to the industry's international standards and best practices, as well as to the technical and operational needs of market players.
Moreover, the Brazilian regulatory authorities have been adopting a stricter stance on compliance. Since the strengthening of the anti-money laundering regulations in 2012 with the enactment of Law 12,683 of 9 July 2012, important anti-corruption rules have also been enacted (Law 12,846 of 1 August 2013 and Decree No. 8,420 of 18 March 2015).
Finally, both CVM and ANBIMA have issued stricter rules for the development of both advisory and discretionary management activities. This trend towards further regulation should be taken into account when analysing establishing a presence in the Brazilian market.
Brazilian accredited insurers are regulated by three authorities: CNSP, SUSEP and CMN.
Pursuant to CMN Resolution No. 4,444 of 13 November 2015, as amended, insurers can only invest in five different types of assets: fixed income, variable income, real estate, investments subject to currency exchange variations and others (including shares of some types of investment funds, certificates of structured transaction and others),
Brazilian insurance companies are prohibited from investing offshore, except through local investment funds and branches of Brazilian insurance companies located offshore. With respect to the former, Brazilian companies are allowed to invest up to 10 per cent of their funds and financial resources in quotas of local investment funds qualified as 'foreign debt'. Thus, Brazilian insurance companies would invest in a local investment fund that, in turn, would invest in the offshore market.
Under Brazilian legislation, there are two types of pension funds: private funds, which are classified as either open-ended or closed-ended; and public funds, which are exclusively composed of pension plans whose members are employees of authorities and government-held companies of the union, states, federal district and municipalities.
While the pension plans offered by open-ended pension funds may be contracted by any individual or group of individuals, those offered by closed-ended pension funds are generally accessible only by sponsors.
The private pension segment is generally governed by Supplementary Law 109 of 29 May 2001, as amended.
While open-ended pension funds are organised as regular joint-stock companies, being regulated by the above-mentioned authorities, closed-ended pension funds can only be organised as foundations or non-profit companies, and are regulated by PREVIC.
The investment restrictions applicable for Brazilian accredited insurers outlined in Section VI.i are the same for open-ended private pension companies.
In addition, CMN Resolution No. 4,661 of 24 May 2018, as amended, further regulates closed-ended pension funds, and sets forth the limits and rules for investment by closed-ended pension funds.
Closed-ended pension funds may invest in:
- fixed-income assets;
- variable income assets;
- structured transactions;
- offshore investments;
- real estate; and
- transactions with members of a related pension plan.
Brazilian closed-ended pension funds are only allowed to invest up to 10 per cent of their net equity offshore through a local investment fund (e.g., feeder fund). In addition, a single Brazilian closed-ended pension fund may not hold more than 25 per cent of the net equity of an offshore investment fund. These restrictions are due to the government's efforts to prevent Brazilian residents' savings being invested outside the country and exposed to offshore risks.
There have been discussions about the possibility of changing the above-mentioned thresholds; however, there is still no concrete proposal in place in this regard.
iii Real property
FIIs are governed by Law 8,668 of 25 June 1993, as amended, and further regulated by CVM Instruction No. 472 of 31 October 2008, as amended. Such funds are designed to invest in real estate projects and are necessarily closed-ended funds. Investments are permitted in the following:
- real estate properties and rights;
- equity of real estate companies;
- special purpose entities with real estate business;
- other funds (FIPs, FIIs, FIDCs); and
- real estate receivables certificates and other instruments.
iv Hedge funds
There are no specific rules regarding hedge funds in Brazil. Local authorities do not consider them as a separate category of investment funds, being generally regulated by CVM Instruction No. 555. Therefore, such funds may be organised as, for instance, multimarket investment funds with diverse investment policies.
v Private equity
FIPs are primarily governed by CVM Instruction No. 578, as amended.
Pursuant to CVM Instruction No. 578, FIPs are characterised as closed-ended investment funds that invest in shares (stock), convertible or non-convertible debentures, subscription warrants, and other securities either convertible into or exchangeable for shares issued by publicly or privately held corporations, as well as equity investments in limited liability companies; and, as a general rule, actively participate and monitor the management of the invested company. It is also permissible that FIPs invest in shares of other FIPs.
At least 90 per cent of a FIP's net equity must be invested in permitted investments, which may now include foreign assets, provided such assets also comply with the FIP investment restrictions. Foreign investments by FIPs are limited to 20 per cent of their net equity.
In addition, FIPs shall have a definite term of duration and be targeted exclusively to qualified investors. In terms of classification, FIPs may fall under the following categories:
- seed capital;
- venture capital;
- research, development and innovation; and
CVM Instruction No. 578 stipulates that most of the operational rules governing an FIP and its operations, particularly those involving, inter alia, governance matters, minimum net equity requirements, investment policy, capital calls, distributions of proceeds and duration, may be established in the FIP's by-laws. Therefore, the FIP structure is very flexible.
vi Other sectors
FIDCs are specifically governed by CVM Instruction No. 356 of 17 December 2001, as amended.
FIDCs enable the securitisation of virtually all types of receivables, and are thus the main vehicle currently used for securitisation in the local market. Moreover, they must invest at least 50 per cent of their portfolio in receivables. Quotas of FIDCs may be divided into senior and subordinated quotas. As a general rule, senior quotas shall have priority for amortisation and redemption, while subordinated quotas permit the creation of over-collateral.
The regulations also set forth rules regarding non-standardised FIDCs. Pursuant to CVM Instruction No. 444 of 8 December 2006, such funds broaden the possibility of investment in receivables such as government bonds and litigated claims.
Exchange traded funds (ETFs)
Governed by CVM Instruction No. 359 of 22 January 2002, as amended (CVM Instruction No. 359), Brazilian ETFs are index-tracking funds; therefore, their portfolios reflect a given index of reference (benchmark).
Until 2013, Brazilian ETFs investments could only reference Brazilian stock and variable-income asset indexes. However, the enactment of CVM Instruction No. 537 of 16 September 2013, which amended CVM Instruction No. 359, finally made fixed-income ETFs accessible from a regulatory perspective and anticipated certain issues regarding the upcoming enabling of international ETFs (local ETFs that replicate international indices).
As of 2014, upon the concession of a few waivers, the first international ETFs were launched under CVM Instruction No. 359, giving such ETFs investors exposure to foreign assets. On 12 July 2016, the CVM announced that additional waivers for the offering of international ETFs to the general public could be granted on a case-by-case basis.
The number of Brazilian standard ETFs has grown since the first ETF was established; however, the number of Brazilian ETFs referencing foreign indexes is still unfortunately extremely low.
The current regulatory framework is expected to improve the structure and profile of the Brazilian investment fund industry, creating great potential for growth and development for managers, national and international investors, and savers.
CVM Instruction No. 554 improves the definitions of the classes of investors and clarifies the regulations that each of such classes is subject to, thus increasing the transparency of and accessibility to asset management products.
In addition, CVM Instruction No. 555 offers new and efficient investment opportunities for local and foreign investors, especially with regard to the accessibility of foreign markets to Brazilian investment funds. The internationalisation of investments can also benefit the ever-increasing pension fund segment, which may be intensified by the new rule.
The rules created by CVM Instruction No. 558 are also evidence of progress in the continuous improvement of the Brazilian investment funds market. The modernisation of the rules applicable to portfolio managers stands out especially with regard to:
- the requirement to specifically assign the responsibility for compliance and risk management to a statutory officer;
- the improvement of the rules of conduct and internal controls;
- the segregation of custody and controllership of assets and liabilities activities from management activities; and
- the distribution of funds quotas by portfolio managers, even though the portfolio managers are not financial institutions.
Notwithstanding the above, CVM Instruction No. 558 tends to, directly or indirectly, generate additional costs for market participants, given that it increases the monitoring and disclosure duties regardless of the size of the portfolio manager.
CVM Instruction No. 558 has intensified the enforcement of transparency, diligence and loyalty principles required from portfolio managers. The CVM's intention was to implement mechanisms to allow investors to analyse and compare the way that portfolio managers are more or less structured.
The above is also true with regard to the CVM Instruction No. 592, as recently amended by CVM Instruction No. 619, the rule that governs the development of securities advisory services in the country.
Professional asset management activity has been the target of several regulations in advanced markets such as Europe and United States since the financial crisis of 2008. The current regulations in such jurisdictions, in addition to various requirements regarding disclosure, also contain requirements (all under the strict supervision of the competent authorities) concerning, for example:
- the custody of assets;
- disclosure of systemic risks;
- registration of financial statements; and
- in some cases, the necessity to fulfil minimum financial requirements.
Therefore, it is possible to identify a move in the regulations applicable to investment funds towards those applicable to the banking and insurance markets.
It would not be surprising if, in the near future, stricter rules also become mandatory in Brazil once the local market is fully mature.
1 Fernando J Prado Ferreira is a partner, João Pedro Ribeiro Taveira is an associate and Arthur Gonçalves Camargo is a legal intern at Pinheiro Neto Advogados.
2 In addition to all foreign exchange transactions having to be carried out through an authorised exchange entity, other requirements include that a relevant foreign exchange contract must be signed describing the respective parties, the date, the nature of the transaction and the exchange rate, among other information; and that all foreign exchange transactions must be registered at the CBB electronic data system (SISBACEN).
3 Based on information provided by the 2020 Brazilian Mutual Fund Industry published by the Getúlio Vargas Foundation Centre for Financial Studies.
4 This section was reviewed by Tiago Lopes da Cruz, an associate at Pinheiro Neto Advogados.
5 Not comprising shares investment funds, FIIs and other types of funds that are governed by particular tax rules.
6 More precisely, legal entities subject to the non-cumulative regime of PIS/COFINS taxation, and financial institutions and equated entities pursuant to the applicable regulations.
7 See footnote 5.
8 See footnote 6.
9 Exception is made for certain investment funds, inter alia, shares investment funds (WHT rate of 10 per cent); FIPs, which, provided certain statutory requirements are met, may benefit from a more favourable tax treatment; and investment funds with portfolios composed of at least 98 per cent government bonds (WHT rate of zero per cent).
10 Normative Ruling No. 1,037 of 2010, as amended, lists the jurisdictions considered tax havens for the purposes of Brazilian tax law.