Brazilian Securities and Exchange Commission modifies the rules on investment funds
Fabiana Rodrigues da Fonseca and Tiffanye Esteves de Queiroz
Rule No. 555 issued by Brazilian Securities and Exchange Commission (local acronym CVM) on December 17, 2014 (the ‘ICVM 555’) will supersede ICVM 409, which has been ruling the creation, management and operation of and the disclosure of information by investment funds for about ten years.
Some of the main changes brought by ICVM 555 refer to the following topics: the electronic means of communication is given a higher importance; the volume, content and form of disclosure of information are rationalized; and the investment thresholds for certain financial assets, particularly those issued abroad, are given more flexibility.
In addition, the ICVM 555 created the so-called ‘Fundo Simples‘ (the ‘simple fund’). Here, no adhesion agreement will be required and there will be no need to verify whether the fund’s products are suitable to the clients’ profile, provided that more than 95% of the fund’s net worth is invested in federal treasury notes or notes with a similar risk. For its simplified structure and conservative investment policy, the Fundo Simples is expected to be a good choice for small investors.
The ICVM 555 will come into force on July 1, 2015.Any investment funds already in operation on such date will have to adapt to the new rules by January 4, 2016.