The entry into force of CVM Resolution 175/22, the new regulatory framework applicable to investment funds in general, was scheduled to enter into force on April 3, 2023. However, the Securities and Exchange Commission of Brazil (CVM) extended the effective date to October 2 of this year, through the publication of CVM Resolution 181/23.

The purpose of the extension was to meet the demand from market participants for a longer adaptation schedule. The authority has also used the new resolution to correct clerical and formal errors and implement other drafting improvements in the standard.

The deadline for the adaptation of Credit Rights Investment Funds (FIDCs) that are in operation on the date the new regulation goes into effect has also been extended, from December 31 of this year to April 1, 2024. The deadline for the entire investment fund industry to adapt, however, continues to be December 31, 2024.

The change was relevant to allow the market to adapt to the new regulatory framework, which has generated doubts among participants in the fund industry.

In order to clarify them, Joint Circular Letter 1/2023/CVM/SIN/SSE was recently released, from two technical areas of the CVM, the Bureau of Supervision of Institutional Investors (SIN) and the Bureau of Supervision of Securitization (SSE). The document contains 84 answers to specific questions asked by market participants about the new regulatory framework. The answers are divided into 24 topics:

  • Timeline of entry into force
  • Classes and subclasses
  • Calculation of net equity of the class
  • Periodic reports
  • CVM's website and systems
  • Remuneration/Rebate/Charges/Financial Statements
  • Adequacy of funds by unilateral act vs meeting
  • Documents that must be kept at the service providers' site
  • Engagement of service providers
  • Distribution of units of a class on an open basis
  • Valuation report required
  • Establishment and registration of the fund
  • Accounting records and financial statements
  • Communication with shareholders
  • Trading using improper privileged information (Insider trading)
  • Supplement A: consent for acknowledgement and assumption of unlimited liability
  • Distribution to the account and at the order - bookkeeping license
  • Liquidity management
  • Sending the administrator a copy of the document signed by the manager
  • Financial statements for transfer of management
  • General adaptations of other rules (Cofi and Res. CVM 21)
  • Related-party voting at a meeting
  • Social and environmental funds
  • Investment by funds with limited liability

The initiative of the CVM's technical areas is salutary, as it helps market participants and essential service providers to adequately interpret the regulatory framework, which significantly impacts on the investment fund industry in Brazil. These guidelines contribute to bringing legal certainty and mitigating the regulatory risks involved in the sector’s adaptation process.