BRAZIL: Changes to Brazil foreign investment rules proposed

Tuesday April 8 2014

The Central Bank of Brazil has held a consultation on changes to Brazil foreign investment rules currently contained in Resolution 2689/2000. The consultation concerned the following measures:

• Depository Receipts: it is proposed to allow DRs to represent debt securities in addition to shares – note that the underlying assets must be outstanding and owned by resident investors. Funds entering Brazil under DR programs must be registered with the Central Bank; however once DRs are issued overseas, there is no need for inflow of proceeds into Brazil.
• Representation: it is proposed that foreign investors be mandatorily represented in Brazil either by a financial institution or by an entity authorized to operate by the Central Bank. In addition, their corporate documents must expressly contain the representation powers of the institution, which shall include updating records, rendering information to the Central Bank and to the Brazilian Securities Commission (CVM), keeping track of inflows and outflows on an individual basis, safekeeping documents, and receiving services of process or notices on behalf of the foreign investor.

The reforms discussed in the consultation are anticipated to be implemented before the end of the year.

Click on the above link for the consultation (in Portuguese).