BRAZIL: CVM publishes resolution on foreign investment changes

Friday April 10 2015

The Securities and Exchange Commission of Brazil (CVM) has published Instruction 560 that updates the rules on registration, transactions and disclosure of information about foreign investors in Brazil in accordance with the regulations approved by the Brazilian Monetary Council (CMN) through CMN Resolution No. 4373, of September 29, 2014 (click here for previous update).

The Instruction covers the following:

• Registration and representation of non-resident investors – prior to commencing operations in Brazil, a non-resident investor must appoint a representative in the country who will carry out the registration and maintenance of information with the CNV. The representative must be a financial institution or other entity duly authorized to operate by the Central Bank of Brazil (Banco Central do Brasil – Bacen). Non-resident investors can register as own account holder, collective account holder, or participant of collective account. The own account holder can operate only in its own name, whereas the collective account holder can operate on behalf of other non-resident investors admitted as participants in the omnibus account. Registration is automatic.

• Reports – from 1 January 2016, the representative shall provide to the CVM monthly reports and half-yearly reports on non-resident account activity, including movement of resources, market and notional value of accounts.

• Custodian requirements – the custodian must be a legal entity duly authorized by the CVM. A non-resident investor may hold one or more accounts.

• Transactions outside of the Organized Market – The acquisition or disposal of securities outside of the organized market is permitted by form of prescribed methods, including subscription, bonus, securities conversion into shares, dividends etc.

• Transfer between Non-Resident Investors – Position transfers between non-resident investors from abroad are permitted, provided they derive from consolidation, spin-off, merger, incorporation of shares and mortis causa succession, and other corporate transactions that do not result in modification of the final holders of the assets and change in the total of financial assets and securities belonging directly or indirectly to each of the investors involved in the operation.

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