Brazil: Real Estate Investment Funds*

Last Updated: 30 July 2010
Article by Marcelo Cosac

On October 31, 2008, the Brazilian Securities Exchange Commission ("CVM") issued Rule No. 472 ("ICVM 472") which introduced significant changes in the regulation of Real Estate Investment Funds ("FII", similar to the US REIT – Real Estate Investment Trust) by updating and modernizing the rules applicable to the FII, in line with CVM Rule No. 409, dated August 18, 2004 ("ICVM 409"), and CVM Rule No. 400, dated December 29, 2003 ("ICVM 400"). ICVM 472 revoked CVM Rule No. 205, dated January 14, 1994 ("ICVM 205"), the former CVM rule applicable to the FII.

The main innovations and changes may be summarized as follows:

More expeditious filing with the CVM

CVM's authorization for the FII's organization and commencement of its operation and the filing with the CVM of the subsequent issues of the initial public offering of shares will now be granted automatically within five (5) business days as of the date of the filing of the respective requests for the authorization for the FII's organization and for registration with CVM of the public offering of the FII's shares, provided that all documents required under ICVM 472 are submitted to the CVM.

Any new placement of shares will be subject to the subscription or total cancellation of the previous placement.

The registration of first offering of shares with the CVM will be subject to the prior examination by the CVM within twenty (20) business days from the date of filing by the applicant pursuant to article 8 of ICVM 400.

Partial placement of shares

In accordance with article 30 of ICVM 400, the partial placement of the FII's shares is permitted if the FII Regulation establishes a minimum subscription amount. In the event of a specific real estate project underlying the FII's shares, such minimum amount must be sufficient to enable the completion of the real estate project.

If the minimum amount so established is not reached, then the FII's administrator will be required to split the funds received by virtue of the subscriptions made in proportion to the shares paid in by the investors. If it happens in the initial public offering of shares of the FII, the administrator must also liquidate the FII.

Expansion of the list of investments FII is allowed to make

ICVM 472 expanded and improved the list of investments permitted to the FII1. For instance, now investments in shares of other FII, certificates of real estate receivables (CRI), and in shares of credit investment funds (FIDC) have been allowed; provided that, investments in shares of a FIDC will be condition on such FIDC adopting an investment policy that exclusively provides for the activities allowed to FII, provided that the issuance and trading of shares of such FIDC must have been registered with the CVM. The expansion of the investment list makes the FII portfolio management more flexible and dynamic, thus giving the fund's administrator a wider range of investment possibilities with the use of the fund's assets.

Purchase of encumbered real property

The FII now may purchase real properties encumbered by collateral (more specifically, 'in rem' guarantees), provided that such collateral has been created before the respective real property was acquired by the FII.

Limit to risk concentration

Paragraph 5 of article 45 of ICVM 472 clearly states CVM's concern with limiting the risk of the FII to a few issuers. As mentioned above, article 45 of the ICVM significantly expanded the list of investments permitted to the FII. However, such Paragraph 5 establishes that the FII that predominantly invest in securities must comply with the limits of investment per issuer and type of financial assets as provided in ICVM 4092. The FII's administrator will be subject to the rules of disqualification and re-qualification also set forth in ICVM 4093.

However, such limitation does not apply to the following investments: (i) shares of equity investment funds (FIP) which adopts an investment policy that exclusively provides for activities allowed to the FII; (ii) shares of stock investment funds which invest exclusively in civil construction or in the real estate market; (iii) shares of other FII; (iv) CRI, and shares of a FIDC which adopts an investment policy that provides for activities allowed to the FII, provided that the issuance and trading of shares of such FIDC must have been registered with the CVM.

Appraisal report for the payment of shares with real properties and related rights

The appraisal report of the real properties and related rights used for the payment of FII's shares still remains mandatory, pursuant to article 12, main paragraph, of ICVM 472.

The approval of the appraisal report for an existing FII is now incumbent upon the shareholders' meeting (no longer the responsibility of the FII's administrator), as previously provided in ICVM 205. Although the administrator is no longer responsible for the approval of the appraisal report, the administrator must take all precautionary steps and act with high standards of diligence to ensure that the information contained in the report is true, consistent, correct and sufficient, being liable for any omission in the discharge of its duties, pursuant to Paragraph 1 of article 12 of ICVM 472.

The appraisal is to be prepared by a specialized firm, rather than by three (3) experts, as previously required by ICVM 205.

Required information to be included in the FII prospectuses

ICVM 472 introduced Attachment III-B to ICVM 400. This attachment establishes the minimum required information that must be stated in the FII prospectuses, including the investment policy, description of the real properties comprising the FII assets, FII operational data, identification of the persons responsible for the analysis and selection of the investments in real estate developments, and information on the possibility of partial placement of the FII's shares (as mentioned herein above).

Mortgage Companies

The mortgage companies are now allowed to manage the FII pursuant to article 28 of ICVM 472. The other institutions also allowed to manage the FII, as previously provided in ICVM 205, have been unchanged.

Communication between the investors and the administrator via e-mail

The utilization of electronic mail for communications between the administrator and the investors (shareholders) has been authorized, subject to the prior consent of such investors. Such innovation was introduced as a means to render the communication between the administrator and the investors more expeditious and efficient, so that the latter may become aware of the decisions made by the administrator and are given an opportunity to express their opinions to the administrator in a faster and more efficient manner.

Charges on the FII

In line with the provisions concerning the charges on funds under ICVM 409, article 47 of ICVM 472 established the provisions applicable to charges on the FII.

The great innovation introduced by ICVM 472 is to allow the administrator to establish that portions of the management fee may be paid directly by the FII to the service providers that have been retained by the FII.

FII for qualified investors

ICVM 472 provides for the organization of FII aimed exclusively for qualified investors4. Such FII is provided with greater structuring flexibility as compared to other FII and may, as long as it is allowed in its Regulation: (i) admit the utilization of bonds and securities for the payment of its shares, provided that specific and precise criteria for the adoption of such procedures are established in the FII Regulation; (ii) waive the preparation of a prospectus; (iii) waive the publication of notices of the beginning and ending of the placement of shares by the FII; (iv) waive the preparation of an appraisal report for the purposes of payment of shares with assets and rights, without prejudice to the capacity of the shareholders' meeting to manifest itself on the value ascribed to such assets and rights; and (v) provide for the existence of shares with special rights or characteristics as to the priority in the payment of the regular income, in the reimbursement of the shares' amount or in the payment to the shareholders of remaining amounts due to the FII's liquidation.


1. Article 45 of ICVM 472.

2. Articles 86 and 87 of ICVM 409.

3. Articles 88 to 91 of ICVM 409.

4. Chapter XII of ICVM 472.

* This Alert has been prepared by Maria da Graça Pedretti and Marcelo Cosac, partners in charge of the banking law and capital markets department of Felsberg, Pedretti, Mannrich e Aidar Advogados e Consultores Legais.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions