Brazil: The Brazilian Stock Investment Funds - Market Access

Last Updated: 25 June 2014
Article by Walter Stuber

On June 24, 2014, the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) issued CVM Instruction No. 549 (CVM Instr. 549/2014), amending CVM Instruction No. 409, of August 18, 2004 (CVM Instr. 409/2004), that regulates the incorporation, administration, operation and disclosure of information on investment funds.

CVM Instr. 549/2014 allows the creation of the so-called Stock Investment Fund – Market Acess (Fundo de Investimento em Ações – Mercado de Acesso - FMA), which is an investment fund in stocks with the most appropriate structure for the purchase of shares of smaller companies of less liquidity, in order to participate more easily in the process of transition between the pre and post Initial Public Offering (IPO) phases.

The investment policy of these FMAs must provide that at least 2/3 of the net worth of the Fund is invested in shares of companies listed on the securities trading segment voted to market access established by a stock exchange or an entity of the organized over-the-counter (OTC) market that ensures differentiated corporate governance practices through a contractual link. This type of Fund must use in its name the term in Portuguese "Ações – Mercado de Acesso" which means "Stock – Market Access".

Regardless of whether they are structured as open-end or closely-end funds, the FMAs will have 180 days to achieve the concentration limits by issuer and by modality of asset set out in their respective regulations.

The relevant aspects of the FMAs contemplated in CVM Instr. 549/2014 are outlined herein.

I. Investment in Closely-Held Corporations

When incorporated in the form of a closely-end condominium, the FMA may invest up to 1/3 of its net worth in the acquisition of shares, debentures, subscription bonus or other securities convertible into or exchangeable for shares issued by closely-held corporations, provided that the FMA must: (i) participate in the decision-making processes of the invested company, with effective influence in the definition of its strategic policies and management, particularly by: (a) appointing members of the invested company's Board of Directors (Conselho de Administração); (b) the holding of shares that integrate the respective control block; (c) the signing of a shareholders´ agreement; or (d) the signing of another contract or the adoption of a procedure which ensures that the FMA has an effective influence in defining its strategic policy and management; and (ii) solely invest in closely-held corporations that comply with the following corporate governance practices: (a) prohibition to issue Profits Participation Certificates (Partes Beneficiarias) and the inexistence of such securities in the market; (b) establishment of an unified term of office of two years to all the members of the Board of Directors; (c) to make available shareholders' agreements and programs for the acquisition of shares or other securities issued by the invested company and disclosure of information on contracts with related parties in the form required by the regulations of CVM for issuers registered in category A1; (d) resolve corporate disputes through arbitration; (e) in case the invested company goes public, it shall be bound, before the FMA, to join a special listing segment of a stock exchange or organized OTC market which guarantees at least the differentiated levels of corporate governance practices provided in the items above; (f) annual audit of its financial statements by independent auditors registered with CVM2; and (g) equal treatment in the event of the transfer of control through the put option of the totality of shares issued by the company to the purchaser of the control for the same price paid to the controller.

CVM's intent is to allow the FMA to monitor the development of companies that have not yet held an IPO but are planning to or have potential to do so in the years that follow. With this measure, CVM creates the possibility of hybrid stock funds that invest both in closely-held and publicly-held corporations. The FMA can play an important role in paving the way for these companies to the stock market, in addition to serving as a source of funding.

For bookkeeping purposes, the assessment of participation of the FMA in closely-held corporations will have to be made every 12 months at fair value, as per an accounting standard on fair value measurement approved by CVM3.

II. Repurchase of Units

In order to enable the FMA manager to have mechanisms to face the mismatching between the fair value of the units (cotas) and the value of the units practiced in the secondary market, a phenomenon that is common in closely-end funds with illiquid assets, CVM regulated the repurchase of units when the net asset value exceeds the value of trading on the secondary market, as long as there are reserves.

The possibility of repurchase, at the same time that encourages negotiations on the secondary market because it provides liquidity, allows the FMA administrator or manager to indicate to the unitholders (cotistas) his/her/its expectation of delivery of results.

The regulation of the FMA incorporated as a closely-end condominium may authorize the FMA to buy its own units in the organized market in which the units are admitted to trading, provided that: (i) the repurchase value of the unit is lower than the book value of the unit of the day immediately preceding the buyback; (ii) the repurchased units are cancelled; and (iii) the repurchase amount do not exceed, in a period of 12 months, 10% of the total number of units issued by the FMA. This 10% limit is determined by the number of units issued by the FMA on the date of the notice mentioned below.

To buy its own units, the FMA manager must announce the intention to repurchase through notice to the market with at least 14 days in advance of the date on which he/she/it wants to start the repurchase. This notice must be filed with the administrator entity of the organized market in which the units of the FMA are admitted to trading and it will be valid for a period of 12 months as of the filing date and contain information about the existence of repurchase programs and the amount of units effectively repurchased during the last three fiscal years.

The FMA will not be able to buy back its own units: (i) whenever the administrator or manager has knowledge of information not yet disclosed to the market concerning the invested companies that can change substantially the value of the unit or influence the unitholder's decision to buy, sell or hold his/her units; (ii) in order to influence the proper functioning of the market; and (iii) for the sole purpose of obtaining financial gain from expected variations in the prices of units.

III. Perfomance Fee

CVM concluded that the correlation between the remuneration paid to the FMA manager and the result of the Fund is healthy and it is in line with the best international practice and CVM Instr. 549/2014 admits the payment of a performance fee on absolute returns (interest rates or inflation) under the terms and conditions described below4.

As a parameter the FMA can use indexes tied to interest rates or inflation to calculate the performance fee, adopting at least one of the following mechanisms, which aim to protect the investor from overpayments:

(a) if the FMA chooses to charge the total performance fee at the end of the life of the FMA, the performance fee will be calculated only on the values effectively received by unitholders and that exceed the value of the total invested capital adjusted according to the parameter chosen by the FMA (interest rate or inflation, as the case may be); and

(b) if the FMA chooses to charge a performance fee on a periodic basis and, at the end of the period of the performance fee calculation, the value of the FMA unit is below the value of the unit on the occasion of the last payment of the performance fee, the administrator must give the FMA the difference between the value of the performance fee paid and that it would be due in accordance with the current value of the unit in the same terms and conditions for payment of the performance fee.

For the purpose of calculating the performance fee, the regulation of the FMA may provide that the amounts received by the unitholders by way of amortization or income will be updated as from the date of their receipt until the payment date of the performance fee, provided that that the maximum amount to be due and payable will be determined by the chosen parameter (interest rate or inflation, as the case may be).

IV. Other Considerations

Funds for Qualified Investors - An investment in a FMA incorporated in the form of a closely-held fund devoted exclusively to qualified investors could be accomplished through the capital call mechanism, that is a commitment whereby the investor is obliged to pay the value of the capital committed as the administrator of the FMA does capital calls, according to deadlines, decision-making processes and other procedures established within the investment commitment.

Market Maker - The administrator of the FMA may hire to act as market maker on behalf of the Fund any legal person duly accredited by an administrator entity of the organized markets, observed the rules in force, provided that: (i) such person is not the administrator or manager of the FMA nor any related party to such administrator and manager; and (ii) the hiring and termination of such service is disclosed as a material fact.

Other Investment Funds - CVM also allows the incorporation of funds to invest in Equity Investment Funds (Fundos de Investimento em Participações - FIPs), Emerging Companies Investment Funds (Fundos de Investimento em Empresas Emergentes - FIEEs) and FMAs named Investment Funds in Units of Equity Funds (Fundos de Investimento em Cotas de Fundos de Investimento em Participações). These Investment Funds in Units of Equity Funds must invest at least 90% of their net worth in units of FIPs, FIEEs or FMAs.

V. Conclusion

The changes introduced by CVM Instr. 549/2014 reflect the proposals elaborated by the Technical Committee of Smaller Deals (Comitê Técnico de Ofertas Menores – CTOM)5 forwarded to CVM with the objective to improve the regulatory environment so that smaller companies can access the capital market and finance the transaction through public issues of shares and comprise the following modifications: (i) investment in closely-held corporations; (ii) repurchase of units; and (iii) performance fee.

CTOM concluded that the main obstacle for smaller firms to use the stock market as a source of funding was the lack of investors able to and willing to buy shares of these companies. Shares of smaller companies have less liquidity and for this reason are less attractive for foreign investors or short-term investors6.

The creation of the FMA by CVM is welcome by all the market participants as an important step forward to facilitate the access of the smaller companies to the Brazilian capital market.


1 According to CVM Instruction No. 480, of December 7, 2009, there are two different categories of registry: (i) category A, which authorizes the trading of any types of securities; and (ii) category B, which excludes shares and share certificates of deposit as well as securities which attribute to the holder the right to acquire shares and share certificates of deposit as a result of the conversion or the exercise of inherent rights, provided that these securities are issued by the same issuer or by a company belonging to its economic group.

2 These are exactly the same conditions required from the Brazilian Equity Investment Funds (Fundos de Investimento em Participação – FIP) to participate of closely-held corporations in accordance with CVM Instruction No. 540 of November 26, 2013.

3 This solution was determined because the FMAs calculate daily the value of their units and this value could be very outdated, since closely-held corporations are not listed on the stock exchange. In the case of the FIP generally the value of the units are determined at cost value.

4 This structure of remuneration is already adopted with success in the private equity and venture capital industry, which also invests in similar assets.

5 The CTOM was formed by public and private entities: the Brazilian Agency for Industrial Development (Agência Brasileira de Desenvolvimento Industrial – ABDI), the Brazilian Association of Entities of the Financial and Capital Markets (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais – ANBIMA), CVM, Banco do Brasil, BM&FBOVESPA S.A. – Securities, Commodities and Futures Exchange (BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros - BVMF), BNDES Participações S.A. - BNDESpar, the Brazilian Innovation Agency (FINEP – Agência Brasileira da Inovação), the Brazilian Institute of Corporate Governance ( IBGC – Instituto Brasileiro de Governança Corporativa), the Brazilian Institute of Capital Markets (Ibmec – Instituto Brasileiro de Mercado de Capitais), the Employees´ Social Security Porftfolio of Banco do Brasil (PREVI - Caixa de Previdência dos Funcionários do Banco do Brasil), the Secretariat of Economic Policy of the Ministry of Finance (Secretaria de Política Econômica do Ministério da Fazenda), Bradesco Investimentos, Brasil Plural, BTG Pactual, FAMA Investimentos General Atlantic, Grupo DGF, Grupo Stratus, ItauBBA, Leblon Equities, Nutriplant, Senior Solutions, Taler, Votorantim and XP Investimentos.

6 The jurisdictions that have managed to develop an active market for smaller companies rely on local investors and investment vehicles suitable to the characteristics of these smaller companies. So, one of the main focuses of the work of CTOM was to make proposals that would create investment vehicles able to buy these papers of lower liquidity and greater risk.

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.

Walter Stuber
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”

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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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