Two Instructions have been issued to date by the Brazilian Securities and Exchange Commission (CVM) to regulate the reporting of information about several kinds of investment funds, they are: Instructions CVM No. 405 and CVM No. 407, of February 27 and May 10, 2004, respectively. Instruction CVM No. 407 is actually a slight adjustment of Instruction CVM No. 405.
Since April 5, 2004 the startup, closing, conversion, spin-off, merger, consolidation and variation of information about financial investment funds, funds of investment in investment funds quotas, both regulated by specific rules, have been events reported to the CVM exclusively, via its electronic information system. This allows registration of the fund in respect to which information is reported (as is). Regarding specifically startups, fund managers are additionally required to attach the fund’s internal regulation and current prospect via that same electronic system.
Financial investment funds, funds of investment in investment funds quotas, funds of investment abroad, mutual privatization funds – FGTS (Mandatory Fund for Unemployment Benefit) and FGTS free portfolio, funds of investments on securities and stocks and funds of investment in quotas thereof are required to forward via CVM specific system the following documents: (i) daily report, as per sample provided; (ii) trial balance sheet; (iii) internal regulation of funds (in operation on April 4, 2004); and (iv) current prospect of funds in operation on April 4, 2004, if any, and any new version thereof, all within established timeframes.
As of the initial date of operations, a Daily Report will be delivered to CVM, even if values are NIL. The other requirements for regular information and documents under regulations applicable to each type of fund remain unaltered. Only the weekly information presently required from financial investment funds and funds of investment abroad will continue to be reported to the Central Bank of Brazil.
This information system is accessible by using the ID currently being used to report information of other funds regulated by CVM.
Failure to meet any deadline will cause imposition of a daily fine of two hundred Brazilian reals (R$ 200,00), as of the first business day following the deadline, on the fund manager.
As of June 1, 2004, financial investment funds, funds of investment in investment fund quotas, are required to forward their investment composite and diversification statements as per specifications of CVM on a monthly basis. Said statement is in replacement of the previously required weekly information reporting. This weekly information will be last reported as of May 28, 2004 and then, will continue to be forwarded directly to the Central Bank of Brazil.
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.
