The administration of the fund comprehends the group of services related directly or indirectly to the functioning and maintenance of the fund that can be provided by the administrator himself or by third parties hired by him, in writing, in the name of the fund.

On behalf of the fund, the administrator shall hire duly qualified or authorized third parties for the following services, with the exception of any other not listed:

  1. the management of the fund's portfolio;
  2. the investment consultancy;
  3. the securities treasury, control and processing activities;
  4. the distribution of quotas;
  5. the writing of the issuance and redemption of quotas;
  6. the custodianship of the securities and other financial assets; and
  7. risk classification per specialized agency constituted in the country.

Management of the fund's portfolio is the professional management, as established in the regulation, of its securities, developed by an individual or a legal entity registered in the administrator of the securities portfolio by CVM, having the manager powers to trade, in the name of the investment fund, these securities.

The hiring of duly qualified or authorized third parties to provide administration services is a faculty of the fund, but the hiring of independent auditing services is obligatory when the administrator is not duly authorized or qualified for the provision of the services related to the securities treasury, control and processing activities, the distribution of quotas, the writing of the issuance and redemption of quotas and the custodianship of the securities and other financial assets.

It is the administrator's duty, in the quality of representative of the fund, to hire the service providers, after a previous and sensible analysis and selection of the hired person, with the need of being in the contract as an approved intervenient.

The contracts signed for providing services related to the management of the fund´s portfolio, the securities treasury, control and processing activities and the writing of the issuance and redemption of quotas shall contain a clause that states a common responsibility between the officer of the fund and the third parties hired by the fund for possible harm caused to the quotaholders due to conducts contrary to the law, to the regulation and the normative acts issued by the CVM. Independently from this solidary responsibility, the administrator responds for losses arising from own acts and omissions that he admits to have been the cause always when he/she admits to have acted in a way contrary to the law, regulation and normative acts issued by CVM.

The administration service provision contracts signed with third parties by the administrator in the name of the fund shall be kept by the administrator and respective contracted people at the disposal of CVM.

The funds managed by financial institutions do not need to hire the services related to the securities treasury, control and processing activities and the writing of the issuance and redemption of quotas, when these services are done by their administrators, that in this case are considered authorized for its rendering.

The administrator has the power to practice all the necessary acts to the functioning of the investment fund, being responsible for the constitution of the fund and for providing information to CVM in the form of the applicable regulations and whenever asked.

In case the administrator is not registered at CVM as a service provider for securities custodianship, the fund shall hire a registered institution for such activity. The custodian contract should contain clauses establishing that:

  1. the custodian institution can accept only the orders issued by the administrator, by the manager or by their legal representatives or attorney;
  2. the custodian is forbidden to execute orders that are not directly linked to the fund's operations; and
  3. the price of the services.

Sales and purchase orders of securities and other assets available in the scope of the financial and capital market shall be issued with a precise identification of the investment fund in whose they should be executed. The grouping of orders between the funds of sales and purchases made through equal and pre-established criteria will be admitted when the same legal entity manages many funds and if the administrator has implemented a system that allows the share, being such department's registration available to CVM for the minimum period of five years.


The fund´s regulation shall contemplate the administration fee that will remunerate all the services related to: (a) the management of the fund´s portfolio; (b) the investment consultancy; (c) the securities treasury, control and processing activities; (d) the distribution of quotas; and (e) the writing of the issuance and redemption of quotas. A performance fee is allowed, based on the result of the fund, as well as an entrance fee and an exit fee. The administration fee shall encompass not only the expenses associated with these services but also the expenses for the services related to the risk classification per specialized agency constituted in the country.

In the event that the fund hires a risk classification agency, the agency´s remumeration shall constitute an expense to the administrator. The contract shall contain a clause obliging the risk classification agency to immediately disclose on its webpage and communicate to the CVM and the administrator any changes in the fund´s classification or termination of the contract. If any such situation occurs, the administrator shall immediately disclose any relevant facts to the market and this disclosure shall encompass any information supplied to the quotaholders. Once the contract is terminated, from the termination date the brochure must include a summary of the last report elaborated by the risk classification agency, the history of the grades obtained by the fund, an indication of the electronic address at which the complete version of the report may be consulted and information stating that it is also available at the administrator´s headquarters. Remuneration of the risk classification agency hired by the fund may be an expense of the fund when it is deducted of the administration fee and this possibility is stated in the fund´s regulation.

It is the administrator's duty to watch over in order that the hiring of third parties´ expenses do not exceed the total amount of the administration fee fixed in the regulation, incurring the payment of any expenses exceeding this limit at his/her expenses.

The fees cannot be increased without the general assembly's previous approval, but they can be reduced unilaterally by the administrator, who shall immediately communicate CVM and the quotaholders this fact, making the due alteration to the regulation and, if that is the case, to the brochure.

In the open-end funds, the administration and performance fees shall be provisioned per business day, always as a fund expense, and they shall be in accordance to what is established in the regulation.

The investment funds and quota investment funds, not directed exclusively to qualified investors who acquire quotas from other investment funds, shall establish in their own regulation that the administration fee charged by the administrator include the administration fee of the investment funds in which they invest. This does not impede that the fund's regulation establishes a maximum administration fee, including the administration fee of the funds in which they invest, and a minimum administration fee that do not include the administration fee of the funds in which they invest, case in which: (a) the brochure and any other advertising material that mentions the administration fee shall stand out both fees, explaining their differences; and (b) the brochure and any advertising material that makes a comparison of any nature between the funds, shall refer, in the comparison, only to the maximum tax allowed to the reference, in note, and to the minimum tax and the effective tax in other periods, if any.

The performance fee is admitted when its collection is in the fund´s regulation other than funds classified as "short-term", "referenced" and "fixed income", which are expressly prohibited from charging a performance fee. The collection of the performance fee shall meet the following criteria: (a) bond to a reference parameter compatible with the fund investment policy and with the securities that are effectively part of it; (b) prohibition of a bond to the performance fee in a percentage that is inferior to 100% of the reference parameter; (c) collection per period, at least half-yearly; and (d) collection after the deduction of all expenses, including the administration fee. The collection of a performance fee is forbidden when the value of the fund's quota is inferior to its value when the collection was made. The collection of an adjustment over the quotaholder's individual performance that applies monies in the fund after the date of the last collection, is allowed exclusively in the cases in which the acquired quota value is inferior to its value on the date of the last collection for the performance accomplished. The funds dedicated exclusively to qualified investors are not subject to the prohibitions discussed herein and can charge a performance fee according to what is set forth in their regulation.

Advisory councils, technical or investment committees can be constituted, without harm to the responsibilities of each one of the fund´s administration service providers, by the initiative of the quotaholders, administrator or manager, who cannot be remunerated at the fund expenses. The attributions, composition and requirements for a call and the deliberation by councils and committees shall be established in a regulation. The existence of councils does not exempt the administrator or manager from the responsibility over the operations of the fund's portfolio. The council or committee members shall inform the administrator and quotaholders about any situation that might put them potentially or effectively in a situation of conflict of interests with the fund.


The administrator cannot practice any of the following acts on behalf of the fund:

  1. to receive a deposit in current account;
  2. to contract and make loans, except for a modality authorized by CVM;
  3. to make guarantee, surety and acceptance or take on a common obligation under any other form;
  4. to sell quotas in installments, without harm to the term payment of subscribed quotas;
  5. to promise quotaholders a pre-determined yield;
  6. to make operations with shares outside the stock exchange or outside the over-the-counter market organized by a CVM authorized organization, except for the hypothesis of public distributions, exercise of the preemptive right and conversion of debentures in shares, exercise of subscription bonuses and in the cases in which CVM has given a previous and express authorization;
  7. to make use of resources from the fund to pay quotaholders' financial loss insurance; and
  8. to practice any act of liberality.

The investment funds shall use their assets to guarantee their own operations as well as to borrow securities, if such activities are performed exclusively through a service authorized by Bacen or CVM.


The administrator's obligations include the following:

  1. diligence so that the following may be kept, at his/her expenses, updated and in perfect order: (a) the quotaholders registry; (b) the general meeting's book minutes; (c) the quotaholders´ book presence list; (d) the independent auditor's opinion; (e) the accounting record regarding the fund´s operations and assets; and (f) the documents regarding the fund operations, for a term of five years;
  2. in case CVM instates an administrative proceeding, keep the above-mentioned documentation until the end of the five-year term;
  3. to request, if it is the case, the admission to negotiation of closed-end fund quotas in the stock exchange or in an organized over-the-counter market;
  4. to pay an injunction fine, in the terms of the legislation in force, for each day of delay in the fulfilling of his/her obligations;
  5. to exercise, or make a diligence to exercise, all the rights arising from the assets and activities of the fund, except for what is set forth in the regulation on the policy regarding the exercise of the right to vote;
  6. to elaborate and advertise the information which is outlined below in the subsequent Section (Section 12. Disclosure of information and results);
  7. to maintain updated with the CVM the list of service providers hired by the fund, as well as other registry information;
  8. to employ, in the defense of the quotaholders´ rights, the diligence required by the circumstances, practicing all the acts needed to assure them, and adopting the due legal measures;
  9. to exercise his/her activities always searching the best conditions for the fund;
  10. to bear the expenses with advertising of the fund, including the elaboration of the brochure;
  11. to transfer to the fund any benefit or advantage that he/she might reach due to his/her condition of administrator, exceptionally admitting that the administrator of the investing quota fund be remunerated by the invested fund administrator;
  12. to keep the quotaholder customer service responsible for the clarification of doubts and the reception of claims according to the definition of the fund's regulation or brochure;
  13. to observe the dispositions part of the regulation and brochure;
  14. to follow the general meeting's deliberation;
  15. to inspect the services provided by third parties hired by the fund.

The quotaholder customer service should be subordinated directly to the director responsible for the fund´s administration before CVM or to another director especially indicated to CVM for this function, or still, according to the case, to a director indicated by the organization responsible for the fund´s distribution or management, hired by the fund.

11.1. Norms of Conduct of the Administrator and the Manager

The administrator and the manager are obliged to adopt the following norms of conduct:

  1. their activities must always seek the best conditions for the fund, applying all the due care and diligence that any active and virtuous person applies to the administration of his own businesses, acting with loyalty in relation to the interests of the quotaholders and the fund, avoiding practices that could harm the fiduciary relationship with them and responding to any infractions or irregularities that might occur under his administration or management;
  2. to enforce or pay attention so that all the rights arising from property and the activities of the fund can be enforced, excluding what is set forth regularly about the related policy regarding the exertion of the fund's right to vote; and
  3. to employ, in the defense of the rights of the quotaholders, all due diligence required by the circumstances to perform all necessary acts to assure they occur and adopt all due legal measures.

The administrator and the manager shall transfer to the fund any and all benefits or advantages they may have due to their condition, admitting, however that the administrator and the manager of the quota fund are remunerated by the administrator of the invested fund.

11.2. Substitution of the Administrator and/or the Manager

The fund's portfolio administrator and manager shall be replaced in case they: (a) are discredited for the exercise of the portfolio management activity by CVM' s decision; (b) renounce; or (c) are destitute by a general meeting deliberation.

In the events of renunciation or discredit, the administrator shall be obliged to immediately call the general meeting to elect its substitute, election to be held in a term of up to 15 days, the call for a general meeting being also possibly made in both cases by the quota holders who have at least 5% of the issued quotas, or by CVM in cases of discredit. In case of renounce, the administrator shall remain in full exercise of his/her functions until his/her effective replacement that shall occur in a maximum term of 30 days, under penalty of the fund´s liquidation by the administrator. In case of discredit, CVM shall appoint a temporary administrator until the election of the new administration.


12.1. Periodical Information

The fund administrator is obliged to:

  1. advertise, daily, the value of the quota and the net equity value for the open-end fund;
  2. send to the quotaholders monthly the accounts statement containing: (a) name and number of the fund's enrollment with the CNPJ; (b) name, address and registration number of the administrator with the CNPJ; (c) name of the quotaholder; (d) balance and value of the quotas in the beginning and in the end of the period and the movement occurred in the middle; (e) profitability of the fund between the last business day of the previous month and the last business day of the balance reference month; (f) date of issuance of account balance; and (g) telephone, electronic mail and correspondence address of the quotaholder customer service;
  3. make available the information on the fund including the ones related to the portfolio composition, at least in the terms of periodicity, term and tenor of the information, in an even way among all quotaholders.

In the event the fund holds positions or operations in course that might be harmed by their disclosure, the statement of portfolio composition can omit their identification and quantity, registering only the value and their percentage over the total portfolio. The omitted operations shall be disclosed in the maximum delay of: (a) 30 days, unextendable, in the "short term" and "referenced" funds; and (b) in all other cases, 90 days from the end of the month, with this term being extendable once only, based on a request submitted for approval to the CVM with a maximum term of 180 days.

In case the administrator discloses to third parties information regarding the portfolio composition, the same information shall be made available to the quotaholders in the same periodicity, except for the hypothesis of disclosure of information by the administrator to the fund service providers, needed for the execution of their activities, as well as the regulating bodies, auto-regulating organizations and class agencies as to their members to meet legal, ruling and statutory requests formulated by them.

The administrator is not obliged to send the monthly accounts statement in the cases in which quotaholders, through the signature in a specific document, expressly choose the non reception of the statement. However, the administrator must keep such document at the disposal of the CVM, for a term of five years.

In case the quotaholder does not communicate to the administrator of the fund his/her new address, either for the sending of a correspondence by letter or by electronic means, the administrator will be exonerated from sending the information set forth in the applicable regulations from the last correspondence that was sent back due to non correction of the declared address. The administrator shall keep the returned mail at the disposal of the inspection of the CVM while the quotaholder does not redeem all his/her quotas.

The administrator shall submit the following documents through the Document Sending System available on the webpage of the CVM, according to the templates available on the aforementioned page:

  1. daily newsletter, within a term of two business days;
  2. monthly newsletter, up to ten days after the closing of the month to which they refer to: (a) trial balance sheet; (b) statement of the portfolio composition and diversification; and (c) monthly profile;
  3. annually, within a term of ninety days from the closing of the fiscal year to which the accounting statements accompanied by the independent auditor's opinion refer to;
  4. standard form with basic information about the fund called "the Statement of Information about the Fund" whenever there is an alteration to the regulation, from the date of the beginning of the validity of the alterations decided in the general meeting.

The delay to rectify the information is three business days from the end of the term established to present the documents. When the fund adopts the policy of using the voting right in general meetings in companies in which it holds a participation, the monthly profile shall necessarily include: (a) the summary of the tenor of the votes issued by the administrator or by his/her representatives legally constituted in the general and special meetings of the companies in which the fund has a participation, that have been held in the fiscal year; and (b) summarized justification of the vote issued by the administrator or by his/her legally constituted representatives, or the summarized reasons for his/her abstention or non presence in the general meeting.

12.2. Occasional Information

The officer is obliged to immediately disclose, by means of a correspondence to all quotaholders and by a communication through the Document Sending System available on the webpage of the CVM, any relevant act or fact occurred or related to the functioning of the fund or the assets part of the portfolio. It is considered relevant any act or fact that might reasonably influence the value of the quotas or in the decision of the investors to acquire, alienate or keep such quotas. The relevant fact shall be immediately communicated through the Document Sending System available on the webpage of the CVM, with the information being also disclosed at the address of the CVM on that site. Any changes related to the subjects which must be included in the brochure and in the regulation of the fund are considered relevant facts, without exclusion of other facts.

12.3. Sales and Distribution Information

The advertising material of the fund, as well as the information relevant to it, must comply with the brochure, the regulation and the other documents registered at CVM. In case the advertising text presents errors or improprieties which might induce the investor to evaluation mistakes, CVM can require that rectifications and clarifications are advertised, with equal highlight, through the media used to advertise the original advertising text, requiring to put in an express way that the information is being re-published by determination of the CVM.

No advertising material can assure or suggest the existence of a guarantee in the future results or risk exemption for the investor.

Any advertising of information on the results of the fund can only be made, by any means, after a grace period of six months from the date of the first emission of quotas.

All advertised information by any means, in which a reference to the fund's yield is included should obligatorily:

  1. mention the date it starts functioning;
  2. to include, additionally to the information disclosed, the monthly profitability report and the accumulated profitability over the past 12 months, bearing in mind the above-mentioned grace period of six months. In this case, the daily description or the description of the period starting from its incorporation is not obligatory;
  3. be accompanied of the monthly average net equity in the last 12 months or since its incorporation if more recent;
  4. advertise the value of the administration fee and the performance fee, if there is any, express in the regulation in force in the last 12 months or since its incorporation, if more recent; and
  5. highlight the fund target public and the restrictions as to the funding, in order to establish permanent or temporary impossibility of access to the fund on the part of the investors in general.

In the event the administrator hires a risk classification company, he must present in all of the disclose material the most recent degree conferred to the fund as well as an indication on how to obtain further information about the performed evaluation. If there is any change in the classification of a fund, or significant change in its investment policy, the administrator shall disclose, additionally and separately to the normal disclosure of the monthly profitability report and the accumulated profitability over the past 12 months, the profitability related to the period after the change, informing the reasons for this double disclosure.

The advertising of yield shall be accompanied of a comparison, in the same period, with a market index compatible with a fund investment policy, if there is one.

In the case of disclosure of information that have as a basis comparative analysis with other investment funds, we should simultaneously inform the dates, periods and sources of information used, the adopted criteria of comparison and everything else that is relevant to allow an adequate evaluation by the market of the compared data disclosed.

Whenever the advertising material presents information regarding previous years yield, a highlighted warning should be included, that: (a) the yield obtained in the past does not represent a guarantee of future results; and (b) the investments in funds are not guaranteed either by the administrator or by any insurance mechanism or, still, by the credit guarantee fund.

12.4. Financial Statements and Audit Reports

The fund shall have its own bookkeeping, having accounts and financial statements segregated from those of the administrator.

The fiscal year of the fund shall be closed every twelve months when the financial statements of the fund related to the ended year shall be done. The closing date of the fiscal year of the fund shall coincide with the end of one of the months of the civil year.

The financial statements shall be put at the disposal of any interested person who requests them for the administrator, within a term of ninety days after the closing of the year.

The elaboration of financial statements shall observe the specific norms issued by CVM.

The fund´s financial statements shall be annually audited by an independent auditor registered at CVM, observed the norms that discipline the exercise of this activity. The auditing of the financial statements is not compulsory for funds that are in operation for less than ninety days.

12.5. Additional Information

At any moment CVM can request documents, additional information or modifications in the presented documentation as well as to request the correction of procedures that might have been adopted not in compliance with the legislation in force.

CVM can determine that the information set forth herein, regarding the quotas, as well as the other information requested by CVM, periodic or eventual, must be presented by electronic means or in the CVM webpage according to the structure of the data bank and programs supplied by CVM.

Electronic mail is considered a valid correspondence from between the administrator and the quotaholders. The sending of information by electronic means depends on the agreement of the fund´s quotaholder being the administrator's duty and responsibility the custody of such authorization. All communications will be considered done on the date they are sent.


13.1. General Dispositions

With respect to financial assets abroad, the following conditions shall be observed:

  1. up to 100%, for the funds classified as "foreign debt" and for funds of any class which require a minimum investment, per investor, of R$ 1 million;
  2. up to 20% for the ones classified as "multimarkets" and
  3. up to 10% of its net equity, for any other type of fund.

As a general rule, "foreign debt" funds must invest at least 80% of their equity in instruments representing the foreign debt under the responsibility of the Union1, the investment of up to 20% of the net worth in other credit instruments traded in the international market being allowed. After compliance with those requirements, any remaining capital can be used in transactions in the derivatives organized markets: (i) abroad, solely for hedging purposes with respect to instruments in the portfolio, or in deposit account in the name of the fund, abroad, due respect being given, in this case, to 10% of the respective net worth; or (ii) in Brazil, also exclusively for hedging purposes of securities in its portfolio and so long as they are backed on instruments representing the foreign debt under the responsibility of the Union, or to be kept in deposit account in the name of the fund, within the Brazilian territory, due respect being given, in this case, to 10% of the respective net worth. Thus, transactions in organized derivative markets may occur in those managed by commodities and futures exchanges, and on the over-the –counter market, in this case so long as registered with the Central of Custody and Financial Settlement of Securities – CETIP, and expenses effectively incurred in the posting of security margins for guarantees in cash, daily adjustments, premiums and operating costs, resulting from the maintenance of positions on the organized derivative markets in the country should be factored in. No maintenance or investment in Brazil of capital raised by the fund is allowed, save in the case of transactions carried out in organized derivative markets in Brazil, exclusively for hedging of securities in the portfolio and provided that backed on instruments representing the foreign debt under the responsibility of the Union or for maintenance at demand deposit accounts in the name of the fund, in Brazil, altogether, the limit of 10% of the respective net worth. There are no limits, however, when the foreign debt funds decide to invest in financial assets abroad.

The applications in assets abroad shall be considered, cumulatively, in all calculations of the corresponding limits of concentration by issuer and modality.

The regulation, the brochure and the sales material of the fund shall contain a highlighted warning that the fund is authorized to perform applications in foreign financial assets. In the event the fund's investment policy permits the application of quotas in other funds, the administrator shall assure that the limits of application there referred shall not be exceeded in the consolidation of the applications of the investor fund with the invested funds.

13.2. Limits per Issuer

The fund shall observe the following concentration limits per issuer, without prejudice to the norms applied to its class:

  1. up to 20% of the equity of the fund when the issuer is a financial institution authorized by Bacen;
  2. up to 10% of the equity of the fund when the issuer is a publicly-held corporation;
  3. up to 10% of the equity of the fund when the issuer is an investment fund;
  4. up to 5% of the equity when the issuer is an individual or private company, i.e. a legal entity that it is not a publicly-held corporation or financial institution authorized by Bacen; and
  5. there are no limits when the issuer is the Federal Government.

For the purposes of the calculations of the above-mentioned limits:

  1. the individual or company, the investment fund and the equity separated according to the law, obliged or co-obliged by the liquidation of the financial asset shall be considered the issuer;
  2. the financial assets that are responsibility of issuers of the same economic group, i.e., the ones composed by the issuer and their controllers, subsidiary or associated companies or submitted with it to a common control shall be considered as the same issuer;
  3. the owner of the rights that assure the preponderance in the deliberations and the power to elect the majority of the administrators, directly or indirectly shall be considered the controller;
  4. two companies when one is the owner of 10% or more of the capital stock or the equity of the other, without being its controller shall be considered associated; and
  5. two companies that have the same controller, either direct or indirect, except when they are publicly-held corporations with shares traded in a stock exchange following a list that requires at least 25% of the shares circulating in the market shall be considered submitted to common control.

The fund shall not detain more than 20% of its equity in securities issued by the administrator, manager or companies associated to him/her, bearing in mind cumulatively that: (a) the acquisition of stocks issued by the administrator is forbidden, except in the case of a fund whose investment policy allows the search to reproduce a market index in which the shares of the administrator or companies associated with him/her are part, in which case such shares could be acquired at the same proportion of its participation in the respective index; and (b) the regulation shall dispose on the maximum percentage of application in quotas of investment funds administered by its administrator, manager or company associated to him/her in the terms item (iv) of the previous paragraph.

The values of the positions of the fund in derivative contracts shall be considered in the calculation of the above-mentioned limits, cumulatively in relation to: (a) the issuer of the subjacent asset; and (b) the counterpart, when it refers to derivatives without guarantee of settlement by the clearing houses or services authorized by Bacen or CVM.

In this regard, derivative contracts shall be considered according to the exposition value, current and potential that might incur in the positions detained by the fund, verified on a consistent methodology that can be checked.

In operations that do not guarantee settlement by clearing houses or services authorized by Bacen or CVM, the positions detained by the fund in operations with the same counterpart shall be consolidated, bearing in mind, in this case, the net positions of exposition, in the event bilateral compensation has not been contractually dismissed.

In the committed operations, the limits established to the issuers shall be observed:

  1. regarding the issuers of the assets object: (a) when alienated by the fund with a repurchase commitment; and (b) whose acquisition has been hired based on forward operations admitted by the Brazilian Monetary Council (Conselho Monetário Nacional – CMN);
  2. in relation to the counterpart of the fund, in the operations without the guarantee of a settlement by clearing houses of clearing services authorized by Bacen or CVM.
  1. The following committed operations shall not be submitted to the limits set forth above:
  1. backed by federal public securities;
  2. purchase operations carried out by the fund with a resale commitment if they count on the guarantee of settlement by the clearing houses or services authorized by Bacen or CVM; and
  3. forward sales admitted by CMN.

The treatment given to derivative contracts and in operations that do not guarantee settlement by clearing houses or services authorized by Bacen or CVM shall also be observed in the following types of committed operations: (a) those settled at the discretion of one of the parties; and (b) forward sales or purchases.

The limits established herein do not apply to the quotas of investment funds when acquired by investment funds that invest in quotas of investment funds, which must keep at least 95% of its invested assets in quotas of investment funds of the same class. The only exception is the investment fund that invest in quotas classified as "multimarket", that can invest 100% of its invested assets in quotas of funds of different classes without any restriction whatsoever because this is the peculiarity that distinguishes the multimarket fund in relation to the other investment funds. The other 5% of the fund´s assets can be kept in on sight deposits in federal government securities, fixed income securities issues by a financial institution and compromised operations, according to the specific CMN regulations.

If the investment policy of the fund allows the application in quotas of other funds, the officer shall be assured that in the consolidation of the applications of the investor fund with the invested funds, the limits of application referred to herein cannot be exceeded, nevertheless considering that the investment fund in quotas shall not be obliged to consolidate the applications in quotas of authorized invested funds, if its portfolios are managed by third parties not related to the officer or manager of the investor´s fund.

Regarding the applications of the investment funds that are not investment funds that invest in quotas of investment funds, the following are forbidden: (a) the applications of the fund in fund quotas for those who might invest in it; and (b) applications in fund quotas that are listed in item (i) of the paragraph below.

13.3. Limits by Modality of Financial Assets

Cumulatively to the limits per issuer, the fund shall observe the following limits of concentration per modality of financial asset, without prejudice to the rules applicable to its class:

  1. up to 20% of the equity of the fund for the group of the following assets: (a) quotas of registered investment funds; (b) quotas of investment funds that invest in quotas of registered investment funds; (c) quotas of Real State Investment funds – FII; (d) quotas of Credit Rights Investment Funds – FIDC; (e) quotas of Investment Funds that invest in Credit Rights Investment Funds – FIC-FIDC; (f) quotas of funds of index of companies listed on the stock market or in the organized over-the-counter-market; (g) Certificate of Real Estate Receivables – CRI; and (h) other financial assets not previewed in item (ii) below. Under certain conditions, the investment funds may exceed the limit mentioned in letters (a), (b) and (f) of item (i) above. The operations with derivative contracts are included in the calculation of the limits established for their assets. For the assets object of the committed operations in which the fund assumes the commitment of repurchase are applied, the 20% limit prevails.
  2. there shall be no limit of concentration by modality of financial asset to the investment in: (a) public federal titles and committed operations backed by those titles; (b) gold, if acquired or alienated in negotiations accomplished on Commodities and Futures Exchanges; (c) titles issued by or co-obligated of a financial institution authorized by Bacen; (d) securities different from those provided for in item (i) above, if registered with CVM and object of a public offer according to the applicable CVM regulations; and (e) derivative contracts, except if referred to in the assets listed on item (i) above.

13.4. The Duties of the Administrator and Manager as to the Limits of Concentration

The administrator and the manager shall respond to the non-observance of the concentration limits by issuer and by modality of financial asset, portfolio composition and concentration, and concentration of risk factor established in the CVM regulations and in the fund´s regulation.

Without prejudice to the responsibility of the manager, the administrator shall inform him/her and the CVM of the occurrence of any non-compliance by the end of the following day of the non-compliance date.

The limits referred to in the CVM regulations or established in the fund´s regulation shall be complied daily, based on the equity of the fund from the previous business day.

The fund´s regulation may reduce but may not increase the maximum limits established in the CVM regulations.

The administrator and manager shall accompany daily all compliances to the limits established herein and the risk factor of the portfolio of the fund in order to maintain the class adopted in the fund´s regulation and the investment policy of the fund.

The main risk factor of a fund is understood as the price index, the interest rate, the share index or the price of the asset which variation produces potentially more effects over the market value of the portfolio of the fund.

The administrator and the manager are not subject to the applicable penalties for the non compliance with the limits of portfolio concentration and diversification and risk concentration, defined in the fund´s regulation and investment in the legislation in force, when the non-compliance is caused by passive non compliance, due to facts that are exogenous and foreign to his/her will, that cause unexpected and significant alterations to the net equity of the fund or in the general conditions of the capital market, if this non-compliance does not exceed the maximum term of 15 consecutive days and does not imply in alteration of the tax treatment conferred to the fund or the fund´s quotaholders. The administrator shall communicate to CVM after having exceeded the term of 15 days referred to herein, the occurrence of the non-compliance, with the due justifications, informing the compliance of the portfolio at the moment it occurs.

If CVM verifies that the non-compliance with the portfolio composition, diversification and risk concentration limits defined in the different classes of investment funds, has extended for a period superior to the 15-day term, shall determine to the administrator, without harm to the appropriate penalties, the call for a general quotaholders´ meeting to decide on one of the following alternatives: (a) transference of administration or management of the fund, or both; (b) merger with another fund, or (c) liquidation of the fund.

At the time of its incorporation, the fund shall have the following maximum terms to reach the limits of concentration per issuer and per modality of assets established in its regulation: (i) 60 days from the date of the first subscription of quotas for open-end funds; or (ii) 180 days from the date of the end of distribution for closed-end funds; and (iii) the acquisition of quotas from investment funds, up to the limit, by each investment fund, of 10% of the net equity of the investor fund, if expressly set forth in the fund´s regulation and brochure. This limit does not apply to investment funds classified as "foreign debt". Applications in quotas of funds that invest in investor funds are forbidden. The investment funds classified as "long term" can only invest in quotas of investment funds also classifies as "long term".


The merger or consolidation of a fund is allowed under the following conditions:

  1. whenever the funds have an investment policy compatible, the implementation of the operation shall occur immediately after the general meeting that deliberates about the merger or consolidation is held;
  2. if, however, the funds have a differentiated investment policy, the implementation of the operation can only occur after the alteration of the regulation is done.

In case of merger, division or consolidation involving a fund organized under the form of a closed-end condominium, the administrator shall proceed with the alterations to the regulation and accept the request of quota redemption of the quotaholders that do not agree with the general meeting's deliberation, abstain or do not come to the meeting. The request for the redemption of quotas shall be formulated up to ten days after the communication of the deliberation to the quotaholders and the payment of the redemption value is done at a maximum of ten days after the quotaholder's request.

The financial statements of each one of the funds object of the division, merger, consolidation or transformation, found in the date of the operation, shall be audited in a maximum term of 60 days, counted from the date the event is accomplished by an independent auditor registered at CVM, and the criteria used for such equalization of quotas among the funds shall be part of the explanatory notes. The parameter used for the conversion of fund quotas values in the cases of merger, consolidation or division as well as the value of the quotas of the funds resulting from such operations shall be part of an explanatory note.

In the cases of division, merger, consolidation and transformation the following documents shall be delivered to the CVM through the Document Sending System at the date of the beginning of the term of the events deliberated in the meeting: (a) new regulation; (b) brochure duly updated, whenever it is the case; and (c) proof of entrance of the request of discharge of the registration with the CNPJ of the funds closed due to merger or consolidation. The fund administrator shall keep at the disposal of CVM an auditor's opinion regarding the statement of division, consolidation or merger.

Subject to the previous authorization of CVM: (a) an open-end fund can be transformed in a closed-end fund; and (b) an investment club can be transformed in a closed-end or open-end fund. For the purposes of this authorization the fund administrator shall send to CVM, through the Document Sending System available on the CVM webpage, the documents referred to in the previous paragraph, within a maximum term of 15 days after the meeting is held. After the authorization of the CVM, the fund´s officer shall concede a term not inferior to 30 days for the request of redemption of quotas of the quotaholders that do not agree with the general meeting's deliberation. The redemption of the quotas shall be made in the conditions existing before the general meeting that deliberated for the transformation of the open-end fund into a closed-end fund or the investment club into fund was held.


15.1. Liquidation

After 90 days of the beginning of the activities, the open-end fund that keeps at any time average net equity inferior to R$ 300 thousand for a period of 90 consecutive days shall be immediately liquidated or merged with another fund.

In case of the fund´s liquidation by deliberation of a general meeting, the administrator shall promote the division of its assets among the quotaholders in the proportion of their quotas, within a maximum term of 30 days from the date the meeting was held. The general meeting shall deliberate regarding the form of payment of the values due to the quotaholders. The independent auditor shall issue an opinion about the statements of the net equity movement, comprehending the period between the date of the last audited financial statements and the effective date the fund was liquidates giving his opinion about the movements occurred during the period. In the explanatory notes to the financial statements of the fund there must be an analysis regarding the fact that the redemption values were or not made with equal conditions and according to the regulations as well as to the existence or not of debts, credits, assets or liabilities not accounted.

15.2. Closing

After the payment to the quotaholders of the total value of their quotas, including in case of closing due to redemption, the administrator of the fund shall send to CVM, through the Document Sending System at CVM webpage within a term of 15 days, the following documentation: (a) minutes of the general meeting that have deliberated on the fund's liquidation, whenever the case, or a closing term signed by the administrator in case of total redemption; and (b) proof of entrance of the request and discharge of the enrollment with the CNPJ. The administrator shall keep at the disposal of the inspection of the CVM the auditor's opinion regarding the statement of liquidation of the fund after a term of 90 days from the date of delivery of the documents referred to herein.

15.3. Other Events

In case it is decreed an intervention, temporary special administration, out-of-court settlement, insolvency or bankruptcy of the fund administrator, the liquidator, the temporary administrator or the intervener are obliged to comply with what is set forth in the CVM regulations. It is allowed to the liquidator, temporary administrator or intervener, according to the case, request to CVM that in appoints a temporary administrator or call a general quotaholders´s meeting to deliberate on the transference of the administration of the fund to another financial institution accredited by CVM or under its liquidation.


It is considered a serious infraction, according to CVM rules, any of the following conducts:

  1. distribution of quota funds without registration with CVM;
  2. distribution of quotas of funds by a person or institution who/which is not part of the distribution system;
  3. the exercise by the administrator of non-authorized activity, or the hiring of third parties who are unauthorized or qualified for the provision of certain services (management of the fund´s portfolio; investment consultancy; the securities treasury, control and processing activities; distribution of quotas; writing of the issuance and redemption of quotas; custodianship of the securities and other financial assets; and risk classification per specialized agency constituted in the country);
  4. non-compliance with the fund's investment policy;
  5. non-compliance with the deliberations taken in general quotaholders´ meetings;
  6. non-publication of a relevant fact;
  7. non-observance of the accounting rules applicable to the funds;
  8. transformation of an opened-end fund in a closed-end fund without the authorization of CVM;
  9. non-observance of the dispositions of the fund's regulation;
  10. de-characterization of the class shares adopted by the fund, except in "multimarket" class funds;
  11. non-observance of the concentration limits per issuer and asset modality;
  12. non-observance of the rules related to concentration in private credits; and
  13. non-observance by the administrator or by the fund's manager of the duties and obligations required under the current regulations.

Without prejudice to other applicable penalties contemplated in the legislation, the administrator is subject to a daily fine of R$ 200, due to non-compliance with the terms previewed in CVM regulations2.

CVM can deem responsible other directors, employees and representatives of the administrator or manager of the fund, in case it is verified his/her responsibility for the non-compliance with the dispositions of the applicable regulations.

These rules are applied to all investment funds registered with CVM in what they are not contrary to the specific provisions and norms governing such funds.


In addition to the importance of CVM in the regulation of the mutual fund industry in Brazil, it is also necessary to mention ANBIMA´s self-regulation activities. ANBIMA has created and instituted Self-Regulation Codes in which the market participants themselves establish regulatory standards that are far more rigid than the prevailing legislation. Self-Regulation contributes to raising the standard operational practices in the market and instilling greater investor transparency. There is a Self-Regulation Code for the Investment Funds Industry (the "Code"), that demands that fund managers be prepared to produce and disseminate among investors brochures or prospectuses duly updated with more detailed information on which to base an investment decision. The Code also establishes rules on fund publicity, dissemination of results by fund managers as well as norms and guidelines relative to marking to market procedures.

The compliance with the principles and rules of the Code shall be mandatory for the Participating Institutions. The Participating Institutions comprise the institutions associated to ANBIMA and the institutions that while not associated, expressly adhere to the Code through the signature of the appropriate adhesion agreement. The Participating Institutions are subject to the provisions contained in the Code should they perform one or more of the following activities: (a) management of investment funds; (b) funds´ portfolio management; (c) funds´ consultancy; (d) distribution of funds´ quotas; (e) funds´ treasury; (e) funds´ assets control; (f) funds´ liabilities control; and (g) funds´ assets custody.


In general, investment funds are not subject to taxation in Brazil, since they are considered "see-through" for tax purposes. Accordingly, tax on income earned by these funds´ portfolios from fixed income financial investments and/or variable income (stock market, commodities, etc) is levied on the investors (i.e. on the quotaholders of the fund).

From a tax standpoint, the applicable rate will vary according to maturity term of the investment made in the fund. A "long term fund" is a fund which invests in fixed rate securities with a maturity date of more than 365 days3. A "short term fund" is a fund which invests in securities that do not comply with long term fund rules.

The income earned by the investors derived from an investment in a local fund is subject to the Brazilian withholding income tax in accordance with the table transcribed below (Table 1). The period is counted from the date of acquisition and the date of redemption of quotas – for each acquisition.

Table 1

Applicable Tax Rate

Maturity Term


180 days


from 181 days 360 days


from 361 days to 720 days


More than 720 days

The income from an investment in a "short term fund" is subject to the Brazilian withholding income tax according to the period between the date of acquisition and the date of redemption of quotas (Table 2). The period is calculated for each acquisition of quotas.

Table 2

Applicable Tax Rate

Maturity Period


6 months


more than 6 months

The fund´s manager withholds the income tax at source on each maturity date of the fund, for funds whose maturity date periods are less than or equal to 90 days. For funds whose maturity date period is longer than 90 days and funds without a maturity date, the income tax is withheld on the last working day of May and November of each year and on the date of the redemption of quotas, if it occurs before.

In the case of the "long term fund", the fund´s manager withholds the income tax at the rate of 15% on the last working day of May and November of each year. The difference, if any (between the effective rate applying at rates varying from 22.5% to 15%) must be withheld at the date of the redemption.

For a "short term fund" the fund´s manager withholds 20% income tax at source on the last working day of May and November of each year and on each redemption date between these two dates. The rate difference (2.5%) will be withheld on the date of redemption, if applicable, according to the rules for the fixed rate investments.

For stock funds the tax is withheld upon the redemption of the quotas.

In addition, there is also a tax known as "IOF"4, which should be considered. The IOF tax is levied on investments in fixed rate investments (bonds and investment funds). If applicable, it is deductible from the income tax withheld. The fund administrator withholds these taxes.

The IOF tax is calculated on the value of the redemption of fixed income investments (including funds) at a maximum rate of 1% per day, limited to the income generated on this operation. The tax applies on a diminishing basis in accordance with rates that decrease according to the period of investment, from 96% to zero of the redemption value. Therefore, the IOF tax is not applicable when redemption takes place 30 days or more after the investment. As mentioned before, the IOF tax levied on investments in funds or fixed rate bonds can be deducted in the income tax withholding calculation.

The issue of quotas by an investment fund is not subject to capital tax. There is no transfer taxes, stamp duty or the like on the purchase or sale by Brazilian funds of shares or securities of Brazilian or foreign companies. Usually funds do not distribute profits except when quotas are being redeemed.

Thus, investors must know the average term of the portfolio of the fund they invest their money and therefore the fund administrator and portfolio manager have the responsibility to inform the time of investments in the portfolio. The longer the investment time, the lower the applicable withholding income tax rate is (withheld at source). Consequently, for investors seeking to pay less tax will have to do more than simply investing for longer in the fund. They will have to make sure that they are investing in product with long-term securities.

Investment fund managers (e.g. full-service banks and investment banks) are subject to Corporate Income Tax at the rate of approximately 25% as well as Social Contribution on Net Income (CSLL tax) at the rate of 15%. However, fund managers could be incorporated as a non-financial entity and, in this case, the CSLL tax rate is 9%. There is also the Contribution for the Social Integration Program (PIS) and the Social Security Contribution (COFINS). The PIS and COFINS taxes apply on gross income at 4% and 0.65%, respectively, in the case of financial institutions. For non-financial entities, the applicable rates are 7.6% (COFINS tax) and 1.65% (PIS tax) – for non-cumulative basis tax credits are allowed. For cumulative basis these taxes apply at 3% (COFINS tax) and 0.65% (PIS tax) and no tax credits are allowed.

There is also a municipal tax - the service tax (ISS tax), which is levied on management fees. The tax rates are charged by the municipalities and vary from 2% to 5% (minimum and maximum rates established by the Federal Constitution). The city of São Paulo charges the ISS tax at the rate of 2.5% on such services.


1. The acquisition of securities representing the foreign debt under the responsibility of the Union is exclusively for foreign debt funds, as provided by the National Monetary Council. These securities must be kept overseas, in a custodian account, in the System Euroclear or LuxClear – Central Securities Depositary of Luxembourg (CEDEL). Securities making the fund's portfolio must be deposited in the custody of entities authorized to provide such services by the relevant local authority.

2. CVM may impose the following penalties on the violators: (i) warning; (ii) fine; (iii) suspension from duties of a director administrator or member of the fiscal council statutory audit committee of a publicly-held corporation, from an entity taking part of the distribution system, or from other bodies which require authorization by or registration with CVM; (iv) temporary disqualification, up to a maximum period of 20 years, from occupying the posts mentioned in the previous item; (v) suspension of the authorization or registration for the execution of the activities covered by this law; (vi) cancelation of the registration or of the authorization to carry out the activities covered by the law; (vii) temporary prohibition, up to a maximum period of 20 years, from practicing certain activities or transactions, to the entities that compose the distribution system or other entities that depend on authorization by or registration with CVM; (viii) temporary prohibition, for a maximum period of 10 years, to operate, directly or indirectly, in one or more types of transaction in the securities market.

3. Article 1 of Law No. 11033, of December 21, 2004, published in the DOU (Brazil) of December 22, 2004, which amends the taxation of financial and capital markets and creates the Tax System for Incentive of Modernization and Expansion of the Port Structure – REPORTO, and Article 6 of Law No. 11.053, of December 29, 2004, published in the DOU (Brazil) of December 30, 2004, which regulates the taxation on social securities benefits plans.

4. Articles 25 to 35 of Decree 6306, of December 14, 2007, published in the DOU (Brazil) of December 17, 2007, which regulates the tax on transactions relates to securities (Imposto sobre Operações relativas a Títulos ou Valores Mobiliários – IOF).

To read Part 1(b) of this article please click on the 'Previous Page' link at bottom of page

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.