Notice from the Brazilian Securities and Exchange Commission addresses the income distribution policy of Investment Funds in Agribusiness Production Chains (Fiagro)
The Superintendencies of Securitization and Agribusiness and of Accounting Standards and Auditing of the Brazilian Securities and Exchange Commission (CVM) issued Joint Circular Letter CVM/SSE/SNC 1/2025 last Thursday, April 3.
The notice addresses the income distribution policy of the Investment Funds in Agribusiness Production Chains (Fiagro), taking into account provisions of Law 8,668 of June 25, 1993, CVM Resolution 39 of July 13, 2021, and Regulatory Annex VI of CVM Resolution 175 of December 23, 2022.
The letter clarifies that Article 10, sole paragraph, of Law 8,668—which deals with income distribution based on a cash basis—does not apply to Fiagro funds, whether established under CVM Resolution No. 39 or under the new Fiagro framework provided in Regulatory Annex VI of CVM Resolution No. 175. This provision was deliberately excluded from Article 20-F of Law No. 8,668 as it pertains to Fiagro.
Therefore, Fiagro funds must distribute income on an accrual basis, limited to accounting profit—meaning accumulated or current-year profit.
The CVM's Superintendency of Securitization and Agribusiness further emphasizes that the bylaws of FII-Fiagro funds which currently provide for income distribution based on Article 10, sole paragraph, of Law No. 8,668, must be amended to exclude any possibility of distributions exceeding the limits imposed by the accrual accounting regime.
It is also worth noting that, since March 3, 2025, the new Regulatory Annex VI of CVM Resolution No. 175 has been in effect. Fiagro funds operating under the categories of FIDC, FII, or FIP must comply with the new regulations by September 30, 2025, as detailed in Circular Letter No. 1/2025/CVM/SSE.
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