On November 12, the Brazilian Securities and Exchange Commission (CVM) published Circular Letter 7/2024/CVM/SIN, with the objective of disclosing additional interpretations of the technical area for the adaptation of the remuneration arrangements of service providers in investment funds.

The guidelines provided seek to clarify specific interpretations on the adaptation period of each fund in relation to the disclosure of the remuneration of service providers, according to the date of incorporation or adaptation of the fund to CVM Resolution 175.

Get to know the main points of the letter.

Prohibition of direct payment of remuneration to the allocator fund manager

The Superintendence of Supervision of Institutional Investors (SIN) clarifies that the division of management and performance fees between the invested classes and investors, including in classes considered "mirrors", is allowed after the end of the period of adaptation of investment funds to this resolution, even considering the prohibition on rebate provided for in article 102 of CVM Resolution 175.

The remuneration of the service providers of each class will be available and transparent to the respective investors, as established in the regulations in force.

The technical area reiterated the prohibition of establishing rebate structures in CVM Resolution 175. Thus, service providers of the investee class or investor cannot set up remuneration structures that potentially harm their independence in decision-making or in the expression of investment suggestions.

Adapting compensation arrangements in stock funds

Funds constituted or adapted until November 1, 2024 have until the end of the deadline for adaptation to CVM Resolution 175, that is, until June 30, 2025, to adapt to the commands related to transparency and segregation of fees for service providers.

Adequacy can occur both through segregation in regulation, and by adopting the concept of global rate accompanied by the respective summary of fees, in accordance with Circular Letter 6/2024/CVM/SIN and Circular Letter 3/2024/CVM/SIN.

The CVM also points out possible scenarios, considering the current rules for phasing the adaptation of funds to CVM Resolution 175:

  • Funds adapted before November 1, 2024: they can comply with all commands related to transparency and segregation of service provider fees until June 30, 2025;
  • Funds incorporated under CVM Resolution 175 until November 1, 2024: may comply with all commands related to transparency and segregation of service provider fees until June 30, 2025;
  • Funds constituted as of November 1, 2024: must fully adopt all provisions of the resolution, including those related to transparency and segregation of fees for service providers; and
  • Funds established before the entry into force of CVM Resolution 175 and not yet adapted: must fully adopt all the provisions of CVM Resolution 175, including those related to transparency and segregation of fees for service providers at the time of their respective adaptations to the resolution.

Deadline for maintaining compensation arrangements

Question 1 of Joint Circular Letter CVM/SIN/SSE 02/23 advised that the remuneration arrangements of investment fund service providers would be regular until December 2024 – the final date for adapting the funds to CVM Resolution 175:

  • intended for the general public, qualified or professional constituted until March 31, 2024;
  • that provide for the rebate to their distributor or manager; and
  • that provide for the possibility of remunerating the distributor based on the performance fee, in the case of funds intended for the general public.

The permission to maintain the remuneration arrangements now considers the new deadline for adapting the funds to CVM Resolution 175, extended in accordance with CVM Resolution 200: June 30, 2025.

Reforms brought about by the regulatory framework

The regulatory framework for investment funds came into force on October 2, 2023. The rule updates the rules on the constitution, operation and disclosure of information of investment funds, as well as the rules on the provision of services to the funds – applicable, in general, to all types of funds. The specific rules for each modality were provided for in normative annexes.

Special emphasis was given to the reforms related to FIDCs and the creation of the category of financial investment funds – which replace investment funds in stocks, foreign exchange, multimarket and fixed income.

Normative Annex VI was recently issued with the definitive regulation of Investment Funds in Agribusiness Production Chains (Fiagro), which can bring the capital market even closer to the financing of Brazilian agribusiness.

The CVM's clarifications presented in Circular Letter 7/2024/CVM/SIN provide more security and predictability to the adaptation of the remuneration arrangements of the funds' service providers.

To learn more about the regulatory framework for investment funds, access our ebook:

See also our articles that address other CVM guidelines on the regulatory framework for investment funds:

For more information about Fiagro, visit our articles: