Private Equity Funds have New Regulation in CVM Brazil

New regulation No. 540  has been enacted on November 26, 2013, by the Brazilian Securities and Exchange Commission [Comissão de Valores Mobiliários - "CVM"], to amend CVM Regulation No. 391 of July 16, 2003 (“CVM Regulation 391″), which regulates the equity funds [“fundos de investimentos em participações – FIP”). The new regulation intends to boost investments in small- and medium-sized companies.

The proposed amendments have been based on studies and discussions conducted by the Technical Committee of Smaller Deals [Comitê Técnico de Ofertas Menores - "Committee"], which was formed, among other invited public and private entities, by 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], Commodities and Futures Exchange [Bolsa de Valores, Mercadorias e Futuros - BM&FBOVESPA], BNDESPar, CVM, and the Brazilian Innovation Agency [Agência Brasileira da Inovação - FINEP] with the objective of studying reforms in the Brazilian system to make it possible to finance small-sized companies through the stock market.

The Committee understands that changes in the regulation of FIPs may contribute to increase the investments of such funds in small- and medium-sized companies which obtain financing by distributing stock in the securities market without putting at risk or distorting the characteristics of such funds.

Source: Mondaq News Alerts


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