New Freedoms For Brazilian Investors To Hold Foreign Assets Take Effect

Tom Burroughes

2 October 2015

Wealthy Brazil-based investors can now hold more foreign assets in their portfolios after new rules that had been delayed finally kicked into gear yesterday.

The Brazilian Securities Commission, or Comissão de Valores Mobiliários, known as CVM for short, has brought in new rules that widen investor freedoms significantly.

CVM’s Normative Ruling No. 554 sets out new terms for what are deemed to be “qualified investors” and creates the new classification of “professional investor”; the second rule, called 555, sets out new rules on how investment funds are managed, operated and reported.

Figures from the Brazilian asset management sector, attending a recent conference in Luxembourg, told this publication that the rules should see more flows into foreign assets, coming at a time when Brazilian investors are seeking alternatives to an embattled domestic equity market that has been hit by Brazil’s economic slowdown.

Under the changes, as explained by law firm Levy and Salomãdo, investments in assets located outside of Brazil may be equal to up to 20 per cent of their net worth, double the older cap of 10 per cent. On the other hand, the investment funds addressed to professional investors may invest up to 100 per cent of their net worth in assets located abroad. To count as a professional investor, the person must have more than R10 million (around $2.5 million) of investments.