Foreign Investment Advisors May Provide Services In Brazil

It is known that Brazil is interested in becoming a member of the Organization for Economic Cooperation and Development (OECD) and one of the steps for this is the adhesion to the OECD Codes of Liberalisation of Capital Movements and of Current Invisible Operations.

In this regard, in early February 2020 the Brazilian Securities Commission (“CVM”) amended the rule applicable to Brazilian securities advisors (“consultores de valores mobiliários”) in order to allow advisors (individuals and/or legal entities) from other jurisdictions to provide such services in Brazil.

The purpose of the amendment, according to the CVM, is “to align the Brazilian market with best international practices, promoting greater efficiency in the local market, especially with respect to investments by Brazilians in the capital markets of other countries” (Antonio Berwanger, Market Development Superintendent of the CVM).

Under Brazilian regulations, securities advisory services consist of guidance, recommendation and independent advice on investments in the securities market, being the client’s decision whether to adopt the advisor’s recommendations. The guidance, recommendation and advice may focus on types of asset and securities, specific securities, securities market service providers and other securities-related aspects. The activity is similar to that developed by Registered Investment Advisors (RIA) in the U.S., but Brazilian advisors are not allowed to act as attorneys or representatives of their clients before brokers to implement and execute the given recommendations.

Securities advisory is regulated in Brazil and depends on authorization by the CVM, even if provided in a subsidiary or incidental manner.

With the amendment to the advisory rule, individuals and legal entities from other jurisdictions may, as from June 2020, provide such services to Brazilian clients, as long as they are acknowledged by the CVM. For such acknowledgment, the securities advisor must:

(i) be authorized and subject to supervision by a competent authority in his/her/its jurisdiction (a) with which the CVM has a mutual information exchange agreement or (b) which is a signatory of the multilateral memorandum of understanding of the International Organization of Securities Commissions – IOSCO; and

(ii) appoint and maintain a legal representative in Brazil, with express powers to receive summonses, subpoenas or notifications; and

(iii) comply with the same rules applicable to advisors domiciled in Brazil, including rules on: suitability, “Know Your Client” (KYC), and Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT).

An individual advisor must additionally:

(i) be a graduate or equivalent degree from an institution officially recognized in his/her country of operation;

(ii) have passed a certification exam whose methodology and content have been previously approved by the CVM or an equivalent entity in his/her country of residence;

(iii) not be disqualified or suspended for the exercise of office in financial institutions and other entities authorized to operate by the CVM, by the Central Bank of Brazil, by the Brazilian Superintendence of Private Insurance – SUSEP, by the Brazilian National Superintendence of Complementary Pension Plans – PREVIC or by equivalent entities in his/her jurisdiction;

(iv) have not been convicted for certain crimes (such as bankruptcy crimes, malfeasance, bribery, concussion, embezzlement, money laundering or concealment of goods, rights and values, crimes against popular economy, economic order, consumer relations, public faith or public property, national financial system) or be subject to a penalty that prevents him/her, even temporarily, from holding public office.

This measure opens a new market for investment advisors from other jurisdictions, in line with recent measures by the CVM to allow Brazilian investors to invest in a wider range of assets abroad.

Ricardo Vieira, of Brazilian law firm Barcellos Tucunduva Advogados (, may assist investment advisors to setup activities in Brazil and/or to obtain the acknowledgment of the CVM.