The Brazilian agribusiness dedicated fund ‘FIAGRO’ has shown significant growth in fund industry, having reached net worth of BRL37 billion to July/2024 distributed across 115 funds.
Brazilian Securities and Exchange Comission (CVM) has just released Regulation 214 to regulate FIAGROs.
See 5 relevant aspects about the new Regulation:
1. Subsidiarity. The subsidiary application of the rules applicable to other categories of funds was maintained, however, restricted to cases in which a class of FIAGRO shares has an investment policy that allows the allocation of more than 50% of its net equity in assets invested by another category of fund.
2. Asset Flexibility. The flexibility for investment of FIAGRO was increased so that the same fund can invest in several assets with physical and/or financial settlement, without restrictions to a specific category of fund, as long as they arise from the agro-industrial chain, with the limits being at the discretion of the administrator and manager.
3. Investment in Carbon Credits and Decarbonization Credits (CBIO). FIAGRO were allowed to invest in CBIOs, however, it will be up to the fund manager to verify the existence and integrity of the carbon credits, as well as to include in the regulations provisions on how the administrator will exercise control over the ownership of the credits.
4. Rural Properties and Rights. In addition to the expansion of the definition of “rural property”, which now includes urban properties intended for the exploration of activities in the agribusiness production chains, FIAGRO were allowed to invest in “any real rights over rural properties” and “real estate credit rights related to rural properties”.
5. Non-standard Credit Rights. FIAGRO-Credit Rights may be registered in the category of non-standard credit rights, subject to the limits of 5% (general public), 10% (qualified investors) and 100% (professional investors).
The Regulation will come into force on March 3, 2025, and will be incorporated into CVM Resolution 175/22 (Regulatory Framework for Investment Funds). The FIAGROs already in operation will have until September 30, 2025 to adapt.
