BRZ CVM Recycling Funds Regulations

On Dec. 22, BRZ CVM issued rules for investments in recycling.

  • BRZ CVM initiated public consultation on proposed regulations for investment funds for recycling projects (ProRecicle) in accordance with the 2023-2024 Regulatory Agenda.
  • The proposal focuses on disclosures to investors and prevention of greenwashing.
  • Highlights
  • investment within scope of securities market, for example via acquisition of assets originated in projects developed in areas of reverse logistics, composting and biomass.
  • May use of ProRecicle even in blended finance operations, which combine different investor profiles, participating in the operation at different levels of risk-return.
  • CVM seeks comment on whether or not to create a new category of funds.
  • Also on the possibility of ProRecicle providing tax incentives or benefits.
  • However, not every ProRecicle would give rise to these incentives or benefits, but only those with an investment policy whose assets with the requirements for tax benefits.
  • BRZ CVM is seeking comment on these two issues, taking into account legal interpretation of regulations and manager discretion re portfolio composition.
  • Consultation
  • Comments must be ad submitted electronically by Mar. 1, 2024.
  • Jul. 2024 BRZ CVM Resolution
  • On Jul. 4, 2024, BRZ CVM issued Resolution 206, which regulates ProRecicle funds.
  • Amends BRZ CVM Resolution 175 of Dec. 23, 2022 re investment funds information.
  • Recycling projects invested in by fund will be approved and monitored by Ministry of the Environment, in accordance with National Commission for Promotion of Recycling.
  • ProRecicle funds will be able to operate in all markets in which Brazilian investment funds participate, without any restrictions imposed on by securities regulations.
  • Focuses on generating opportunities for circular economy within the capital market.
  • Based on application of resources in projects that stimulate recycling production chain.
  • Sets out ProRecicle class of quotas and ProRecicle quota class reporting requirements.
  • Resolution 206 to regulate ProRecicle funds will enter into force on Aug. 1, 2024.

Regulators BRZ CVM
Entity Types B/D; Corp; Exch; IA; Inv Co
Reference PR, Res 206, 7/4/2024; PR, CP, Nt. SDM 07/2023; 12/22/2023; ESG;
Functions Compliance; Environment; Financial; Legal; Tax; Trading
Countries Brazil
Products Fund Mgt; Securities
Regions Am
Rule Type Final
Rule Date 12/22/2023
Effective Date 8/1/2024
Rule Id 195843
Linked to N/A
Reg. Last Update 7/4/2024
Report Section International

Last substantive update on 07/08/2024