Circular Letter No. 9/2023/CVM/SIN: New Operational Dynamics for Non-Resident Investors Exempt from CVM Registration

SECURITIES COMMISSION OF BRAZIL
Rua Sete de Setembro, 111/2-5º and 23-34º Floors – Center – Rio de Janeiro - RJ – ZIP: 20050-901 – Brazil Tel.: (21) 3554-8686 - www.cvm.gov.br Circular Letter No. 9/2023/CVM/SIN Rio de Janeiro, November 16, 2023

To
Representatives of non-resident investors
Subject: New operational dynamics for non-resident investors exempt from registration with the CVM under the terms of CVM Resolution No. 13

1. This Circular Letter aims to provide clarifications regarding changes in the CVM systems that have recently entered production, relating to the operational process provided for in Article 2, Sole Paragraph, of the Resolution.

2. As is known, the financial and capital market infrastructures still use the operational code granted by the CVM when registering non-resident natural person investors, such that, even when exempt from this registration, Article 2, Sole Paragraph, provided that representatives of this type of investor send a list of information allowing the obtaining of a CPF (Individual Taxpayer Registry) for them, whenever applicable and necessary, as well as a code that allows this investor to operate in the Brazilian market. This remains the case until market infrastructures adapt so that they no longer require this code in their respective registries.

3. In its new version, the SIE-WEB 1 system now allows this fictitious operational code to be obtained in a new manner, according to which the representative may link such an investor to an equally fictitious account with code 000000, which will contain the name “Collective account for simple registration of non-resident natural person investors” (INR pessoa física).

4. Thus, the complete operational code that will allow this natural person investor to operate for now in the local market will henceforth be defined by the taxonomy RRRRR.000000.INRINR-1.1, where:

• “RRRRR” is the code already obtained by the representative of non-resident investors upon their own registration with the CVM.
• “INRINR” is the individual code obtained by the representative for this investor when the initial registration operational step is completed (see item 2 above).

5. The objective of this new operational dynamic is to clearly demonstrate that the aforementioned code no longer corresponds, since the issuance of CVM Resolution No. 64, to any type of CVM registration for non-resident investors qualified as natural persons, since they no longer depend, since then, on any type of registration or authorization from the Agency to operate.

6. Furthermore, the new system allows the market to coexist with situations of (1) a non-resident natural person investor effectively without registration with the CVM, and (2) one who chooses, by their own decision, to waive this exemption and maintain a formal registration with the Agency, for any lawful reason envisioned.

7. In this context, we emphasize that the inclusion of a natural person in any other account than this fictitious one described in item 3 above will henceforth be understood as a conventional inclusion of a passenger in a collective account, such that, if a given representative chooses to include this investor in a real collective account, the CVM will interpret that the investor chose not to avail themselves of the exemption from registration.

8. For this reason, we inform that non-resident investors qualified as natural persons who hold an operational code obtained under the terms of Circular Letter No. 3/2022/CVM/SIN must adhere to the new system, canceling the previous inclusion and performing a new inclusion to the fictitious account 000000, as, if they do not do so, they will become liable for supervision fees, periodic documents provided for in CVM regulations, as well as, they will have to compose the net worth of the portfolio to which they belong for all purposes.

9. If this investor comes to register with other intermediaries/representatives, the new representative must also include this investor in their respective fictitious account 000000, which will allow the formation of a complete operational code based on the same criterion cited in item 4 of this Circular Letter.

10. Another relevant point relates to the information provided to the Central Bank of Brazil within its legal competencies, regarding the foreign exchange contract concerning the inflow of resources promoted by this investor (known as “RDE”). Regarding this matter, we collate below the registration screens for this inflow for better reference:
    Screen 1
    Screen 2

11. As seen in Screen 2, in the “Holder” field of that system, the CPF or CNPJ (Corporate Taxpayer Registry) of the non-resident investor to whom a given resource inflow and its respective foreign exchange contract refer must be informed.

12. That system is prepared to identify, when providing information in the “Holder” field, whether the non-resident investor in question is a natural person (in which case a CPF will be informed) or a legal entity (in which case a CNPJ will be informed). When the investor is a natural person, the system does not require the “CVM Code” information to be provided, precisely due to the exemption from registration with this Agency for this type of investor.

13. Thus, for the case of RDE registration regarding a non-resident natural person investor who operates with an operational code obtained under the terms of this Circular Letter, we reiterate that the “CVM Code” field must not be filled, under penalty of generating a critical error preventing registration, in that system, of the aforementioned foreign exchange contract.

14. Therefore, the registration of a non-resident natural person investor without “CVM Code” should follow the following flow: (i) on Screen 1, inform the modality “Include Portfolio Registration in the Country”; (ii) on Screen 2, do not fill in the “CVM Code” field; (iii) inform the CPF in the INR field in the “Holder” field; and (iv) fill in the remaining fields according to the instructions contained in the “RDE-Portfolio Manual”.

15. Finally, we inform that discussions and development are still underway, jointly with the market infrastructures operating in the country, of a definitive operational exit that may lead, in the future, such investors to seek the CVM only for the eventual obtaining of a registration number with the Brazilian Federal Revenue Service (“CPF”).

Sincerely,
Digitally signed by
DANIEL WALTER MAEDA BERNARDO
Superintendent of Institutional Investor Supervision

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1 System made available by the CVM to representatives of non-resident investors for registration management, including registration, of their clients.