Brazil Securities Commission issues guidance limiting FIAGRO cash-basis income distributions to current and retained profits

The Brazil Securities Commission (CVM) published Joint Circular Letter CVM/SSE/SNC 1/2025 to clarify the income distribution policy for Investment Funds in Agribusiness Production Chains (FIAGRO), referencing provisions of Law 8.668 and CVM Resolutions 39 and 175, including Annex VI to CVM Resolution 175. The guidance states that Article 10, sole paragraph, of Law 8.668 does not apply to FIAGRO, including funds aligned with Annex VI. On that basis, administrators and managers using a cash regime to distribute results are not permitted to make distributions that exceed the profits of the financial year and accumulated profits. Adjustments to fund regulations can be implemented within the process of adapting FII-FIAGRO to the requirements set out in Annex VI to CVM Resolution 175. The interpretation set out in the circular is to be applied from its publication.