What is an FIDC?
What is a receivable investment fund?
Receivables investment funds are an investment fund that allocates a preponderant portion (more than 50%) of its net assets to be invested in rights and securities representing credits.
What are Credit Rights?
These are rights and securities representing credit, originating from operations carried out in the financial, commercial, industrial, real estate, mortgage, leasing and service rendering segments. Ex: Duplicates, Financing Contracts, Public Service Accounts, Debentures, etc.
The receivable investment fund is a financial instrument with different opportunities among those involved:
- For the founding / originating companies, a flexible instrument that can be used both to raise funds in the capital market, as well as in cash management or in financing the network of suppliers and service providers.
- For investors, an investment option with an expected return higher than the other fixed income types available in the domestic financial market.
- For financial institutions, an agile operation, used both for generating funding and for mitigating credit risk, allowing for the adjustment of the Basel index. With the expansion of the Receivables Funds, financial institutions also increased their participation in offering solutions and providing services to the segment. Through the administration / management and custody of the receivable funds.
Funds can be formed by subordinate and senior shares. The proportion of each class is mentioned in the fund’s regulations when applicable, after definition during the structuring of the fund. The accounts of the fund must be registered and kept in a deposit account in the name of the holders.
Senior shares are the shares of a single class that are not subject to the other shares for the purposes of amortization, redemption and distribution of earnings. That is, they are quotas that have preference over subordinate quotas. In closed-end funds, the legislation allows the issuance in series or groups of senior quotas with different characteristics (value of the issue, minimum amount of investment, remuneration and different terms for partial or total amortization). It is through this class of quotas that originating companies raise financial resources.
Subordinated quotas are those that subordinate or subject to senior quotas for the purpose of amortization, redemption and distribution of income (they are not preferential quotas). They are subscribed by the originator of the fund, upon the constitution of the fund, to support eventual losses resulting from defaults on the receivables assigned (collateral guarantee). The legislation allows subordinated quotas of different classes to be issued (differentiated subordination to senior quotas). They are remunerated according to the excess income presented by the fund, after the payment of the remuneration of the senior shareholders and the other expenses of the fund.
Securitization is a financial practice that consists of grouping various types of financial liabilities (notably credit securities such as invoices issued and not yet paid, debts related to loans, among others), converting them into standardized securities negotiable in the domestic and foreign capital markets.
From the point of view of the company that originated the Credit Rights, operations with the FIDC make it possible to raise financial resources through securitization of receivables. Securitization can be carried out using performed receivables, that is, receivables whose respective commercial operations have already been completed or through the use of receivables to be performed, that is, whose respective commercial operations are yet to be completed.
Taxation of Shareholders
|Long Term Securities||Priority Project Securities||Investment Funds in Securities of Priority Projects|
|Investor||Income tax (income)||FTT / Exchange||Income tax (income)||FTT / Exchange||Income tax (income)||FTT / Exchange|
|Non-resident investor (tax haven)||22.5% a 15%||0%||22.5% a 15%***||0%||22.5% a 15%***||0%|
|Physical person||22.5% a 15%
(isenção – CRI)
|Legal person||22.5% a 15%*||N/A||15%**||N/A||15%**||N/A|
* Profit will be subject to additional tax at a rate of 34% (or 40% in the case of financial institutions or other similar entities). Income tax withheld at source will be deducted.
** The profit will be subject to CSLL (Social Contribution on Net Income) with a rate of 9% (or 15% in the case of financial institutions or similar entities).
*** Taxation applicable to income earned by a beneficiary resident or domiciled abroad, who does not carry out financial operations in Brazil in accordance with the rules and conditions established by the National Monetary Council, or who is located in a country that does not tax income or that tax at the maximum rate below 20%.
Receivable Investment Fund Legislation
– Resolução CMN nº 2.907 (www.bcb.gov.br > Legislação e Normas > Normas do CMN e do BC > Busca de Normas > Digitar no campo de busca “2907”)