Fundos de Investimento em Direitos Creditórios (FIDC), a pool of resources with an obligation of investing a portion of its networth (at least 50%) in discounting receivables. FIDCs might be constituted as either open or closed condominium format and have determined or undetermined investment periods.
Rights and titles that represent credit arising from operations performed in the financial, commercial, industrial, real estate, mortgage, leasing and service provision segments.
The underlying credits might have real or surety guarantees.
Format and Registration
Book entry, kept in a deposit account under the holder’s name. The shares of closed-end funds held by qualified investors can be registered for negotiation in the secondary market
Senior shares are allowed. Such shares must have priority for amortization and redemption effects. Subordinated shares are subordinated to Senior shares for amortization and redemption effects.
Open-end Fund: Shares might be redeemed at any moment, according to liquidity and to the terms and regulations specified by the fund’s regulation. Closed-end fund: Shares might only be redeemed in specific situations, such as: (i) in the deadline of a given series , class of shares or the fund according to the fund’s regulation; (ii) in consequence of the fund’s “sell off”. In addition, the amortization happens: (a) In dates pre-established in the fund’s regulation, (b) In consequence of the general share holder’s committee decision.
Senior shares might have expected return parameters. However, they do not represent or can be considered as a promise or guarantee that the share will reach such return. It represents the expected return for investors in that class of shares.
It occurs by institutions authorized by the Brazilian Central Bank to distribute securities. In the case of closed-end funds, public offerings depend on previous registration on the CVM (Brazilian Securities and Exchange Commission), except for those funds that followed the guideline rules imposed by the CVM to avoid registration. According to the CVM, only qualified investors are allowed to generate or purchase FIDC shares. Although FIDC shares do not have a minimum allowed value, the minimum investment is R$ 25.000,00
Open-end Fund – The shares can’t be transferred or assigned except for legal decision, guarantee foreclosure, or succession. Closed-end Fund – The shares might be transferred upon assignment and transfer term, signed by the assignor and assignee and registered in an official notary.
CETIP or BM&FBOVESPA
The Brazilian Government determines conditions for a fund to be considered a FIDC.
FIDCs can have 13 different types of underlying assets.
FIDCs main categories are: Commercial Receivables, Corporate Credit, Vehicle Financing and Personal Credit.