Understanding Foreign Investment in Brazil

Economist Giovanni Cataldi and Attorney Andrea Sano Alencar delve into foreign investment in Brazil.

As a rule, foreign investments in Brazil must be registered with the Central Bank of Brazil (“BACEN”). Registration of foreign investments may be divided into two main categories: (i) foreign direct investments which are regulated by Law 4,131 of 3 September 1962, as amended, (“Direct Investment” and “Debt Transactions”); and (ii) investments made in the Brazilian financial and capital markets, which requires the use of a local custodian to represent the foreign investor, regulated by CMN Resolution 4,373[1] (“Indirect or Portfolio Investment“).

The registration of foreign capital is done at the Electronic Declaratory Registration System (“RDE”), at the Central Bank of Brazil (“BACEN”) information system (“SISBACEN”).

The foreign capitals are registered in specific modules, according to their classification, which are:

  • Foreign Direct Investment (“IED”);
  • Foreign Debt Transactions, such as loans, long-term imports financing and royalties’ contracts (“ROF”); and
  • Indirect or Portfolio Investments. 

Direct Investment

According to the BACEN, a direct investment is defined as such by its intention to remain long-term in the country and by its acquisition over-the-counter markets, direct in non-listed companies[2].

Brazilian companies can receive foreign direct investment from both Individuals and Legal Entities that are not resident in Brazil.

Registration of a foreign direct investment must be submitted electronically to the Central Bank by the company receiving the investment (the investee), using the SISBACEN for direct foreign investments (“RDE-IED”).

Debt Transactions

Foreign debt transactions may be made through the exchange of foreign currency (i.e., loans, certificates of deposit, private debentures, etc.) directly between a foreign and a domestic party.

A foreign debt transaction must be registered with the BACEN before the actual inflow of funds and submitted electronically by the investee using the SISBACEN for foreign debt transactions (“RDE-ROF”). This electronic registration does not require preliminary approval.

Indirect Investments or Portfolio Investments

Investments by foreign investors in Brazilian financial and capital markets are regulated by the National Monetary Council (the “CMN”), the Brazilian Securities and Exchange Commission (the “CVM“) and BACEN.  The main regulation governing such investments is CMN Resolution 4,373 of 29 September 2014.With certain exceptions, foreign investors may invest in the Brazilian financial and securities markets using the same fixed-income instruments (i.e., notes, certificates of deposit, bonds and debentures), derivative instruments (i.e., swaps, futures, NDF and options), securities, mutual funds, private equity and other investment funds, and other financial instruments available to Brazilian residents.

To invest in the Brazilian financial and securities markets, a foreign investor must:

  • appoint an agent in Brazil (which must be a financial institution or an institution authorized by the BACEN);
  • register with the CVM; and
  • enter into a custody agreement with a financial institution authorised to provide custodian services, in accordance with CVM Instruction 560 of 27 March 2015, as amended[3].

In recent years, several operational measures have been implemented to make operational foreign investment flows simpler and speedier. In this regard, almost all registration, can now be made electronically and is usually centralised in one (or more) financial institutions that provide diverse services (such as legal and tax representatives, custodians and settlement banks for FX contracts).  In addition, since 2 May 2022[4], non-resident individuals will no longer be required to register directly with CVM before they can buy registered securities. Instead, his or her representative merely will be required to fill in the information on CVM’s online platform or via the exchange responsible for the market where the securities are traded.


For more information, contact Giovanni at giovannicataldi@hotmail.com and Andrea at asano@efcan.com.br.




The content in this article is for informational purposes only and should not be construed as financial advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Giovanni Cataldi, Andra Sano Alencar, Finance Monthly or any third-party service provider.


[1] https://www.bcb.gov.br/rex/legce/Ingl/Ftp/Resolution4373.pdf

[2] Note that there are some activities that are not allowed or that there are some restrictions.

[3] ttps://www.b3.com.br/data/files/CC/B5/C0/38/43473610B4199636790D8AA8/ICVM%20560%20-%20english%20version.pdf

[4] CVM Resolution nº 64, of February 7, 2022


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