Brazil has tightened its rules on inbound foreign investment. A new mandatory notification regime entered into force in early 2025. Placing compliance obligations on a broad range of international investors. including those who previously transacted in Brazilian capital markets without filing any prior notice to regulators. The window to map existing exposure and adjust deal structures is narrow.
Brazil's investment screening regime now requires foreign investors to notify the relevant federal authority before completing acquisitions above defined ownership or value thresholds in designated sensitive sectors. The notification obligation applies at the point of execution, not at closing, meaning non-compliance can arise before a transaction is even finalised. International companies with active or planned positions in Brazilian securities, investment funds, or operating businesses must assess their exposure immediately.
This alert explains what changed, which categories of business are affected, and what international investors must do now to remain compliant.
What changed – the regulatory development and its effective date
Brazil's investment legislation was amended to introduce a formal pre-notification requirement for foreign direct investment in sectors deemed sensitive to national security and economic sovereignty. The change took effect in the first quarter of 2025.
Previously, Brazil relied on a largely post-closing review model. Regulators could examine completed transactions, but there was no universal obligation to notify before signing. The amended rules reverse this logic for covered transactions. Investors must file a notification – supported by disclosure obligations comparable in scope to those governing a prospectus or securities offering – before the transaction is consummated.
The authority responsible for reviewing notifications is the Conselho de Controle de Atividades Financeiras (COAF) and the relevant federal ministry, acting in coordination with Brazil's securities and exchange regulator, the Comissão de Valores Mobiliários (CVM). The CVM already oversees listing requirements, IPO procedures, and investment fund regulation. Its involvement in the new screening process signals that capital markets transactions are squarely within scope.
Failure to notify before completion can result in the transaction being declared void, administrative fines calibrated to the value of the investment, and reputational consequences that affect future access to Brazilian capital markets. For investors managing securities offerings or portfolio positions through an investment fund structure, the stakes are particularly high.
Who is affected – threshold criteria and business categories
The notification requirement applies to foreign investors – whether individuals, companies, or investment funds – that meet one or more of the following threshold criteria:
- Acquisition of a direct or indirect ownership interest above a prescribed percentage in a Brazilian entity operating in a sensitive sector
- Investment value exceeding a prescribed monetary threshold, regardless of the percentage of ownership acquired
- Any acquisition that results in a foreign investor obtaining effective control or decisive influence over a Brazilian entity in a covered sector
- Subscription to new shares or participation in an IPO where the issuer operates in a sensitive sector and the investor's resulting stake meets the threshold
Sensitive sectors designated under the amended investment legislation include: defence and dual-use technology, telecommunications infrastructure, energy and utilities, financial services and banking, healthcare and pharmaceutical production, and digital infrastructure. This list is not exhaustive. The responsible authority retains discretion to classify additional sectors by administrative act.
Investment fund vehicles – including funds domiciled outside Brazil that hold Brazilian assets – are expressly covered. A foreign investment fund acquiring a qualifying stake through a Brazilian fundo de investimento (investment fund) must file the notification at the level of the ultimate beneficial owner, not merely at the fund vehicle level. This is a departure from the approach many international fund managers have historically applied in Brazil.
Transactions already signed but not yet closed as of the effective date of the new rules are subject to a transitional notification window. Companies in this position face the most immediate compliance deadline. For deals in pre-signing stages, the new rules apply in full from the date the term sheet or binding heads of agreement is executed.
To understand the full intersection of these requirements with existing banking and finance regulatory obligations in Brazil, international investors should review their positions across all transaction types simultaneously.
To receive an expert assessment of your investment screening exposure in Brazil, contact us at info@ferrazwhitmore.com.
What to do now – immediate actions and compliance timeline
International companies and fund managers with existing or planned Brazilian investment positions should take the following steps without delay.
Map current and pipeline transactions. Identify all existing holdings and pending deals involving Brazilian entities in potentially sensitive sectors. This includes direct equity positions, convertible instruments, and participations held through investment fund structures. Check whether any holding crosses the ownership or value thresholds set out in the amended investment legislation.
Assess transitional obligations. If any transaction was signed before the effective date but has not yet closed, the transitional notification window applies. Missing this window carries the same consequences as failing to notify on a new deal. The deadline for transitional filings is measured from the effective date of the new rules – not from the date of the original signing.
Review disclosure obligations. The notification filing must include detailed disclosure about the investor's ownership chain, ultimate beneficial owner, financing sources, and strategic intent. The scope of required disclosure is broadly comparable to the prospectus and securities offering disclosure obligations that apply in regulated capital markets transactions. Assembling this documentation takes time. Begin the process before the filing deadline, not on the day of it.
Audit fund structures. Foreign investment funds with Brazilian portfolio companies must determine whether their structure triggers the notification at the fund level, the manager level, or the ultimate beneficial owner level. Structures involving multiple layers of holding vehicles – common in private equity and real estate funds – require particular care. A misjudgement about which entity bears the notification obligation can result in a technically deficient filing that does not satisfy the requirement.
Engage local Brazilian counsel and coordinate with international advisers. The notification process is conducted in Portuguese and governed by Brazilian administrative procedure rules. Engaging a lawyer in Brazil with capital markets experience is not optional for this exercise. For investors with parallel positions in other jurisdictions, coordinated advice across legal systems is essential. Comparable screening regimes in other markets – such as those covered in our alert on investment screening in the United States – share structural similarities but differ in material procedural details.
For a tailored strategy on meeting Brazil's new notification requirements, reach out to info@ferrazwhitmore.com.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising clients on capital markets, investment regulation, and cross-border transactions across 46 jurisdictions. Our Americas practice supports international investors, investment funds, and multinationals managing legal and regulatory risk in Brazil and across Latin American markets. We combine civil law expertise with English common law tradition to provide coordinated advice for investors operating across multiple legal systems. Our attorneys have advised on securities offerings, IPO procedures, and investment fund structures in both civil law and common law jurisdictions. The firm's capital markets practice in Brazil covers the full spectrum of regulatory compliance, from listing requirements and disclosure obligations to investment screening and cross-border structuring. As a law firm in Brazil matters with a Lisbon base, we give clients direct access to EU and Atlantic regulatory expertise alongside Brazilian market knowledge. To discuss your compliance position under the new notification regime, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.