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BeginnerBrazilian REITs · Lesson B2.4 · Module B2

The meeting: where unitholders decide too

Module B2: Who runs the fund

11 slides~5 minquiz at the end

In this lesson

  • 1 share, 1 vote: how the meeting decides
  • What only the meeting can approve
  • The quorum to replace the manager, with the math
See the slides
Auditorium with rows of empty seats

FIIs · Lesson B2.4

Your share gets a vote too

What only the unitholders' meeting decides — and why it's your business.

ProjectManhattan · Wikimedia Commons · CC BY-SA 3.0

The voting rule

One share, one vote

1 vote

for each share you hold

The majority of those present decides. The meeting is valid with any number of unitholders.

CVM Resolution 175, Annex III, art. 15, and general part, art. 74.

The agenda

What only the meeting decides

  • The year's accountsapproving the financial statements
  • Replacing who's in chargeadministrator or manager
  • Issuing sharesbeyond the pre-authorized limit
  • Reshaping the fundmerger, spin-off, liquidation
  • Changing the bylawsincluding the investment policy
  • Fees and conflictsmanagement fee and related-party deals

CVM Resolution 175, general part, art. 70; Annex III, art. 12.

The notice

How much time you get to prepare

  1. Call noticeThe notice goes outwith the agenda and the proposal
  2. Annual · 30 daysThe year's accountsat least 30 days' notice
  3. Special · 15 daysEverything elseat least 15 days' notice
  4. VoteResult in the minutesbinding on all unitholders

CVM Resolution 175, Annex III, art. 13 § 2.

By the numbers

Your weight — and the group's

200your shares÷5,000,000fund shares=0.004%of the votes
5,000,000×25%=1,250,000shares replace the manager

In a fund with more than 100 unitholders. Illustrative example.

Qualified quorum

Replacing the manager takes more votes

More than 100 unitholders

25%

  • of issued shares voting in favor

Up to 100 unitholders

50%

  • half of issued shares in favor

Also applies to mergers, liquidation, bylaw changes, conflicts of interest and fees. Annex III, art. 16.

The common mistake

“I own too little, it's not my business”

Funds with thousands of unitholders struggle to reach quorum precisely because everyone thinks that way.

And you vote in the interest of all unitholders (Annex III, art. 18).

Keep this

Three takeaways

  1. 1 share, 1 voteThe majority of those present decides, with any turnout.
  2. The big calls are the meeting'sReplacing the manager, issuing shares, merging, liquidating, bylaws and fees.
  3. Some need moreReplacing the manager takes 25% of shares in favor in a fund with over 100 unitholders.

Quick quiz · 1 of 2

Can the administrator replace the manager on its own?

See answer

No. Replacing an essential provider is reserved to the meeting (CVM Resolution 175, general part, art. 70, II).

Quick quiz · 2 of 2

A fund with 5 million shares and 20,000 unitholders. How many shares, at least, approve replacing the manager?

See answer

1,250,000. With more than 100 unitholders, the qualified quorum is a majority of those present adding up to at least 25% of issued shares.

Lesson complete

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Image credits
  • ProjectManhattan · Wikimedia Commons · CC BY-SA 3.0 — Wikimedia Commons
  • Handi Boyz LLC · Pexels · Pexels License — Pexels

Educational content, written for learners. Not investment advice.