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BeginnerBrazilian REITs · Lesson B2.1 · Module B2

Who does what inside an FII

Module B2: Who runs the fund

10 slides~4 minquiz at the end

In this lesson

  • A real estate fund's org chart
  • Custodian, registrar and auditor: what each one does
  • Why your broker doesn't run the fund
See the slides
Glass office towers in São Paulo

FIIs · Lesson B2.1

One fund, seven companies

Who does what inside a Brazilian REIT — and who answers for what.

Luiz Pantoja · Wikimedia Commons · CC BY 2.0

The org chart

Two essentials and a team around them

Unitholdersvote at the meeting
Manageressential: picks the assets
The FIIthe assets
Administratoressential: fiduciary owner
Custodian
Registrar
Auditor

CVM Resolution 175, art. 3. With up to 5% in securities, the administrator may do both jobs (Annex III, art. 5).

The control team

Who holds, records and checks

  • Custodianholds the fund's financial assets
  • Registrarrecords who owns each share
  • Independent auditorchecks the annual accounts, within 90 days
  • Unitholders' representativeelected by the meeting to oversee

CVM Resolution 175, Annex III, arts. 20, 26, 27 and 36. Custody is waived when those assets are up to 5% of the fund.

Hired only if the fund wants

Four optional services

  • Distributorsells new shares in an offering
  • Real estate consultanthelps find and assess properties
  • Property managerhandles leasing and upkeep
  • Market makerposts buy and sell orders on the exchange

CVM Resolution 175, Annex III, art. 27.

A typical fund

Count the companies

7

companies working for 1 fund

Administrator, manager, registrar, custodian, auditor, property manager and market maker.

Illustrative: some funds have fewer, when one company takes on several roles.

The common mistake

Your broker doesn't run your fund

Your broker

  • Sends your order to the exchange
  • Shows your shares
  • No role in the fund

Inside the fund

  • Administrator answers for the fund
  • Manager picks the assets
  • Auditor checks the accounts

Switching brokers changes nothing in the fund. Every provider is named in the fund's bylaws.

Keep this

Three takeaways

  1. Two essentialsThe administrator and the manager are the fund's essential providers.
  2. A control teamCustodian holds, registrar records, auditor checks, representative oversees.
  3. The broker is outsideIt only takes your order to the exchange.

Quick quiz · 1 of 2

Who are an FII's essential service providers?

See answer

Administrator and manager, under CVM Resolution 175. The others are hired around them.

Quick quiz · 2 of 2

Who records who owns each share?

See answer

The registrar. It keeps the record of shareholders, and the administrator pays for that service.

Lesson complete

Next lesson

B2.2Beginner · Lesson B2.2Administrator: the owner on paperThe properties are in its name — and so is the responsibility.Continue
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Image credits
  • Luiz Pantoja · Wikimedia Commons · CC BY 2.0 — Wikimedia Commons
  • Alena Darmel · Pexels · Pexels License — Pexels

Educational content, written for learners. Not investment advice.