The Central Bank of Brazil established, in its Circular No. 3.039 of June 8 2001, the 2001 Census of Foreign Capital in Brazil. This was due to the increase of foreign capital which has been invested in the country over the last five years.

According to the Central Bank, in direct foreign investments alone the country received approximately $105 billion between 1996 and 2000.

As in the last census, all the Brazilian companies whose foreign participation, on December 31 2000, was at least 20% of its total capital or, at least 10% of its voting capital, must fill out the declaration issued by the Central Bank. Brazilian companies which had, on December 31 2000, external debts which exceeded R$10,000 ($4,156) are also required to fill out the aforementioned declaration.

Brazilian companies must send the declaration to the Central Bank by August 10 2001, and the companies which do not present the declaration on time or with incorrect information are subject to a fine of R$100,000 ($ 41,560).

A new rule concerning real estate investment funds is about to be approved by the Brazilian Securities Commission (CVM). The new rule will substitute the CVM´s Rule 205, which now regulates real estate investment funds.

It must be stressed that, pursuant to Resolution No. 2248/96 issued by the National Monetary Council on February 8 1996, foreign individuals or legal entities resident or domiciled abroad, funds or other collective investment foreign entities can acquire real estate investment fund quotas.

The main changes which are about to be made are: (i) to create more flexibility in order to allow the fund to invest in other real estate segments which are not necessarily real estate; (ii) to allow the fund to make significant changes to the fund´s by-laws or substitute the administrator without the CVM´s prior authorization; (iii) to improve the quality of the fund´s prospectus; (iv) to classify the fund according to its type of assets; (v) to allow private subscription between quotaholders; (vi) to accept mortgage companies to act as managers of such funds; (vii) to make use of the electronic means of disclosing information; and (viii) to simplify the proceedings concerning qualified investors.

According to the CVM´s superintendent, the main objective of this future rule is to attract small investors by making significant changes which make real estate investment more efficient.