Circular No. 1218 - Committed Operations - Alteration of Operational Limits for Short-Term Committed Operations - Equivalence to Other Short-Term Operations for Withholding Income Tax Purposes

CIRCULAR NO. 001218

We communicate that the Board of Directors of the Central Bank of Brazil, in view of the provisions of Article 30 of the Regulation annexed to Resolution No. 1,088, of January 30, 1986, has decided:

a) to alter the limits for carrying out committed operations, as provided in the aforementioned Regulation, establishing:

a.1 - institutions qualified under Article 7 - up to 30 (thirty) times the calculation base, observing the following:

I - up to 15 (fifteen) times, for operations with:

• Central Bank Notes and federal public bonds; and/or

• state and municipal public bonds and private bonds, contracted with financial institutions and other institutions authorized to operate by the Central Bank; and/or

• state and municipal public bonds, contracted with individuals and non-financial legal entities, limited to 0.5 (half) times the calculation base; and/or

• private bonds, contracted with individuals and non-financial legal entities, limited to 1.5 (one and a half) times the calculation base;

II - above 15 (fifteen) up to 30 (thirty) times, for operations with Central Bank Notes and federal public bonds;

a.2 - institutions qualified under Article 8 - up to 15 (fifteen) times the calculation base, observing the following:

I - up to 3 (three) times, for operations with any bonds;

II - above 3 (three) up to 15 (fifteen) times, for operations with Central Bank Notes and federal public bonds;

b) establish that institutions qualified under Article 9 of the aforementioned Regulation, when carrying out committed operations with bonds issued by their respective States and/or Municipalities, contracted with individuals and non-financial legal entities, must observe a limit of 1 (one) times their net worth;

c) establish that institutions qualified under Articles 7 and 8 of the aforementioned Regulation, when carrying out committed operations backed by private bonds, must observe a maximum of 20% (twenty percent) of the limits for operations with these bonds in the case of securities issued, accepted, or co-obligated by the same company, such limitation not applying to those issued, accepted, or co-obligated by company(ies) affiliated with the qualified institution itself;

d) for the purposes of the preceding clause, a company is considered affiliated:

I - in which the qualified institution participates with 10% (ten percent) or more of the capital, directly or indirectly;

II - in which administrators of the qualified institution and their relatives up to the second degree participate, jointly or individually, with 10% (ten percent) or more of the capital, directly or indirectly;

III - in which shareholder(s) with 10% (ten percent) or more of the capital of the qualified institution participate(s) with 10% (ten percent) or more of the capital, directly or indirectly;

IV - that participates with 10% (ten percent) or more of the capital of the qualified institution, directly or indirectly;

V - whose administrators and their relatives up to the second degree participate, jointly or individually, with 10% (ten percent) or more of the capital of the qualified institution, directly or indirectly;

VI - whose shareholder(s) with 10% (ten percent) or more of the capital participate(s) with 10% (ten percent) or more of the capital of the qualified institution, directly or indirectly;

VII - whose administrators, in whole or in part, are the same as those of the qualified institution, except for positions held in collegiate bodies, provided for in the statute or internal regulations of the qualified institution, provided that their holders do not exercise executive functions, after prior consultation with the Central Bank.

2. This Circular will enter into force on September 1, 1987, when Circular No. 1,159, of April 22, 1987, will be revoked, allowing for any eventual excess verified to be eliminated due to the maturity of the private bonds backing the committed operations until September 15, 1987.

Brasília-DF, August 13, 1987

Alkimar Ribeiro Moura Wadico Waldir Bucchi Director Director