Circular No. 2329 — Establishes Monetary Update of Variable Income Securities Applications and Amends COSIF

CIRCULAR NO. 002329

ESTABLISHES MONETARY UPDATE OF APPLICATIONS IN VARIABLE INCOME SECURITIES AND AMENDS COSIF.

WE COMMUNICATE THAT THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BRAZIL, IN A SESSION HELD ON 07.07.93, HAVING REGARD TO THE PROVISIONS OF ART. 183, ITEM I, OF LAW NO. 6.404, OF 15.12.76, IN ART. 29, PARAGRAPHS 6 AND 7, OF LAW NO. 8.541, OF 23.12.92, AND BASED ON ART. 4, ITEM XII, OF LAW NO. 4.595, OF 31.12.64, BY COMPETENCE DELEGATED BY THE MONETARY COUNCIL, DECIDED:

ART. 1. VARIABLE INCOME SECURITIES ACQUIRED FOR FORMATION OF OWN PORTFOLIO MUST BE REGISTERED AT THE VALUE EFFECTIVELY PAID, INCLUDING BROKERAGE AND FEES.

PARAGRAPH 1. FROM 01.01.93, VARIABLE INCOME SECURITIES MUST BE MONETARILY CORRECTED, OBSERVING MONTHLY PERIODICITY.

PARAGRAPH 2. THE COUNTERPART OF THE MONETARY CORRECTION PROVIDED FOR IN THIS ARTICLE MUST BE REGISTERED IN MONETARY CORRECTION RESULT.

ART. 2. THE APPRECIATION/DEPRECIATION OF THE PORTFOLIO OF VARIABLE INCOME SECURITIES MUST BE DETERMINED, MONTHLY, TITLE BY TITLE, OBSERVING THE FOLLOWING PROCEDURES:

I - FOR SECURITIES QUOTED ON THE EXCHANGE, BY CALCULATING THE DIFFERENCE BETWEEN THE COST VALUE, MONETARILY CORRECTED, AND THE AVERAGE QUOTATION OF THE LAST BUSINESS DAY OF EACH MONTH IN WHICH THE SECURITY HAS BEEN QUOTED, ON THE STOCK EXCHANGE WHERE IT WAS MOST TRADED IN THE IMMEDIATE PREVIOUS CIVIL TRIMESTER;

II - FOR SECURITIES NOT QUOTED ON THE EXCHANGE, INCLUDING SHARES OF CLOSED COMPANIES AND SHARES OF LIMITED COMPANIES, BY CALCULATING THE DIFFERENCE BETWEEN THE COST VALUE, MONETARILY CORRECTED, AND THE BOOK VALUE, ALSO MONETARILY CORRECTED UP TO THE DATE OF THE BALANCE SHEET/ACCOUNTS IN WHICH THE ASSESSMENT IS BEING MADE, ALLOWING, FOR THIS PURPOSE, A LAG RELATIVE TO THE DATE OF ASSESSMENT OF, AT MOST, 12 (TWELVE) MONTHS.

PARAGRAPH 1. IN THE CASE OF PORTFOLIO APPRECIATION, THAT IS, WHEN THE QUOTATION OR BOOK VALUE IS SUPERIOR TO THE MONETARILY CORRECTED COST, THE ACCOUNTING RECOGNITION OF SUCH APPRECIATION IS NOT ADMITTED.

PARAGRAPH 2. IN THE CASE OF PORTFOLIO DEPRECIATION, THAT IS, WHEN THE QUOTATION OR BOOK VALUE IS INFERIOR TO THE MONETARILY CORRECTED COST, A PROVISION MUST BE ESTABLISHED, IN AN AMOUNT SUFFICIENT TO COVER LIKELY LOSSES IN THE REALIZATION OF ITS VALUE.

PARAGRAPH 3. FOR THE PURPOSE OF THE PROVISIONS OF THIS ARTICLE, THE INDIVIDUAL APPRECIATION OR DEPRECIATION OF A SECURITY MUST BE SUBJECT TO COMPENSATION WITH THE DEPRECIATION OR APPRECIATION OF OTHER SECURITIES, AND THE ESTABLISHMENT OF A PROVISION IS NECESSARY ONLY IN THE CASE WHERE THE MARKET VALUE OF THE PORTFOLIO IS INFERIOR TO ITS MONETARILY CORRECTED COST.

ART. 3. UPON THE ALIENATION OF THESE SECURITIES, THE RESULT OF THE TRANSACTION (PROFIT OR LOSS) MUST BE CONSIDERED THE DIFFERENCE BETWEEN THE NET VALUE OF THE SALE AND THAT OF THE RESPECTIVE MONETARILY CORRECTED ACQUISITION COST.

ART. 4. THIS CIRCULAR ENTERS INTO FORCE ON THE DATE OF ITS PUBLICATION.

BRASÍLIA (DF), JULY 7, 1993

CLÁUDIO NESS MAUCH
DIRECTOR OF NORMS AND ORGANIZATION
OF THE FINANCIAL SYSTEM