Circular No. 2.403

CIRCULAR N. 002403 ------------------ Provides for the capitalization of profits and absorption of the balance of accumulated losses, determined in the balance sheet of 30 June. The Board of Directors of the Central Bank of Brazil, in a session held on 21.12.93, having regard to the provisions of art. 10, item VII, of Law No. 4.595, of 31.12.64, with the modifications introduced by art. 19 of Law No. 7.730, of 31.01.89, and based on art. 4, item XII, of the aforementioned Law No. 4.595, by competence delegated by the National Monetary Council, D E C I D E D: Art. 1 The profits determined in the balance sheet drawn up on 30 June and incorporated into ACCUMULATED PROFITS OR LOSSES, or into reserves, by financial institutions, other institutions authorized to operate by the Central Bank of Brazil and consortium administrators may be used for capital increase, before the end of the fiscal year, observing the provisions contained in the legislation and regulations in force. Art. 2 The loss determined by the institutions and administrators referred to in the previous article, in the balance sheets of 30 June and at the end of the fiscal year, may be absorbed with the use of resources from shareholders or quotaholder partners, after the absorption of the existing balances in accumulated profits, profit reserves and capital reserves, provided that it is provided for in the articles of association or social contract. Paragraph 1 The absorption may be carried out at any time of the year, observing the provisions of items 1.20.3.3 and 4 and 1.20.5.2 of the Accounting Plan for Institutions of the National Financial System - COSIF. Paragraph 2 In the case of an institution with foreign capital participation, the absorption of losses referred to in this article, with the use of external resources originating from short, medium and long-term financial operations, shall be conditioned upon prior authorization from the Department of Foreign Capital (FIRCE) and/or the Department of Exchange (DECAM), observing the respective competence. Paragraph 3 The amount corresponding to the absorption shall be debited to the appropriate liability account that has recorded the counterpart of the inflow of available funds and credited to ACCUMULATED PROFITS OR LOSSES. Art. 3 This Circular enters into force on the date of its publication. Art. 4 Circulars Nos. 2.204 and 2.281, of 23.07.92 and 26.02.93, respectively, are revoked. Brasília, 14 January 1994 Cláudio Ness Mauch Director of Norms and Organization of the Financial System