Circular No. 2750 — Establishes procedures for the accounting recording of subscription, increase and reduction of share capital

CIRCULAR N. 002750

ESTABLISHES PROCEDURES FOR THE ACCOUNTING RECORDING OF SUBSCRIPTION, INCREASE AND REDUCTION OF SHARE CAPITAL.

THE COLLEGIATE BOARD OF THE CENTRAL BANK OF BRAZIL, AT A SESSION HELD ON 04.09.97, BASED ON ART. 4, ITEM XII, OF LAW NO. 4,595, OF 12.31.64, BY COMPETENCE DELEGATED BY THE NATIONAL MONETARY COUNCIL, BY ACT OF 07.19.78,

HAS RESOLVED:

ART. 1 The subscription of initial share capital of financial institutions and other institutions authorized to operate by this body, deliberated at a shareholders' meeting or a quotaholders' meeting, must be recorded in the account title CAPITAL, of the Chart of Accounts for Institutions of the National Financial System - COSIF, having as counterpart CAPITAL TO BE PAID IN.

ART. 2 The increase of share capital of the institutions referred to in the previous article, deliberated at a shareholders' meeting or quotaholders' meeting, must be recorded, while not approved by this body, in CAPITAL INCREASE, having as counterpart:

I - CAPITAL TO BE PAID IN, when effected with funds from shareholders or quotaholders;

II - CAPITAL RESERVES, PROFIT RESERVES OR ACCUMULATED PROFITS OR LOSSES, when effected with reserves or profits.

ART. 3 The total or partial paid-in of share capital, through the subscription of shares or quotas, must be recorded as a credit to CAPITAL TO BE PAID IN, having as counterpart CASH or another appropriate account.

PARAGRAPH 1 On the date of approval, by this body, of the minutes of the shareholders' meeting or quotaholders' meeting that deliberated the increase of share capital, the amounts recorded in CAPITAL INCREASE must be transferred to CAPITAL.

PARAGRAPH 2 The balances of CAPITAL, LEGAL, STATUTORY AND FOR EXPANSION RESERVES, OTHER SPECIAL PROFIT RESERVES AND ACCUMULATED PROFITS, as well as profits relating to the base dates of June 30 and December 31, may be used for the increase of share capital.

ART. 4 The account title CAPITAL REDUCTION, code 6.1.1.40.00-2, with the attributes UBDKIFACTSWERLMN, is hereby created in COSIF, to record the amounts relating to the reduction of share capital, deliberated at a shareholders' meeting or quotaholders' meeting.

ART. 5 The reduction of share capital of the institutions referred to in Art. 1, deliberated at a shareholders' meeting or quotaholders' meeting, must be recorded, while not authorized by this body, as a debit to the account CAPITAL REDUCTION, having as counterpart:

I - ACCUMULATED PROFITS OR LOSSES, in the case of amortization of losses;

II - SUNDRY CREDITORS - COUNTRY, in the case of redemption of shares or quotas;

III - CAPITAL TO BE PAID IN, in the case of cancellation of shares or quotas not yet paid in.

PARAGRAPH 1 The funds relating to the redemption of shares or quotas may only be paid to the beneficiaries after the approval by this body of the minutes of the shareholders' meeting or quotaholders' meeting that deliberated the reduction of share capital, in the manner defined therein.

PARAGRAPH 2 The reduction of share capital must be recorded as a debit to CAPITAL and a credit to CAPITAL REDUCTION, on the date of approval by this body of the minutes of the shareholders' meeting or quotaholders' meeting that deliberated the reduction of share capital.

ART. 6 The subscription of initial share capital of consortium administrators, as well as subsequent increases, must be recorded on the date of the deliberation of the shareholders' meeting or quotaholders' meeting as a credit to CAPITAL, having as counterpart:

I - CAPITAL TO BE PAID IN, when effected with funds from shareholders or quotaholders;

II - CAPITAL RESERVES, PROFIT RESERVES OR ACCUMULATED PROFITS OR LOSSES, when effected with reserves or profits.

SOLE PARAGRAPH. The balances of CAPITAL, LEGAL, STATUTORY AND FOR EXPANSION RESERVES, OTHER SPECIAL PROFIT RESERVES AND ACCUMULATED PROFITS, as well as profits relating to the base dates of June 30 and December 31, may be used for the increase of share capital.

ART. 7 The reduction of share capital of consortium administrators must be recorded, on the date of the deliberation of the shareholders' meeting or quotaholders' meeting, as a debit to the account CAPITAL, having as counterpart:

I - ACCUMULATED PROFITS OR LOSSES, in the case of amortization of losses;

II - SUNDRY CREDITORS - COUNTRY, in the case of redemption of shares or quotas;

III - CAPITAL TO BE PAID IN, in the case of cancellation of shares or quotas not yet paid in.

SOLE PARAGRAPH. The reduction of share capital of consortium administrators may only be effected if the remaining share capital and shareholders' equity are maintained at the minimum levels required in the regulation in force.

ART. 8 The institutions and administrators referred to in Arts. 1 and 6, respectively, may not receive funds from shareholders or quotaholders, intended for the increase of share capital, before the holding of the shareholders' meeting or quotaholders' meeting that deliberates the increase of share capital.

ART. 9 The provisions contained in Circular No. 2,387, of 12.14.93, remain applicable to credit cooperatives.

ART. 10 This Circular enters into force on the date of its publication.

ART. 11 Circular No. 943, of 07.04.85, and Art. 1 of Circular No. 2,403, of 01.14.94, are revoked, and the account title FUNDS FOR CAPITAL PAID-IN and Scheme No. 1 - CONSTITUTION, INCREASE AND REDUCTION OF SHARE CAPITAL, of COSIF, are eliminated.

BRASÍLIA, APRIL 9, 1997

ALKIMAR RIBEIRO MOURA
DIRECTOR

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NOTE: RETRANSMITTED DUE TO ERROR IN THE DATE