Circular No. 2913 — Disposes on the application of resources raised abroad and establishes procedures for registration and evaluation of securities acquired with such resources

CIRCULAR N. 002913

Dispõe sobre a aplicação de recursos captados no exterior e estabelece procedimentos para registro e avaliação de títulos adquiridos com base nesses recursos.

The Collective Board of Directors of the Central Bank of Brazil, in a session held on July 21, 1999, based on Article 4, items VI, XII, and XXXI of Law No. 4,595 of December 31, 1964, and item II of Resolution No. 1,128 of May 15, 1986, by competence delegated by the National Monetary Council, by act of July 19, 1978,

DECIDED:

Article 1. Securities acquired in accordance with Resolutions Nos. 2,440 of November 12, 1997, and 2,483 of 1998, and Circular No. 2,781 of November 12, 1997, by financial institutions and other institutions authorized to operate by the Central Bank of Brazil, shall be blocked until their respective maturity or until the application of resources in the modalities provided for in the current regulation, prohibiting their use in any other forms of negotiation, including those related to the provision of guarantees.

Paragraph 1. The block must be effected through registration in a specific account in the Special Settlement and Custody System (SELIC).

Paragraph 2. Securities may be replaced at any time by others that serve for the classification under the direction established by the normative instruments mentioned in the "caput" of this article.

Article 2. Securities registered in the manner of the preceding article, for which there is the intention and financial capacity of the institution to hold them in the portfolio until maturity, must be evaluated at their acquisition cost, plus the earnings accrued, cumulatively observing that:

I - the resources used for the acquisition must originate from raising through public issuance abroad;

II - the term of these securities cannot exceed that of the external resource raising operation that served as collateral for their acquisition;

III - these securities cannot be replaced and must remain unavailable until their respective maturity.

Article 3. It is mandatory to disclose, in explanatory notes to financial statements, information that covers, regarding the securities referred to in Article 2, at least the following aspects:

I - the amount, nature, and maturity;

II - the linkage with external resources;

III - the market value, segregated by type of security.

Article 4. In addition to the minimum information required in the preceding article, a declaration regarding the institution's capacity and intention to hold the securities until maturity, as provided in Article 2, must be disclosed in the Administrative Report.

Article 5. Institutions must keep available to the Central Bank of Brazil managerial reports that clearly and objectively evidence the operations in which the procedures provided for in this Circular were adopted.

Article 6. The adoption of the procedure provided for in this Circular is admitted for securities in the portfolio, provided that the provisions of Article 2 are met, through the reversal of provisions for market value adjustment possibly constituted.

Paragraph 1. The reversals referred to in this article must be registered as a credit to the appropriate sub-item of the accounting title:

I - REVERSAL OF OPERATIONAL PROVISIONS, code 7.1.9.90.00-8, when referring to provisions constituted in prior periods;

II - OPERATIONAL PROVISION EXPENSES, code 8.1.8.30.00-0, when referring to provisions constituted in the current period.

Paragraph 2. The effect on the result and shareholders' equity of the reversal referred to in this article must be evidenced in an explanatory note to the financial statements.

Article 7. This Circular enters into force on the date of its publication.

Article 8. Circular No. 2,887 of May 12, 1999, is hereby repealed.

Brasília, July 21, 1999

Sérgio Darcy da Silva Alves
Director