Circular No. 2981 — Establishes Procedures Regarding Authorization for the Establishment of Branches Abroad and for Direct or Indirect Equity Participation in Brazil and Abroad by Financial Institutions and Other Institutions Authorized by the Central Bank of Brazil

CIRCULAR NO. 002981

Establishes procedures regarding authorization for the establishment of branches abroad, and for direct or indirect equity participation, in the Country and abroad, by financial institutions and other institutions authorized to operate by the Central Bank of Brazil.

The Collegiate Board of the Central Bank of Brazil, in a session held on April 26, 2000, based on Article 10, item X, of Law No. 4,595, of December 31, 1964, and having regard to the provisions of Articles 2 and 22 of Resolution No. 2,674, of December 21, 1999,

DECIDED:

Article 1. It is established that requests for authorization for the establishment of branches and for equity participation, direct or indirect, in financial institutions or similar entities, abroad, by financial institutions and other institutions authorized to operate by the Central Bank of Brazil, must be filed with the component of the Department of Organization of the Financial System (DEORF) to which the institution is subject, accompanied by:

I - a copy of the corporate act that deliberated on the matter;

II - an economic and financial feasibility study of the branch or equity investment, as established in Article 2, item IV, of Resolution No. 2,674, of December 21, 1999;

III - information on the activities to be developed by the representative office;

IV - information regarding the resources allocated to the branch or equity participation, indicating, as applicable:

a) the amount of capital to be allocated to the branch;

b) the capital of the participated institution;

c) the global value of the intended participation, with a breakdown of the quantity, type, classes, and respective nominal value of the shares or quotas to be subscribed or acquired;

V - a copy of the articles of association or bylaws of the participated institution, or a draft of these documents;

VI - capital composition statements of the participated institution and of the legal entities that participate in it, in accordance with current regulations;

VII - a copy of the most recent balance sheet of the participated institution;

VIII - a declaration, signed by the administration of the participating institution, committing to make available to the Central Bank of Brazil, in an integral and unrestricted manner, all information, data, documents, and verifications necessary to evaluate the respective active and passive operations and the risks assumed by the branch or by the participated institutions, as provided in Article 2, paragraphs 2 and 3, of Resolution No. 2,674, of 1999.

Sole Paragraph. For the purposes of Resolution No. 2,674, of 1999, a company located abroad is considered similar if its operations are typified, under the terms of the legislation and regulations in force in the Country, as those of an institution authorized to operate by the Central Bank of Brazil.

Article 2. The following dates must be reported, within a maximum period of thirty days from the respective occurrence, to the Department of Registration and Information of the Financial System (DECAD), via transaction PMSG750 of the Central Bank Information System (SISBACEN):

I - the filing of the request for the establishment of a branch or equity participation abroad with the competent foreign authority, when applicable;

II - the authorization for the operation of a branch abroad, granted by the competent foreign authority, when applicable;

III - the start or end of operations of a branch abroad;

IV - the start or end of equity participation abroad.

Sole Paragraph. DECAD may indicate a new transaction of SISBACEN, in substitution for that referred to in the main text, with a view to forwarding the information referred to in this article.

Article 3. From the semester following the start of branch operations or the realization of investments as equity participation in financial institutions or similar entities abroad, the institutions referred to in Article 1 must prepare semi-annual reports, for a period of four semesters, demonstrating that the operations conducted by the branch or by the participated institution are in line with the planned operational strategy, as well as that the profitability and return on investments meet those specified at the time of submitting the respective authorization request.

Paragraph 1. The reports referred to in the main text must:

I - be prepared by the last business day of the month following the end of the corresponding semester;

II - remain available at the headquarters of the institution to the Central Bank of Brazil and to independent auditors.

Article 4. The proof referred to in Article 15 of Resolution No. 2,674, of 1999, must be provided within ninety days, by presenting the following documents to the Department of Foreign Capital (FIRCE):

I - a foreign exchange contract regarding the entry of resources into the Country;

II - a closing balance sheet of the branch or a purchase and sale contract for the shares or quotas, together with the most recent balance sheet of the participated institution;

III - proof of the cancellation of the registration of the enterprise with the foreign supervisory authority.

Article 5. Requests for authorization for the allocation of new resources for branches located abroad, for the subscription of capital increases, and for increasing the relative position in the capital of a financial institution or similar entity subject to direct or indirect equity participation abroad, must be filed with DEORF, accompanied by a copy of the corporate act that deliberated on the matter.

Sole Paragraph. In the event of subscribing to a capital increase or increasing the relative position in the capital of the institutions referred to in the main text, the participating institution must send the new capital composition statements of the participated institution and of the legal entities that participate in it, in accordance with current regulations, in addition to informing the quantity, respective values, classes, and types of the shares or quotas to be subscribed or acquired.

Article 6. For the purposes of reinvesting abroad the resources obtained from the closure of a branch and the alienation of direct or indirect equity participation, in accordance with Article 15 of Resolution No. 2,674, of 1999, the provisions of Article 1 or Article 5 of this Circular must be observed, as applicable.

Article 7. Requests for authorization for processes of spin-off, merger, or consolidation of a financial institution or similar entity subject to direct or indirect equity participation abroad must be filed with DEORF, accompanied by:

I - a copy of the corporate acts of the involved institutions, which deliberated on the matter;

II - capital composition statements of the participated institution and of the legal entities that participate in it, in accordance with current regulations;

III - information on the criteria for assessing the patrimonial values involved in the operation.

Article 8. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil that opt for the consolidation of financial statements in accordance with Article 4 of Resolution No. 2,674, of 1999, must file the authorization request with DEORF, containing justification for the request, accompanied by the following documents regarding the participated company:

I - identification (name, complete address of the headquarters, and, if applicable, registration number in the National Registry of Legal Entities (CNPJ));

II - a copy of the respective updated articles of association or bylaws;

III - statements of the composition of its social capital and of the legal entities that participate in it, in accordance with current regulations;

IV - a copy of the financial statements for the last social year;

Sole Paragraph. In addition to the documents referred to in the main text, the participating institution must send to DEORF a simulation of the consolidated financial statements, including the participated company.

Article 9. Documents originating from abroad must be legalized at the Brazilian Consulate of the country of origin, translated by a sworn public translator, and registered, originals and respective translations, at the competent office for the registration of titles and documents.

Article 10. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil must send this Autarchy, in the form and within the timeframe to be established by DECAD and the Department of Information Technology (DEINF), information on all equity participations, direct or indirect, held on April 3, 2000, in the Country and abroad.

Article 11. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil must also notify DECAD, within a maximum period of thirty days from the date of occurrence:

I - any changes in the equity participations referred to in the previous article held directly or indirectly, in the Country and abroad;

II - the acquisition of new direct and indirect equity participations in the Country and abroad that do not require authorization, as well as respective changes.

Article 12. The reports, interrogatories, or inquiries directed to branches or participated institutions abroad, referred to in Article 17 of Resolution No. 2,674, of 1999, must be forwarded to the Department of Supervision (DEFIS), within a maximum period of thirty days from the respective receipt by the branch or by the participated institution.

Sole Paragraph. The provisions of this article cover the respective responses offered to the competent foreign authority by the branch or by the participated institution abroad.

Article 13. The foreign exchange procedures to be observed regarding the transfer of resources abroad, as well as those pertaining to the movements of the said resources outside the Country, must comply with the regulations established by FIRCE and the Department of Foreign Exchange (DECAM), within their respective areas of competence.

Article 14. Failure to observe the deadlines established for the submission and updating of the information provided in this Circular subjects the institution to a monetary penalty in accordance with current regulations.

Article 15. This Circular enters into force on the date of its publication.

Brasília, April 28, 2000

Sérgio Darcy da Silva Alves Carlos Eduardo de Freitas Director Director

Daniel Luiz Gleizer
Director