Circular No. 3.901

The Collegiate Board of the Central Bank of Brazil, in a session held on 22 May 2018, based on arts. 6 and 7, item III, of Law No. 11.795, of 8 October 2008, 9, item IX, subitem "b", and 15 of Law No. 12.865, of 9 October 2013,

R E S O L V E S :

Art. 1 The consortium administrators and payment institutions must disclose, in explanatory notes to the financial statements, information on related parties.

Art. 2 In the disclosure of the information referred to in art. 1, Technical Pronouncement CPC 05 (R1) – Disclosure on Related Parties, approved by the Committee of Accounting Pronouncements (CPC) on 3 September 2010, must be observed.

§ 1 The technical pronouncements cited in the text of CPC 05 (R1), while not received by a specific act of the Central Bank of Brazil, cannot be applied.

§ 2 The mentions of other pronouncements in the text of CPC 05 (R1), for the purposes of this Circular, must be interpreted as references to pronouncements of the CPC that have been received by the Central Bank of Brazil, as well as to the pertinent provisions of the Chart of Accounts for Institutions of the National Financial System (Cosif).

§ 3 The mentions, in the text of CPC 05 (R1), of the terms "control", "joint control", "investment entity" and "significant influence" must be interpreted as references to the following concepts:

• I - control: situation in which the investing institution is exposed to or has rights over variable returns arising from its involvement with the investee and has the ability to affect those returns through its power over that entity;

• II - joint control: situation in which there is contractually agreed sharing of control of an entity, in which decisions about relevant activities require the unanimous consent of the controlling parties;

• III - investment entity: entity that cumulatively meets the following conditions:

  • a) its business purpose is the investment of funds exclusively for the purposes of capital appreciation returns, investment income or both;

  • b) obtaining funds from investors has the objective of providing them with investment management services; and

  • c) the measurement and evaluation of the performance of a substantial portion of its investments must be made based on fair value; and

• IV - significant influence: situation in which the investing institution holds, directly or indirectly, at least 20% (twenty percent) of the voting capital of the investee, without controlling it, or holds or exercises the power to participate in decisions on the financial or operating policies of the investee, without controlling it, considering, at a minimum, the following factors:

  • a) representation on the board of directors or on the management of the investee;

  • b) participation in policy-making processes, including decisions on dividends and other distributions of the investee;

  • c) material transactions between the investing institution and the investee;

  • d) exchange of directors or other members of senior management; and

  • e) provision by the investing institution of technical information essential to the activity of the investee.

Art. 3 Circular No. 3.463, of 12 August 2009, is revoked.

Art. 4 This Circular enters into force on 31 December 2018.

Tiago Couto Berriel Deputy Director of Regulation