CMN Resolution No. 3040 on Requirements and Procedures for the Establishment, Authorization to Operate, Transfer of Corporate Control, and Corporate Reorganization of Specified Financial Institutions

RESOLUTION NO. 3040

Dispenses with the requirements and procedures for the constitution, authorization to operate, transfer of corporate control, and corporate reorganization, as well as for the cancellation of the authorization to operate of the institutions specified.

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595 of December 31, 1964, makes public that the MONETARY COUNCIL, in a session held on November 28, 2002, based on Article 4, item VIII, of the aforementioned law, Law No. 4,728 of July 14, 1965, Article 20, paragraph 1, of Law No. 4,864 of November 29, 1965, Law No. 6,099 of September 12, 1974, with the amendments introduced by Law No. 7,132 of October 26, 1983, and Article 1 of Provisional Measure No. 2,192-70 of August 24, 2001,

RESOLVED:

Article 1. Approve the attached regulation that governs the constitution, authorization to operate, transfer of corporate control, and corporate reorganization, as well as the cancellation of the authorization to operate of multiple banks, commercial banks, investment banks, development banks, credit, financing and investment societies, real estate credit societies, mortgage companies, development agencies, leasing societies, securities broker-dealers, securities distribution societies, and currency exchange broker-dealers.

Article 2. Requests for authorization referred to in the attached regulation will be subject to studies by the Central Bank of Brazil with a view to their acceptance or refusal.

Article 3. The Central Bank of Brazil is authorized to issue norms and adopt measures deemed necessary for the execution of the provisions of this resolution.

Article 4. This resolution enters into force on the date of its publication, producing effects from June 2, 2003, except for Articles 14 to 18 of the attached regulation to this resolution, whose validity is immediate.

Article 5. The provisions of Resolution No. 2,099 of August 17, 1994, and complementary regulation apply to processes filed with the Central Bank of Brazil prior to June 2, 2003.

Article 6. Articles 1 to 4 and 8 to 12 of the Attached Regulation I of Resolution No. 2,099 of August 17, 1994, Articles 2, 3, 4, 6, 7, 9, 10, 11, and 13 of Resolution No. 2,212 of November 16, 1995, and Resolution No. 2,762 of August 2, 2000, are revoked, and regulatory bases and citations to the Attached Regulation I of Resolution No. 2,099 of 1994, contained in norms issued by the Central Bank of Brazil, shall refer to this resolution.

Brasília, November 28, 2002

Arminio Fraga Neto
President

Attached Regulation to Resolution No. 3,040 of November 28, 2002, which governs the requirements and procedures for the constitution, authorization to operate, transfer of corporate control, and corporate reorganization, as well as for the cancellation of the authorization to operate of the institutions specified.

Chapter I

ON CONSTITUTION AND AUTHORIZATION TO OPERATE

Article 1. The constitution and operation of multiple banks, commercial banks, investment banks, development banks, credit, financing and investment societies, real estate credit societies, mortgage companies, development agencies, leasing societies, securities broker-dealers, securities distribution societies, and currency exchange broker-dealers referred to in Article 1 are subject to the provisions of this regulation.

Article 2. The operation of the institutions referred to in Article 1 presupposes:

I - constitution, in accordance with legal norms, the norms of this regulation, and other prevailing regulatory provisions;

II - authorization to operate.

Article 3. In the constitution process, the person technically qualified to conduct the project with the Central Bank of Brazil must be indicated, as well as the organizing group of the new institution, which must include representatives of the future control group and future holders of qualified participation.

Article 4. For the purposes of this regulation, qualified participation is understood as direct or indirect participation by natural or legal persons equivalent to 5% (five percent) or more of shares or quotas representing the total capital of the institutions referred to in Article 1.

Constitution

Article 5. The constitution of the institutions referred to in Article 1 will be subject to the following conditions, the compliance with which will be examined by the Central Bank of Brazil:

I - publication of a statement of purpose by natural or legal persons who do not yet form part of the control group of the institutions referred to in Article 1, in the terms and conditions established by the Central Bank of Brazil, which must also publish it, using the means it deems most appropriate;

II - submission of the following documents, covering the first three years of the institution's activity:

a) economic and financial feasibility study, which must contain, at minimum:

1. economic and financial analysis of the market segments in the region where it intends to operate and projection of participation in these segments with indication of the main competitors in each;

2. profitability expectation, with indication of expected returns in each of the chosen market segments;

3. financial projections showing the evolution of equity during the period, with identification of the funding sources that will enable this evolution;

b) business plan, which must indicate, at minimum:

1. detailed description of the proposed organizational structure, with clear determination of responsibilities assigned to the various levels of the institution;

2. specification of the internal control structure, demonstrating mechanisms that ensure adequate supervision by management and the effective use of internal and external audit as control instruments;

3. establishment of strategic objectives;

4. definition of the main products and services to be operated and target audience;

5. technologies to be used in the placement of products and sizing of the service network;

6. definition of the maximum deadline for the start of activities after the grant, by the Central Bank of Brazil, of the authorization to operate;

7. description of the criteria used in the selection of administrators, as well as identification of these latter when requested by the Central Bank of Brazil;

c) definition of corporate governance standards to be observed, including the detailed structure of incentives and remuneration policy.

III - indication of the composition of the institution's control group;

IV - demonstration of economic-financial capacity compatible with the size, nature, and objective of the venture, to be met, at the discretion of the Central Bank of Brazil, individually by the controlling shareholder or by the control group;

V - express authorization by all members of the control group and all holders of qualified participation:

a) to the Federal Revenue Secretariat, for the provision to the Central Bank of Brazil of a copy of the income declaration, assets and rights, and debts and real encumbrances, relating to the last three fiscal years, for exclusive use in the respective authorization process;

b) to the Central Bank of Brazil, for access to information about them contained in any public or private registration and information system;

VI - absence of restrictions that may, in the judgment of the Central Bank of Brazil, affect the reputation of the controllers, applying, where applicable, the other legal and regulatory norms regarding the conditions for the exercise of administrative positions in the institutions referred to in Article 1.

Paragraph 1. The Central Bank of Brazil, in cases it deems necessary, may require the publication of the statement of purpose by natural or legal persons who already form part of the control group of the institutions referred to in Article 1.

Paragraph 2. The Central Bank of Brazil, in evaluating compliance with the conditions established in item II, will take into account the nature and size of the institution involved.

Paragraph 3. Development agencies are exempt from the publication of the statement of purpose referred to in this article.

Article 6. Once the Central Bank of Brazil recognizes compliance with the conditions established in Article 5, the interested parties must formalize the request for authorization to operate, within a maximum period of ninety days, counted from the receipt of the respective communication, the non-observance of which will result in the archiving of the process.

Sole Paragraph. The Central Bank of Brazil may, upon justified request, grant an additional period of up to ninety days, after which, if no relevant measures are taken, the constitution process will be automatically archived.

Authorization to Operate

Article 7. The authorization to operate depends on the approval, by the Central Bank of Brazil, of the formal acts of constitution, observing prevailing regulation.

Sole Paragraph. The authorization referred to in the main text is equally conditioned on proof, by all members of the control group and all holders of qualified participation, of the origin of the resources that will be used in the venture.

Article 8. The start of the institution's activities must observe the deadline provided in the business plan; the Central Bank of Brazil may grant, exceptionally, an extension of the deadline, upon reasoned request signed by the institution's administrators.

Paragraph 1. The Central Bank of Brazil may, in the case of extension of the deadline provided in the main text, require any documents and declarations necessary to update the authorization process.

Paragraph 2. Upon obtaining the authorization to operate, and prior to the start of activities, the institution must:

I - send to the Central Bank of Brazil a declaration attesting to the conformity of its infrastructure with the presented business plan;

II - prove, in the case of financial institutions, adherence to the mechanism for protecting holders of credits against financial institutions.

Paragraph 3. Once activities have started, the institution must, during its first three fiscal years, demonstrate in the management report accompanying the semi-annual financial statements the adequacy of the operations carried out with the strategic objectives established in the manner of Article 5, item II, letter "b", item 3.

Paragraph 4. The independent auditor must opine, in a specific item of the report prepared regarding the financial statements, on the information referred to in Paragraph 3.

Article 9. If, during the first three fiscal years, the non-adequacy of operations with the strategic objectives is verified, the institution must present justified reasons, which will be examined by the Central Bank of Brazil, which may establish additional conditions, setting a deadline for their compliance.

Chapter II

ON AUTHORIZATION FOR TRANSFER OF CORPORATE CONTROL AND REORGANIZATION

Article 10. The transfer of corporate control and any change, direct or indirect, in the control group, which may imply alteration in effective interference in the institution's business, resulting from:

I - shareholders' or partners' agreement;

II - inheritance and acts of disposition of will, such as donation, advance of legitime, and establishment of usufruct;

III - act, isolated or combined, by any person, natural or legal, or group of persons representing common interest.

Sole Paragraph. The provisions of this article do not apply to transfers of corporate control to legal entities in which no new natural persons enter the list of final controllers of the institution.

Article 11. The following reorganization acts also require authorization from the Central Bank of Brazil:

I - change of corporate object, observing the provisions of Article 16;

II - creation or cancellation of operational portfolio, by a multiple bank;

III - merger, spin-off, or incorporation.

Article 12. Requests referred to in Articles 10 and 11 must observe the provisions of Article 5 and the sole paragraph of Article 7.

Sole Paragraph. The Central Bank of Brazil, in the analysis of the processes referred to in the main text, may dispense, as appropriate, with compliance with conditions established in the aforementioned Article 5.

Article 13. The Central Bank of Brazil, in the occurrence of the situations described below, may require compliance with conditions established in Articles 5 and 7, namely:

I - application of items IV and V of Article 5 and the sole paragraph of Article 7, in the event of expansion of participation held by a controlling shareholder, by a percentage equal to or greater than 5% (five percent) of the capital, cumulatively or not;

II - application of item V of Article 5 and the sole paragraph of Article 7 in the following cases:

a) entry of a shareholder or partner with qualified participation or with rights corresponding to qualified participation, resulting from legal acts formalized, directly or indirectly, with other partners or shareholders of the institution;

b) expansion of qualified participation held by a shareholder or partner by a percentage equal to or greater than 5% (five percent) of the institution's capital, cumulatively or not;

c) assumption of the status of shareholder or partner holding qualified participation.

Paragraph 1. The occurrence of the events referred to in this article must be communicated to the Central Bank of Brazil, within the period to be established by it.

Paragraph 2. From the receipt of the information referred to in Paragraph 1, the Central Bank of Brazil will have a period of sixty days to adopt the measures referred to in this article.

Chapter III

ON CORPORATE CONTROL STRUCTURE

Article 14. Direct shareholdings that imply control of the institutions referred to in Article 1, constituted from the date of publication of this resolution, may only be held by:

I - natural persons;

II - financial institutions and other institutions authorized to operate by the Central Bank of Brazil;

III - other legal entities, whose corporate object is exclusively the shareholding in financial institutions and other institutions authorized to operate by the Central Bank of Brazil.

Sole Paragraph. The provisions of this article do not apply to development agencies and public financial institutions that are or will be subject to a privatization process.

Article 15. The entry of a partner or shareholder into the status of member of the control group, occurring from the date of publication of this resolution, implies the need for compliance, by the same, with the provisions of Article 14.

Chapter IV

ON CANCELLATION OF AUTHORIZATION TO OPERATE

Article 16. The practice of acts that result in the extinction of the company or a change in its corporate object, resulting in its decharacterization as a company part of the financial system, implies the cancellation of the respective authorization to operate.

Article 17. The indispensable requirements for the cancellation of the authorization to operate of the institutions referred to in Article 1 are:

I - publication of a statement of purpose in the terms and conditions established by the Central Bank of Brazil, which must also publish it, using the means it deems most appropriate;

II - deliberation in a general assembly or partners' meeting, as appropriate;

III - instruction of the respective process, with the Central Bank of Brazil, in the terms and conditions established by it.

Paragraph 1. In addition to the requirements established in this article, the Central Bank of Brazil may condition the cancellation to the liquidation of passive operations specific to the institutions referred to in Article 1.

Paragraph 2. The provisions of this article do not apply to the extinction of the company resulting from merger, total spin-off, or incorporation, provided that the resulting or successor institution is authorized to operate by the Central Bank of Brazil.

Article 18. The Central Bank of Brazil, having exhausted other measures within its competence, may cancel the authorization to operate of the institutions referred to in this regulation, when any one or more of the following situations are verified at any time:

I - operational inactivity, without acceptable justification;

II - institution not located at the address informed to the Central Bank of Brazil;

III - interruption, for more than four months, without acceptable justification, of the submission of financial statements required by prevailing regulation, to that Autarchy;

IV - non-observance of the deadline for the start of activities.

Sole Paragraph. The Central Bank of Brazil, prior to cancellation for the reasons referred to in this article, will publish, by means it deems most appropriate, its intention to cancel the authorization in question, with a view to the possible presentation of objections by the public, within a period of thirty days.

Chapter V

ON GENERAL PROVISIONS

Article 19. The Central Bank of Brazil must regulate the:

I - documents necessary to instruct the processes regarding the matters covered by this regulation;

II - deadlines to be observed in the instruction of the processes.

Article 20. The Central Bank of Brazil, during the analysis of the matters covered by this regulation, may:

I - request any additional documents and/or information deemed necessary to decide on the claim;

II - summon for an interview members of the control group, holders of qualified participation, and the indicated administrators of the institution.

Article 21. The Central Bank of Brazil will summarily deny requests related to the matters covered by this regulation, if it is found:

I - registration irregularity against the administrators, members of the institution's control group, or holders of qualified participation, not remedied within a period granted by it;

II - falsity in the declarations or documents presented in the instruction of the process.

Sole Paragraph. In the cases referred to in item I, the Central Bank of Brazil may grant a period to the interested parties to remedy the registration irregularity.