CMN Resolution No. 4,851

CMN RESOLUTION NO. 4,851, OF AUGUST 27, 2020

Amends provisions of Resolution No. 4,192, of March 1, 2013, and Resolution No. 4,279, of October 31, 2013, and revokes Resolution No. 4,679 and Resolution No. 4,680, both of July 31, 2018, which provide for the methodology for calculating Reference Equity (RE).

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes it public that the National Monetary Council, in a session held on August 27, 2020, based on Article 4, items VIII and XI, of the aforementioned Law, Article 20, § 1, of Law No. 4,864, of November 29, 1965, Law No. 6,099, of September 12, 1974, and Articles 1 and 12 of Complementary Law No. 130, of April 17, 2009,

RESOLVES:

Article 1. Resolution No. 4,192, of March 1, 2013, shall enter into force with the following amendments:

“Article 5. .............................................................................................

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~~§ 13. Until December 31, 2021, tax credits for fiscal losses and negative basis of Social Contribution on Net Income resulting from sold positions in foreign currency carried out with the objective of providing a hedge against exchange rate variation of its investments in controlled companies, affiliates, branches, agencies, or offices domiciled abroad recognized in the period from January 1, 2018, to December 31, 2020, shall not be included in item VIII of the main text.

~~§ 14. After January 1, 2022, the tax credits referred to in § 13 shall be included in item VIII of the main text according to the following schedule:

~~I - at least 50% (fifty percent), by June 30, 2022; and

~~II - 100% (one hundred percent), by December 31, 2022.” (NR)

~~“TITLE III

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~~CHAPTER VI

~~OF THE EXTINGUISHMENT of the debtor balance of instruments authorized to compose Supplementary Capital and Level II

~~Article 24-A. The Central Bank of Brazil may determine the extinguishment of the debtor balance of instruments authorized to compose Supplementary Capital or Level II of RE or the conversion of these instruments into shares of the issuing institution, in accordance with Article 11 of Law No. 12,838, of July 9, 2013, when it considers the measure necessary to ensure the continuity of that institution and, at the same time, to mitigate relevant risks to the regular functioning of the financial system.

~~§ 1. For the purposes of this Resolution, risk to the continuity of the institution is characterized by the non-compliance with a determination of the Central Bank of Brazil to increase the amounts of RE, Level I, or Principal Capital, and simultaneously, the calculation of at least one of the following situations:

~~I - material deterioration:

~~a) of the value and liquidity of its assets;

~~b) of its solvency status; or

~~c) of its credibility, characterized by a significant reduction in the volume of fundraising;

~~II - increase in the risk of default resulting in the activation of guarantee mechanisms and safeguards of clearinghouses and settlement service providers, in accordance with specific legislation of the Brazilian Payments System (SPB).

~~§ 2. For the purposes of this Resolution, relevant risk to the regular functioning of the financial system is characterized by the possibility that the discontinuation of the institution may result in:

~~I - compromise of operations of other institutions or relevant market segments that may generate uncertainty regarding the solidity of the financial system; or

~~II - significant prejudice to the supply, at adequate levels, of a service considered essential to the financial system.

~~§ 3. Instruments authorized to compose Supplementary Capital shall have their debtor balance extinguished or converted into shares before instruments authorized to compose Level II.

~~§ 4. The Central Bank of Brazil may only determine:

~~I - the extinguishment of the debtor balance of an instrument that presents the extinguishment clause referred to in Article 17, item XV, or Article 20, item X, as established therein; or

~~II - the conversion into shares of an instrument that presents the conversion clause referred to in Article 17, item XV, or Article 20, item X, as established therein.

~~Article 24-B. Issuing institutions of instruments authorized to compose RE must prepare and keep permanently updated an action plan for the eventual occurrence of the extinguishment or conversion provided for in Article 17, item XV, and Article 20, item X.

~~§ 1. The action plan referred to in the main text must include:

~~I - measures to be taken to comply with any obligations and other operational procedures related to the extinguishment or conversion process;

~~II - precautions and procedures necessary for the extinguishment or conversion to occur in a transparent and organized manner.

~~§ 2. The action plan mentioned in the main text must be part of the capital contingency plan established in Resolution No. 4,557, of February 23, 2017.

~~Article 24-C. It is the responsibility of the board of directors or, in its absence, the executive board of the issuing institution of instruments eligible for RE:

~~I - to provide full knowledge of the action plan mentioned in Article 24-B to holders of rights over these instruments;

~~II - to disclose and inform the Central Bank of Brazil, according to procedures established by this Agency, regarding situations related to the extinguishment or conversion mentioned in the main text of Article 24-B.” (NR)

~~“Article 29-A. The amount of resources from the funds referred to in Law No. 7,827, of September 27, 1989, Article 10 of Law No. 7,998, of January 11, 1990, and Law No. 8,036, of May 11, 1990, recognized in Level II of RE is limited to the following percentages, applied to the value of these resources computed in the mentioned level on June 30, 2018:

~~I - 100% (one hundred percent), until December 31, 2019;

~~II - 90% (ninety percent), from January 1, 2020;

~~III - 80% (eighty percent), from January 1, 2021;

~~IV - 70% (seventy percent), from January 1, 2022;

~~V - 60% (sixty percent), from January 1, 2023;

~~VI - 50% (fifty percent), from January 1, 2024;

~~VII - 40% (forty percent), from January 1, 2025;

~~VIII - 30% (thirty percent), from January 1, 2026;

~~IX - 20% (twenty percent), from January 1, 2027;

~~X - 10% (ten percent), from January 1, 2028; and

~~XI - 0% (zero percent), from January 1, 2029.

~~§ 1. The limit referred to in the main text does not apply to resources from the mentioned funds authorized to compose Level II of RE after August 2, 2018.

~~§ 2. Articles 27, 28, and 29 do not apply to resources subject to the limit established in the main text.” (NR)

~~“Article 31. ............................................................................................

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~~II - disclosure of information related to the calculation of RE;

~~III - compliance with the provisions of § 2 of Article 16; and

~~IV - compliance with the provisions of §§ 13 and 14 of Article 5.

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Article 1. (Revoked, from 3/1/2022, by CMN Resolution No. 4,955, of 10/21/2021.)

Article 2. The summary of Resolution No. 4,279, of October 31, 2013, shall enter into force with the following wording:

“Amends provisions of Resolution No. 4,122, of August 2, 2012.” (NR)

Article 3. The following are revoked:

I - Resolution No. 4,679, of July 31, 2018;

II - Resolution No. 4,680, of July 31, 2018; and

III - the following provisions of Resolution No. 4,279, of October 31, 2013:

a) items I and II of Article 1; and

b) Articles 2, 3, and 4.

Article 4. This Resolution enters into force on October 1, 2020.

Roberto de Oliveira Campos Neto
President of the Central Bank of Brazil