CMN Resolution No. 45 — Regulation of Acceptance of Bills of Exchange, Including Direct Consumer Credit

RESOLUTION NO. 000045

THE CENTRAL BANK OF THE REPUBLIC OF BRAZIL, in accordance with the deliberation of the National Monetary Council, in a session held on December 27, 1966, and in view of the provisions of Articles 4, item VI, and 9 of Law No. 4,595, of December 31, 1964, and Articles 14, item II, and 27 of Law No. 4,728, of July 14, 1965, with the purpose of regulating operations carried out by Credit and Financing Companies and those of the mixed type resulting from the acceptance of negotiable instruments,

RESOLVES:

I - Credit opening operations through acceptance by the financier of bills of exchange shall be governed by a formal written contract, observing a minimum term of 6 months for the resulting bills of exchange and the tying of collateral that exceeds, at minimum, 20% (twenty percent) of the value of the acceptances.

II - They shall be carried out exclusively for the financing of the purchase of goods made by a user or final consumer and for the working capital of companies; operations aimed at financing working capital may not exceed 60% (sixty percent) of the total of such operations. The maturity of the negotiable instruments delivered as collateral must precede that of the respective bill acceptances, providing adequate terms for the collection of the claim in the market or outside it.

III - The refinancing of installment sales, made to a user or final consumer, shall comply with the following provisions:

a) it shall be guaranteed by the pledge of the credit opening contract signed between the seller and the buyer, whose redemption installments are represented by promissory notes or bills of exchange; in this case, the negotiable instruments must necessarily accompany the respective contract for collection by the financing company, directly or through a bank acting as its agent;

b) series of bills of exchange or promissory notes may be received starting from the first, allowing the substitution of due installments during each month by other due installments within the validity period of the contract, so that the entirety of the collateral remains intact and due.

IV - The purchase financing contracted directly with the consumer or final user shall have as its main guarantee the fiduciary alienation of the good object of the transaction and may not exceed 80% (eighty percent) of the value of the sale.

V - The financing referred to in the previous item may also be carried out through the intervention of the selling company, as the drawer of the bills of exchange, observing the following general conditions:

a) a formal contract between the selling company and the financier for the drawing and acceptance of bills of exchange, the proceeds of which in the market shall be specifically destined to the financing of customers of the seller, for the acquisition of goods for cash;

b) the contracting of financing to the client, consumer, or final user, by a formal instrument of adherence to the agreement mentioned in letter "a" above;

c) the fiduciary alienation of the transacted good, when applicable, or the joint liability of the seller in the instruments representing the utilization of the credit extended to the buyer, which shall constitute, alternatively or jointly, the guarantee;

d) the financing to the client may be carried out up to the total value of the acquired good, provided that the debtor firm deposits, as collateral linked to the respective contract, the amount necessary to maintain the minimum guarantee margin of 20%;

e) the proceeds from the collection of the instruments or the amortizations of the credit opening contracts in favor of the buyers may be used in new credit openings, granted in the form of letter "b" above, provided they are due within the term of the respective bill acceptances, so that the entirety of the collateral remains intact and due.

VI - Operations for working capital financing shall have as collateral the regularly constituted pledge of goods that are easy to place and difficult to deteriorate, the fiduciary alienation, or the pledge of instruments representing legitimate commercial transactions, allowing the rotation of pledged instruments and the substitution of the commercial pledge or fiduciary alienation by instruments also representing legitimate commercial transactions.

VII - The goods subject to fiduciary alienation or pledge must be unequivocally identified; the possession of the pledged goods shall be transferred to the financier at the time, prohibiting the institution of a fiduciary depositary directly or indirectly linked to the financed entity, except when two fiduciary depositaries are established as jointly liable, in which case one of them may be a director of the drawer company.

VIII - The bills of exchange resulting from the operations covered by this Resolution may be placed in the market directly by the accepting companies, observing the following rules:

a) the placement in the market directly by the accepting companies shall be done by order, account, and risk of the drawer;

b) the payment of brokerage fees for the intermediation in the sale of the bills shall be made, obligatorily, by receipt and identification of the beneficiary of the commission.

IX - As subsidiary collateral, accepting companies may receive, in addition to others, the following, understood however that in working capital financing, only after the constitution of the main guarantees may the bill of exchange be accepted:

a) pledge of promissory notes issued or guaranteed by directors of the financed company or by third parties;

b) pledge, duly formalized, of shares that possess a high degree of negotiability, as defined in Resolution No. 16, of February 16, 1966, issued by this Bank;

c) pledge, duly formalized, of debentures issued by commercial or industrial companies; and

d) guarantee of foreign banks, duly constituted.

X - Operations with a monetary correction clause shall also comply with the following rules:

a) the monetary correction clause, at the discretion of the contracting parties, shall:

1. adopt the coefficients approved by the National Council of Economy for the correction of the Treasury's Adjustable Obligations (Art. 27, of Law No. 4,728, of July 14, 1965), establishing the maximum correction, as a percentage of the principal of the operation; or

2. pre-fix the value of the monetary correction, observing, in this case, the provisions of letter "c" below;

b) the text of the bills of exchange, resulting from the operations covered by this item, shall reference Art. 27 of Law No. 4,728, of July 14, 1965, and specify the monetary correction in accordance with what is agreed upon in the credit opening contract, as well as the interest rate to be applied to the principal, if agreed;

c) the nominal differences resulting from the monetary correction of the credit opening contracts and the bills of exchange covered by this item, according to the provisions of Art. 27, § 1, of Law No. 4,728, of July 14, 1965, do not constitute taxable income for the purposes of income tax, except in the case of pre-fixed monetary correction (letter "a", number 2, above) if this, added to the interest rate, is higher than the monetary correction that would result from the application of the correction coefficients approved by the National Council of Economy; in this case, the excess shall be equated to the interest referred to in Art. 54 of Law No. 4,728, with the accepting companies of the bills of exchange responsible for the withholding and immediate payment, upon redemption, of the due tax;

d) the value of the collateral shall be equivalent, at minimum, to the sum of the following portions:

• nominal value of the bill at the date of issuance;

• 20% (twenty percent) of the nominal value above; and

• value of the contracted monetary correction.

XI - The limit of the direct responsibility of the same client, referred to in item VII, letter "c" of Ordinance No. 309, of November 30, 1959, of the Ministry of Finance, shall be subject to the following conditions:

a) 10% (ten percent) of the total applications, provided that the responsibility of each of the drawees of the instruments delivered as collateral does not exceed 2% (two percent) of the value of the guarantees received for the total of the contracts in force;

b) 25% (twenty-five percent) of the total applications, in the case of operations where the respective bills of exchange are drawn by the selling firms, in the capacity of intervening drawers, provided that the credit granted to each client of the seller does not exceed 0.05% (five hundredths of a percent) of the total application; and

c) 5% (five percent) of the total applications whenever the responsibility of one of the drawees is higher than 2% (two percent) of the total applications or if it is an operation whose guarantee does not involve co-obligors.

XII - The passive operations of any nature of credit and financing companies and those of the mixed type may not exceed, in value, 15 (fifteen) times the sum of the paid-in capital and reserves, observing the following rules:

a) only legal reserves (Art. 130 of Decree-Law No. 2,627, of September 26, 1940) and those duly approved by a shareholders' general meeting, or those constituted by express statutory provision, shall be computed as reserves; provisions or funds for credit risks, constituted in accordance with the Income Tax legislation and approved by a general meeting, shall be computed as reserves provided that the company highlights in the published balance sheets and statements and those sent to this Bank the abnormal course active credits; they shall not be considered reserves, even if so named, the passive accounts for the regularization of the active (depreciation or amortization);

b) from the sum of the paid-in capital and reserves, participations of a permanent nature in the capital of other companies shall be deducted, thus considered those that do not result from subscription guarantee operations or those that do not have a high degree of negotiability, as defined in Resolution No. 16, of February 16, 1966, issued by this Bank, as well as abnormal course credits;

c) balances remaining from operations carried out within the system established by Resolution No. 21, of March 15, 1966, issued by this Bank, nor those resulting from operations executed in the capacity of financial agent of government funds, shall not be computed among the passive operations.

XIII - The prohibition to credit and financing companies and those of the mixed type to jointly liable themselves in negotiable instruments in a manner different from that established in this Resolution is maintained, as well as to collect resources through the issuance of other instruments representing orders or promises of payment; companies that, eventually, are responsible for instruments under these conditions may not extend their maturity.

XIV - Credit, Financing, and Investment Companies remain exempt from the compulsory collection referred to in item VI of Ordinance 309, of November 30, 1959, of the Ministry of Finance.

XV - Investment or development banks may receive deposits with monetary correction for a minimum term of 6 months, observing the following:

a) the deposits shall be governed by the conditions established in item III of Resolution No. 31, of July 30, 1966, issued by this Bank;

b) the issuance of bank deposit certificates shall continue to be done in accordance with the provisions of the current legislation and regulations;

c) interest, calculated on the corrected principal, may be paid monthly, but the monetary correction shall only be paid at the maturity of the deposit; if a certificate is issued, the payment of interest shall be registered on the reverse of this document;

d) the nominal differences resulting from the monetary correction, according to the provisions of Art. 27, § 1, of Law No. 4,728, of July 14, 1965, do not constitute taxable income for the purposes of income tax, except in the case of pre-fixed monetary correction if this, added to the interest rate, is higher than the monetary correction that would result from the application of the coefficients approved by the National Council of Economy; the excess, in such a hypothesis, shall be considered interest and shall be subject to the incidence of income tax, except for deposits made until December 31, 1966, whose interest, in the period elapsed until December 31, 1967, shall be exempt from income tax (Art. 1, § 2, of Decree-Law No. 13, of July 18, 1966) even if advanced monthly.

XVI - Non-compliance with the provisions of this Resolution shall subject the infringing companies to the penalties provided for in Law No. 4,595, of December 31, 1964, Art. 44 and its items, respecting the following conditions:

a) the violation of operational rules shall determine the application of a warning penalty and, in case of recidivism, a fine corresponding to 10 times the highest minimum wage in force in the Country, per contract concluded in disagreement with the aforementioned rules; and

b) the violation of the provisions of item XII shall determine the application of a warning penalty and, in case of recidivism, successive and increasing fines, corresponding to 50, 100, and 200 times the highest minimum wage in force in the Country.

XVII - The percentage referred to in item II may be altered due to conjunctural situations or for the progressive adjustment of specific cases resulting from regional operating conditions, in which case the limit referred to in item XII shall also be reduced.

XVIII - The revocation of Resolutions Nos. 21 and 28, issued by this Bank on March 15, 1966, and June 30, 1966, Instruction No. 251, of September 26, 1963, of the extinct Superintendence of Money and Credit, and Circulars Nos. 27, 40, 80, and 83, respectively of March 25, 1966, May 31, 1966, July 29, 1963, and October 10, 1963, the first two from the Central Bank and the others from the Superintendence of Money and Credit, is reiterated, as well as the reservation of the realization of refinancing operations for companies that have not yet used the credits obtained based on item V of the aforementioned Resolution 21.

XIX - Resolution No. 32, of July 30, 1966, and Circular No. 49, of August 16, 1966, both issued by this Bank, are revoked.

Rio de Janeiro-RJ, December 30, 1966

CENTRAL BANK OF THE REPUBLIC OF BRAZIL

Dênio Nogueira
President