CMN Resolution No. 4693

The Central Bank of Brazil, pursuant to Article 9 of Law No. 4,595 of December 31, 1964, makes it public that the National Monetary Council, in a session held on October 29, 2018, based on the provisions of Articles 34, §§ 4 and 6, of said Law, Articles 7 and 23 of Law No. 6,099 of September 12, 1974, and Complementary Law No. 130 of April 17, 2009,

RESOLVES:

Art. 1. This Resolution sets forth the conditions and limits for the realization of credit operations with related parties by financial institutions and leasing companies, for the purposes of the provisions of Article 34 of Law No. 4,595 of December 31, 1964.

Art. 2. For the purposes of this Resolution, the following are considered related parties of an institution:

I - its controllers, whether natural or legal persons, as per Article 116 of Law No. 6,404 of December 15, 1976;

II - its directors and members of statutory or contractual bodies;

III - the spouse, partner, and relatives, by blood or affinity, up to the second degree, of the natural persons mentioned in items I and II;

IV - natural persons with qualified equity participation in its capital; and

V - legal entities:

a) with qualified equity participation in their capital;

b) in whose capital there is, directly or indirectly, qualified equity participation;

c) in which there is effective operational control or predominance in deliberations, regardless of equity participation; and

d) that share a director or member of the board of directors.

Art. 3. For the purposes of this Resolution, qualified participation is considered to be direct or indirect participation held by natural or legal persons in the capital of the institutions referred to in Art. 1, or by these institutions in the capital of legal entities, equivalent to 15% (fifteen percent) or more of the respective shares or quotas representing ownership.

Art. 4. For the purposes of this Resolution, a credit operation is considered to be:

I - loans and financing;

II - advances;

III - financial leasing operations;

IV - provision of guarantee, suretyship, co-obligation, or any other form of personal guarantee for the fulfillment of a third party's financial obligation;

V - availability of credit lines and other credit commitments;

VI - credits contracted with funds to be disbursed;

VII - interbank deposits regulated under Article 4, item XXXII, of Law No. 4,595 of 1964; and

VIII - deposits and applications abroad, in accordance with current regulations, in financial institutions or those equivalent to financial institutions.

Sole Paragraph. An operation is also considered to be carried out with a related party if it characterizes an indirect, simulated transaction, or one involving the intermediation of a third party, with the aim of carrying out an operation provided for in the items of the main text of this article.

Art. 5. The institutions mentioned in Art. 1 may carry out credit operations with related parties, provided that the conditions set forth in Art. 6 and the limits set forth in Art. 7 are cumulatively observed.

Art. 6. Credit operations with related parties, except for cases provided for in legislation or specific regulation, may only be carried out under conditions compatible with market conditions, including regarding limits, interest rates, grace periods, terms, required guarantees, and criteria for risk classification for the purpose of establishing provisions for possible losses and write-offs, without additional or differentiated benefits compared to operations approved for other clients of the same profile of the respective institutions.

§ 1º. Market-compatible conditions are considered to be the parameters adopted by the institution in credit operations of the same modality for borrowers of the same profile and credit risk.

§ 2º. The provisions of this article apply even to the hypotheses provided for in items II to V of § 4 of Art. 34 of Law No. 4,595 of 1964.

Art. 7. The sum of the balances of credit operations contracted, directly or indirectly, with related parties must not exceed 10% (ten percent) of the value relative to net worth adjusted by accumulated revenues and expenses, minus the value of participations held in institutions authorized to operate by the Central Bank of Brazil and in financial institutions abroad, observing the following maximum individual limits:

I - 1% (one percent) for contracting with a natural person; and

II - 5% (five percent) for contracting with a legal entity.

§ 1º. The limits referred to in this article must be calculated on the date of granting the credit operation, based on the accounting document relating to the penultimate month relative to the reference date.

§ 2º. The limits referred to in the main text must include credit operations with related parties that are:

I - assigned to third parties with retention of substantial risks and benefits or control; and

II - acquired from third parties, regardless of the retention or transfer of risks and benefits or control by the assignor.

Art. 8. The provisions of Art. 7 do not apply:

I - to operations with companies controlled by the Union, in the case of federal public financial institutions;

II - to credit operations where the counterparty is an institution authorized to operate by the Central Bank of Brazil;

III - to obligations assumed between related parties arising from liability imposed on clearing house members and other participants of clearing houses or providers of clearing and settlement services authorized by the Central Bank of Brazil or the Securities and Exchange Commission (CVM) and their respective counterparties in operations conducted within the scope of said clearing houses or service providers;

IV - to the deposits and applications referred to in Art. 4, item VIII; and

V - to credit operations carried out:

a) with the legal entities referred to in Art. 2, item V, letter "d", provided that the directors or board members common to both the lending institution and the borrower are considered independent in both counterparties;

b) by a single credit cooperative, a central credit cooperative, and confederations of cooperatives;

c) by a cooperative bank, with cooperatives belonging to the same cooperative system; and

d) by the National Bank for Economic and Social Development (BNDES), development banks, and development agencies, with legal entities in which they participate directly or indirectly.

§ 1º. The exception referred to in item V, letter "a" of the main text applies only to the lending institution:

I - constituted as an open-capital corporation; and

II - subject to the obligation to establish an audit committee, in accordance with Resolution No. 3,198 of May 27, 2004.

§ 2º. For the purposes of this Resolution, a director or board member is considered independent if they meet, at minimum, the following conditions in both counterparties:

I - do not hold qualified participation, are not a controlling shareholder, member of the control group or another group with qualified participation, nor spouse, partner, or relative, by blood or affinity, up to the second degree of these individuals;

II - are not bound by a shareholders' agreement; and

III - have not been, or have not been in the last three years:

a) a director or member of statutory or contractual bodies, including in their affiliated companies;

b) an employee, including of their affiliated companies;

c) a spouse, partner, or relative, by blood or affinity, up to the second degree, of the persons referred to in letters "a" and "b"; and

d) a beneficiary of remuneration, beyond that related to the activity of independent advisor or eventual equity participation.

§ 3º. The director or board member of public financial institutions will only be considered independent if they meet, in addition to the conditions set forth in § 2º, the provisions of Article 22, § 1º, of Law No. 13,303 of June 30, 2016.

Art. 9. The institutions mentioned in Art. 1 must establish, by April 1, 2019, a policy for the realization of credit operations with related parties.

Sole Paragraph. The policy referred to in the main text must be:

I - approved by the board of directors or, if none exists, by the executive management of the institution; and

II - formalized in a specific document, kept available to the Central Bank of Brazil, along with its history of changes.

Art. 10. The institutions referred to in Art. 1 must have updated records identifying all related parties and keep them for at least five years after the date each party ceases to be considered related.

Art. 11. The provisions of Arts. 9 and 10 do not apply to single credit cooperatives, central credit cooperatives, and confederations of cooperatives.

Art. 12. The Central Bank of Brazil is authorized to issue norms and adopt measures deemed necessary for the execution of the provisions of this Resolution.

Art. 13. The following are revoked:

I - item II of Art. 4 of Resolution No. 2,686 of January 26, 2000;

II - Resolution No. 4,596 of August 28, 2017; and

III - Resolution No. 4,599 of September 13, 2017.

Art. 14. This Resolution enters into force on January 1, 2019.

Ilan Goldfajn
President of the Central Bank of Brazil