CMN Resolution No. 5,169 — Dispenses on the Conditions for Issuance of Development Credit Letter – LCD

Resolution

CMN RESOLUTION NO. 5,169,
OF AUGUST 22, 2024

Dispenses on the conditions for issuance of Development Credit Letter – LCD.

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the Monetary National Council, in a session held on August 22, 2024, based on Articles 4, caput, items VI, VIII, and XI, of the aforementioned law, Article 5 of Law No. 14,937, of July 26, 2024, and Article 26-A, caput, item I, of Law No. 12,810, of May 15, 2013,

R E S O
L V E D:

CHAPTER I
ON THE OBJECT AND SCOPE OF APPLICATION

Article 1.
This Resolution regulates the conditions for issuance of Development Credit Letter – LCD by the National Bank for Economic and Social Development – BNDES and by banks development authorized to operate by the Central Bank of Brazil.

Sole Paragraph. Issuance of LCD by multiple banks that possess a development portfolio is not permitted.

CHAPTER II
ON THE GENERAL CONDITIONS FOR LCD ISSUANCE

Article 2.
Issuing institutions of LCD must meet the following conditions:

I - the sum of the nominal values of LCDs issued per year must not exceed 6.5% (six tenths and five hundredths percent) of the institution's net equity, limited to R$10,000,000,000.00 (ten billion reais); and

II - the balance of LCDs issued must not exceed 25% (twenty-five percent) of the institution's net equity.

§ 1. For purposes of compliance with item I of the caput, the net equity calculated in the annual Balance Sheet of the issuing institution for the social exercise immediately preceding that of the issuance must be used.

§ 2. Non-compliance with the conditions mentioned in the caput implies suspension of new issuances of LCDs by the issuing institution.

CHAPTER III
ON THE GENERAL CHARACTERISTICS OF THE LCD

Article 3.
The remuneration of the LCD may be based on fixed or floating interest rates, combined or not, as well as other rates, provided they are publicly known and regularly calculated.

§ 1. Issuance of LCD is permitted with the following provisions:

I - periodic payment of earnings, provided that intervals are not less than one hundred and eighty days; and

II - update of its nominal value based on a price index, with an update frequency less than one year admitted.

§ 2. The redemption value of the LCD may be lower than its issuance value, according to its remuneration criteria.

§ 3. The nominal value of LCD cannot be updated based on exchange rate variation.

Article 4.
The minimum maturity period for the LCD is twelve months.

CHAPTER IV
ON THE CONSTITUTIVE REGISTRATION AND CENTRALIZED DEPOSIT OF THE LCD AND THE LINKING OF GUARANTEES

Article 5.
The issuance of LCD must be carried out through constitutive registration in a central depository authorized to exercise the activity of centralized deposit by the Central Bank of Brazil.

Article 6.
The LCD must be deposited in a financial asset centralized deposit system authorized by the Central Bank of Brazil and operated by a central depository, in accordance with specific legislation.

Article 7.
In the event that the LCD is issued with real guarantee, the secured credit rights must integrate a guarantee basket linked to the LCD.

CHAPTER V
ON THE CONDITIONS FOR REDEMPTION AND REPURCHASE OF THE LCD

Article 8.
The issuing institution is prohibited from:

I - repurchasing or redeeming the LCD, totally or partially, before twelve months, counted from the issuance date; and

II - making the payment of values related to the update by price index, accrued since issuance, when the repurchase occurs, by the issuing institution, or the redemption, total or partial, before the contracted maturity date.

Sole Paragraph. The prohibition referred to in item I of the caput also applies to repurchases effected by institutions affiliated with the issuing institution of the LCD, except in the case of operations carried out with the objective of intermediation.

Article 9.
The repurchase and early redemption of LCD must be carried out through stock exchanges or organized over-the-counter markets.

CHAPTER VI
ON THE PROVISION OF INFORMATION TO THE INVESTOR

Article 10.
The issuing institution and institutions participating in the distribution, placement, or negotiation process of LCD must adopt procedures that ensure:

I - the suitability of the instrument to the investor's profile; and

II - investor access to the information necessary for investment decisions.

Sole Paragraph. For the purposes of the caput, the following information regarding the LCD must be provided to the investor at a minimum:

I - impossibility of redemption, total or partial, before twelve months, counted from the date of issuance;

II - conditions for repurchase by the issuing institution;

III - possibility of redemption lower than the issuance value, due to remuneration criteria; and

IV - conditions applicable to the coverage of the Credit Guarantee Fund – FGC.

CHAPTER VII
FINAL PROVISIONS

Article 11.
The Central Bank of Brazil will adopt, within the scope of its legal powers, the measures necessary for the execution of the provisions of this Resolution.

Article 12.
This Resolution enters into force on the date of its publication.

OTÁVIO RIBEIRO DAMASO
President of the Central Bank of Brazil substitute