Joint Decision BACEN/CVM 03/96

JOINT DECISION NO. 03, OF FEBRUARY 7, 1996
BANK OF BRAZIL
SECURITIES AND EXCHANGE COMMISSION

Provides for the remuneration conditions of debentures.

The Board of Directors of the BANK OF BRAZIL and the Collegiate Body of the SECURITIES AND EXCHANGE COMMISSION, based on art. 11 of Law No. 8,177, of March 1, 1991, on arts. 8 and 9 of Law No. 8,660, of May 28, 1993, and on Provisional Measure No. 1,277, of January 12, 1996, taking into account the provisions of Resolution No. 1,723, of June 27, 1990, and Circulars Nos. 2,436, 2,463 and 2,588, respectively of June 30, 1994, August 12, 1994 and July 5, 1995, all from the Bank of Brazil,

D E C I D E:

Art. 1. Debentures may only have the following remuneration:
I - fixed interest rate;
II - Reference Rate - TR or Basic Financial Rate - TBF, observing a minimum term of 4 (four) months for maturity or renegotiation period; III - floating interest rate, in accordance with Resolution No. 1,143, of June 26, 1986, of the National Monetary Council, observing a minimum term of 120 (one hundred and twenty) days for maturity or renegotiation period, allowing that the intervals for adjusting the rate used as a reference occur in a period not less than 30 (thirty) days; IV - fixed interest rate and update clause based on a price index, observing a minimum term of one year for maturity or renegotiation period, observed that:
a) the price index referred to in this item must be regularly calculated and be public knowledge; b) the periodicity of application of the update clause cannot be less than one year; c) the payment of the value corresponding to the update can only occur upon the maturity or renegotiation of the debentures.

Paragraph 1. The rate referred to in item III:
I - must be regularly calculated and be public knowledge; II - must be based on operations contracted at fixed market rates, with a term not less than the adjustment period stipulated contractually.

Paragraph 2. Minimum periods of 30 (thirty) days must be observed for the payment of debenture yields.

Art. 2. The following are prohibited:
I - the issuance, from July 1, 1995, of debentures with exchange rate variation clause, due to the provision of art. 1., sole paragraph, item "a", of Provisional Measure No. 1,277, of January 12, 1996; II - the contractual provision of more than one remuneration base or more than one price index, except in the event of extinction of that established; III - the issuance of debentures:
a) by leasing companies and mortgage companies in accordance with item IV of the previous article; b) by other joint-stock companies, remunerated by TR or TBF in accordance with item II of the previous article.

Paragraph 1. The periodicity of application, to debentures issued prior to the date referred to in this article, of update clause or exchange rate variation cannot be less than one year.

Paragraph 2. The provisions of the previous paragraph also apply, including, to situations of scheduled amortization, early redemption and conversion into shares.

Art. 3. The premium of debentures:
I - can only be paid observing a minimum term of 4 (four) months from the date of its issuance, observing an identical period between payments; II - cannot have a price index, the TR, the TBF or any reference based on an interest rate as a base.

Art. 4. The provisions of the previous articles apply to debentures in circulation, from the first renegotiation that occurs after the date of entry into force of this Joint Decision.

Art. 5. This Joint Decision enters into force on the date of its publication.

Art. 6. Joint Communication No. 44, of September 24, 1992, and Joint Decision No. 1, of May 12, 1994, both from the Bank of Brazil and the Securities and Exchange Commission, are hereby revoked.

Brasília, February 7, 1996

Gustavo Jorge Laboissiere Loyola
President of
BANK OF BRAZIL

Francisco Augusto da Costa e Silva
President of
SECURITIES AND EXCHANGE COMMISSION

(Published in the Official Gazette on February 9, 1996 - pg 2.262 - Section I).