Joint Decision BACEN/CVM 07/99

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JOINT DECISION NO. 07
CENTRAL BANK OF BRAZIL
SECURITIES AND EXCHANGE COMMISSION OF BRAZIL

Establishes the conditions for the remuneration of debentures.

The Collegiate Board of the CENTRAL BANK OF BRAZIL and the Collegiate Board of the SECURITIES AND EXCHANGE COMMISSION OF BRAZIL, based on Art. 11 of Law No. 8,177, of March 1, 1991, and Arts. 8 and 9 of Law No. 8,660, of May 28, 1993, and in view of the provisions of Art. 56 of Law No. 6,404, of December 15, 1976, Resolution No. 2,613, of June 30, 1999, Resolution No. 2,646, of September 22, 1999, and Circular No. 2,905, of June 30, 1999,

HAVE DECIDED:

Art. 1. It is established that debentures may only have the following remuneration:
I - fixed interest rate;
II - Reference Rate – TR or Long-Term Interest Rate – TJLP, observing a minimum term of one month for maturity or repricing period; III - Basic Financial Rate – TBF, observing a minimum term of two months for maturity or repricing period; IV – floating rates, in the manner admitted by Resolution No. 1,143, of June 26, 1986, observing that the rate used as a reference must:
a) be regularly calculated and publicly known; b) be based on operations contracted at fixed market rates, with a term not inferior to the repricing period stipulated contractually; V – fixed interest rate and update clause based on a price index, observing a minimum term of one year for maturity or repricing period, observing that:
a) the price index referred to in this item must have a regularly calculated series and be publicly known; b) the frequency of application of the update clause cannot be less than one year; c) the payment of the amount corresponding to the update may only occur upon the maturity or repricing of the debentures; d) the payment of interest and amortization performed in periods less than one year must be based on the nominal value of the debentures, without considering monetary update for periods less than one year.

Sole Paragraph. Only leasing companies and mortgage companies may issue debentures remunerated by TBF.

Art. 2. The issuance of debentures is prohibited:
I - with an exchange rate variation clause;

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II – with provision for more than one remuneration base or more than one price index, except in the case of extinction of the agreed base or index.

Art. 3. The premium of debentures cannot be based on a price index, the TR, the TBF, or any reference based on an interest rate.

Sole Paragraph. It is admitted that the premium of debentures be based on the variation of the revenue or profit of the issuing company.

Art. 4. The provisions of this Joint Decision do not apply to debentures that ensure, as a condition of remuneration, exclusively participation in the profit of the issuing company.

Art. 5. The Securities and Exchange Commission may register the issuance of debentures with a remuneration clause not provided for in this Joint Decision only when the remuneration condition has been previously authorized by the Central Bank of Brazil.

Art. 6. The provisions of this Joint Decision apply:
I - to Real Estate Receivable Certificates – CRI, as provided for in Law No. 9,514, of November 20, 1997; II – to debentures in circulation, from the first repricing that occurs after the date of entry into force of this Joint Decision.

Art. 7. This Joint Decision enters into force on the date of its publication.

Art. 8. Joint Decision No. 3, of February 7, 1996, of the Central Bank of Brazil and the Securities and Exchange Commission, is hereby revoked.

Brasília, September 23, 1999.
Armínio Fraga Neto
President of
CENTRAL BANK OF BRAZIL
Francisco da Costa e Silva
President of
SECURITIES AND EXCHANGE COMMISSION OF BRAZIL