Resolution No. 33

RESOLUTION BCB

NO. 33, OF OCTOBER 29, 2020

Establishes the criteria for the accounting measurement and recognition of investments in affiliates, controlled entities, and jointly controlled entities held by institutions required to use the Accounting Standard of Institutions Regulated by the Central Bank of Brazil – Cosif by virtue of Resolution BCB No. 92, of May 6, 2021, and the procedures for disclosure in explanatory notes of information related to these investments by institutions authorized to operate by the Central Bank of Brazil. (Amended by Resolution BCB No. 553, of March 3, 2026.)

The Collegiate Board of the Central Bank of Brazil, in a session held on October 29, 2020, based on arts. 9 of Law No. 4.595, of December 31, 1964, 6 and 7, item III, of Law No. 11.795, of October 8, 2008, 9, items II and IX, letter "b", and 15 of Law No. 12.865, of October 9, 2013, and having in view the provisions of art. 28 of Resolution No. 4.817, of May 29, 2020,

RESOLVES:

TITLE I

PRELIMINARY PROVISIONS

UNIQUE CHAPTER

ON THE OBJECT AND SCOPE OF APPLICATION

Art. 1. This Resolution establishes:

I - the criteria for the accounting measurement and recognition by institutions required to use the Accounting Standard of Institutions Regulated by the Central Bank of Brazil – Cosif in accordance with art. 1, caput, item I, of Resolution BCB No. 92, of May 6, 2021, of investments in affiliates, controlled entities, and jointly controlled entities, in Brazil and abroad, including operations for the acquisition of participation, incorporation, merger, and spin-off of entities, in which they are part; and (Amended by Resolution BCB No. 553, of March 3, 2026.)

a) (Revoked by Resolution BCB No. 553, of March 3, 2026.)

b) (Revoked by Resolution BCB No. 553, of March 3, 2026.)

c) (Revoked by Resolution BCB No. 553, of March 3, 2026.)

d) (Revoked by Resolution BCB No. 553, of March 3, 2026.)

e) (Revoked by Resolution BCB No. 553, of March 3, 2026.)

II - the procedures for disclosure in explanatory notes of information related to the investments referred to in item I by institutions authorized to operate by the Central Bank of Brazil.

Sole Paragraph. The provisions of items I and II do not apply to the following investments, which must be classified, measured, recognized, and evidenced in accordance with the specific accounting regulation applicable to financial instruments:

I - participations in entities that are not affiliates, controlled, or jointly controlled; and

II - participations in investment funds.

TITLE II

CRITERIA APPLICABLE TO INSTITUTIONS REQUIRED TO USE COSIF BY VIRTUE OF RESOLUTION BCB NO. 92, OF MAY 6, 2021

(Title amended by Resolution BCB No. 553, of March 3, 2026.)

CHAPTER I

DEFINITIONS

Art. 2. For the purposes of this Title, the following are considered:

I - goodwill: an asset that represents future economic benefits resulting from assets that are not individually identified or recognized separately, acquired in a transaction for the acquisition of participation in an affiliate, controlled, or jointly controlled entity;

II - acquisition of participation: acquisition of a portion of the capital of another entity, including in the form of subscription of new shares or quotas;

III - identifiable asset:

a) the asset that can be separated and sold, transferred, licensed, rented, or exchanged, individually or together with a related contract, asset, or liability, regardless of the intention of use by the institution; or (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

b) the asset that results from contractual rights or other legal rights, regardless of whether such rights are transferable or separable from the institution, or from other rights and obligations; (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

IV - affiliate: an entity over which the investing institution has significant influence; (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

V - controlled entity: an entity over which the investing institution has control, directly or indirectly; (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

VI - jointly controlled entity: an entity whose control is contractually shared by two or more entities, such that decisions regarding the activities that significantly affect the business returns require the unanimous consent of the controlling parties;

VII - control: a situation in which the investing institution is exposed to, or has rights to, variable returns resulting from its involvement with the investee and has the ability to affect those returns through its power over the investee; (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

VIII - operation base date: a common date for all entities involved in the operation, defined for the assessment and evaluation of their financial situations in operations for the acquisition of participation, incorporation, merger, and spin-off, as well as for the purposes of:

a) establishing the replacement relationship of the shares or quotas of the entities involved in the operation; and

b) capital increase and definition of its form of payment, when applicable;

IX - discount: the negative difference value between the acquisition cost and the fair value of the identifiable assets, minus the fair value of the assumed liabilities of the acquired entity, determined on the base date of the corporate participation acquisition operation;

X - economic group: a group composed of the controlling entity and all its controlled entities;

XI - reverse incorporation: an incorporation operation in which the incorporated entity holds participation in the capital of the incorporating institution; (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

XII - significant influence: the power to participate in the decision-making regarding the financial and operational policies of an investee, without individual or joint control of these policies;

XIII - monetary items: units of currency held in cash and assets and liabilities to be received or paid in a fixed or determinable number of currency units;

XIV - equity method: an accounting method through which the investment in an entity is adjusted to reflect the investor's participation in the net equity of the investee;

XV - recording currency: the currency in which accounting bookkeeping is carried out;

XVI - foreign currency: any currency different from the functional currency of the entity;

XVII - functional currency: the currency of the primary economic environment in which the entity operates;

XVIII - independent parties:

a) entities that are not part of the same economic group as the institution; and (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

b) natural persons who are not controlling, directly or indirectly, entities that are part of the same economic group as the institution; (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

XIX - assumed liability: a present obligation, derived from a past event, whose fair value can be measured reliably on the base date of the operation;

XX - adjusted net equity of the investee: the value of the net equity of the investee, after making the necessary adjustments to eliminate the effects resulting from:

a) partial payments of capital increases;

b) accounting criteria materially different from those provided in the current accounting regulation applicable to the institutions mentioned in item I of the caput of art. 1; (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

c) exclusion from the net equity of the investee of unrealized results, resulting from transactions carried out with the investor, and with other affiliates, controlled, and jointly controlled entities; and

d) exclusion of any reciprocal participations admitted by current regulation;

XXI - power: rights that give the investor the current ability to direct the activities that significantly affect the returns of the investee;

XXII - exchange rate: the exchange ratio between two currencies;

XXIII - spot exchange rate: the exchange rate normally used for the immediate settlement of foreign exchange operations; and

XXIV - foreign currency transaction: a transaction denominated in or requiring settlement in a foreign currency.

§ 1. Indications of the existence of significant influence include:

I - representation on the board of directors or executive board of the investee;

II - participation in the policy-making processes, including decisions on dividends and other distributions;

III - material transactions between the investor and the investee;

IV - exchange of directors or other senior management members; and

V - provision of essential technical information for the activity of the investee.

§ 2. Significant influence is presumed when the investor holds 20% (twenty percent) or more of the voting capital of the investee, without controlling it.

CHAPTER II

EVALUATION OF INVESTMENTS IN AFFILIATES, CONTROLLED ENTITIES, AND JOINTLY CONTROLLED ENTITIES

Section I

Acquisition of Participations

Subsection I

Operations for the Acquisition of Participations Between Independent Parties

Art. 3. Acquisitions of participations in affiliates, controlled entities, and jointly controlled entities whose seller of the participation is independent of the acquirer must be initially recognized at the acquisition value, segregating the following items:

I - fair value of identifiable assets minus the fair value of assumed liabilities of the investee on the base date of the operation, calculated based on the proportion of the participation acquired in the capital of the investee over the value of the adjusted net equity of the investee on that date; and

II - goodwill, if any.

§ 1. The value referred to in item I of the caput must be segregated and classified according to the following economic fundamentals, proven by documentation that serves as the basis for bookkeeping:

I - accounting value of the adjusted net equity of the investee on the base date of the operation;

II - difference between the fair value and the accounting value of assets and liabilities of the investee on the base date of the operation, if any; and

III - identifiable assets and assumed liabilities measurable with reliability, not recorded in the accounting of the investee on the base date of the operation, if any.

§ 2. The value of any positive difference between the acquisition value and the value referred to in item I of the caput that has no economic foundation in future benefits must be immediately recognized in the period's result as non-operating expense.

§ 3. The acquisition value must consider, in addition to the fair value of the assets transferred by the acquirer, all other consideration, including liabilities incurred by the acquirer owed to the former owners of the acquired entity and equity participations issued by the acquirer, as well as any adjustments made after the base date of the acquisition operation already provided for in the negotiation.

§ 4. The fair value assessment of the identifiable assets and assumed liabilities of the investee must be the subject of a report prepared by an independent specialized asset valuation company.

Art. 4. If a discount is determined in the assessment of the fair value of the identifiable assets and assumed liabilities of the investee referred to in § 4 of art. 3, a new assessment must be carried out by another independent specialized asset valuation company.

Sole Paragraph. If the new assessment results in a discount, the institution mentioned in item I of the caput of art. 1 must recognize as non-operating revenue the lowest discount determined in the assessments mentioned in the caput. (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

Art. 5. Participations already held by the acquirer must only be reassessed, as provided in art. 3, in the case of step acquisition of control, at the time of the acquisition of control.

§ 1. The gain or loss resulting from the reassessment referred to in the caput must be recorded in the period's result or in net equity, according to the recognition and measurement criterion applicable to the portion already held.

§ 2. The goodwill eventually resulting from the acquisition of new participation in an entity over which the investor has control must be recorded in a separate account of the investor's net equity at the net value of the tax effects.

Subsection II

Operations for the Acquisition of Participations Between Entities of the Same Economic Group

Art. 6. Acquisitions of participations in affiliates, controlled entities, and jointly controlled entities whose seller is part of the same economic group as the acquirer must be initially recognized by applying to the accounting value of the adjusted net equity of the investee on the base date of the operation the portion of participation acquired.

Sole Paragraph. The value of any difference between the acquisition value and the accounting value of the net equity of the investee determined in accordance with the caput must be recognized in net equity.

Section II

Investees Abroad

Subsection I

Preliminary Procedures

Art. 7. In the assessment of participations in affiliates, controlled entities, and jointly controlled entities abroad, prior to the application of the equity method, the institutions mentioned in item I of the caput of art. 1 must: (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

I - designate the functional currency of each investee abroad;

II - convert foreign currency transactions into the functional currency of the investee; and

III - convert the financial statements of the investee abroad from the functional currency to the national currency, if the functional currency of the investee is different from the national currency.

Sole Paragraph. The provisions of the caput also apply in the assessment of branches abroad.

Subsection II

Functional Currency

Art. 8. The institutions mentioned in item I of the caput of art. 1 must consider, in the designation of the functional currency of each investee abroad, cumulatively, the following factors: (Amended, effective March 1, 2024, by Resolution BCB No. 367, of January 25, 2024.)

I - the economic environment in which the entity generates and spends cash;

II - the currency that most influences the selling prices of products and services, labor costs, and other costs for the provision of products and services;

III - the currency of the country whose competitive and regulatory aspects most influence the determination of selling prices for its products and services;

IV - the currency through which the resources for the entity's financing activities are originated; and

V - the currency through which the resources generated by the entity's operational activities are usually accumulated.

§ 1º The following additional factors may be considered to determine whether the functional currency of the foreign investee is the same as that of the investor, if the factors established in the caput are insufficient for this definition:

I - the activities of the foreign investee are carried out as an extension of the investor, such that no significant degree of autonomy is granted to the entity abroad;

II - transactions with the investor represent a relevant proportion of the foreign investee's activities; and

III - the cash flows arising from the activities of the foreign investee:

a) directly affect the investor's cash flows and are readily available to be remitted to it; and

b) are sufficient to pay interest and other existing and expected debt obligations, regardless of contributions from the investor.

§ 2º The functional currency of consortium administrators and payment institutions operating in the Country must be the national currency.

§ 2º The functional currency of the institutions mentioned in item I of the caput of Art. 1 that operate in the country must be the national currency. (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

§ 3º The change of the functional currency of the foreign investee is permitted only if there is a significant change in the primary economic environment in which the entity operates, considering the factors defined in the caput and § 1º.

§ 4º In the event of a change in the functional currency of the foreign investee, as provided in § 3º, the conversion procedures to the new functional currency must be applied prospectively from the date of the change.

Art. 9º The Central Bank of Brazil may determine the change of the functional currency of foreign investees if an inadequate definition of this currency is identified.

Subsection III
Conversion of Transactions in Foreign Currency

Art. 10. If foreign investees carry out transactions in a currency different from their respective functional currencies, consortium administrators and payment institutions must convert, upon initial recognition, individually, the foreign currency transactions into the functional currency by applying, to the foreign currency amount, the spot exchange rate on the date of the transaction.

Art. 10. If foreign investees carry out transactions in a currency different from their respective functional currencies, the institutions mentioned in item I of the caput of Art. 1 must convert, upon initial recognition, individually, the foreign currency transactions into the functional currency by applying, to the foreign currency amount, the spot exchange rate on the date of the transaction. (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

Sole Paragraph. If the recording currency of the foreign investee is different from its functional currency, the conversion referred to in the caput must be made from the foreign currency to the recording currency.

Art. 11. Consortium administrators and payment institutions must convert, upon the preparation of the trial balance or balance sheet, individually, the foreign currency transactions into the functional currency at the exchange rate:

Art. 11. The institutions mentioned in item I of the caput of Art. 1 must convert, upon the preparation of the trial balance or balance sheet, individually, the foreign currency transactions into the functional currency at the exchange rate: (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

I - of the date of the respective trial balance or balance sheet, in the conversion of:

a) monetary items; and

b) non-monetary items measured at fair value; and

II - of the date of the transaction, in the case of non-monetary items measured at historical cost.

§ 1º In the assessment of impairment due to a reduction in the recoverable amount of non-monetary assets in foreign currency, when required by specific regulation, the impairment loss must be determined by comparing:

I - the carrying amount in foreign currency converted in accordance with item II of the caput; and

II - the recoverable amount in foreign currency converted according to the exchange rate in effect on the date of its calculation.

§ 2º The adjustments resulting from the conversion referred to in the caput must be recorded:

I - in a separate account of equity, net of tax effects, in the case of non-monetary items whose gains and losses are recognized in equity; and

II - as an offset to income, in other cases.

§ 3º If the recording currency of the foreign investee is different from its functional currency, the conversion referred to in the caput is permitted based on the daily balances of each subtitle or accounting title related to the dates on which the transactions were carried out, considering the daily variation in the exchange rate.

Subsection IV
Conversion of Financial Statements in Foreign Currency

Art. 12. If the functional currency of the foreign investee is different from the national currency, consortium administrators and payment institutions must convert the balances of the financial statements of these entities from the functional currency to the national currency, observing that:

Art. 12. If the functional currency of the foreign investee is different from the national currency, the institutions mentioned in item I of the caput of Art. 1 must convert the balances of the financial statements of these entities from the functional currency to the national currency, observing that: (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

I - assets and liabilities must be converted at the exchange rate of the date of the respective trial balance or balance sheet of the investor; and

II - revenues and expenses must be converted at the exchange rates of the dates the transactions occurred.

§ 1º The use of the average exchange rate for the period, in each foreign currency, is admitted if the investor does not have access to the necessary data to convert revenues and expenses at the exchange rates of the dates the transactions occurred.

§ 2º If the investor uses the option provided in § 1º, the average exchange rate must be applied to convert all revenues and expenses carried out in the same currency.

§ 3º The exchange variation adjustments resulting from the conversion process referred to in the caput must be recorded in the converted financial statements of the foreign investee as a separate component of equity, net of tax effects.

Section III
Evaluation by the Equity Method

Art. 13. Investments in participations in affiliates, controlled entities, and jointly controlled entities must be evaluated in the periods subsequent to acquisition by the equity method and adjusted monthly, as follows:

I - the carrying amount of equity referred to in item I of § 1º of Art. 3 must be recalculated by the equity method, with the respective adjustments recorded as an offset:

a) to the period's income, in the case of changes in the investee's equity resulting from values recognized in its income; and

b) to the appropriate separate equity accounts, in the case of changes in the investee's equity resulting from values recognized directly in its equity, without effects on the period's income;

II - the value of the difference referred to in item II of § 1º of Art. 3 must be appropriated to income proportionally to the write-off, partial or total, of the corresponding item in the investee's accounting, including by depreciation, amortization, or impairment of the asset;

III - the values of identifiable assets and assumed liabilities not recorded in the investee's accounting referred to in item III of § 1º of Art. 3 must be adjusted according to specific regulation for the measurement of these items; and

IV - the future profitability expectation premium (goodwill) of the investee must be amortized, as an offset to the period's income, according to the period defined in a technical study for the realization of future economic benefits that underpinned its recognition, or written off by alienation or loss of the investment.

§ 1º The remuneration of capital earned on the investments referred to in the caput must be:

I - recognized as an asset when the investor obtains the right to receive it; and

II - measured according to the value declared by the investee entity, as an offset to the carrying value of the equity participation.

§ 2º The accounting recording method provided in § 1º also applies to capital remuneration received before its declaration.

§ 3º The provision in item III of the caput does not apply to contingent liabilities, as defined in specific regulation, assumed in the acquisition of the investment.

§ 4º The liabilities referred to in § 3º must be evaluated, until their final write-off, at the higher value between the fair value on the operation's base date and the value calculated according to the specific regulation applicable to the recognition and measurement of contingent liabilities and provisions.

§ 5º The write-off referred to in § 4º must occur when the contingent liability is settled, cancelled, or extinguished.

§ 6º If the investor's share in the investee's losses exceeds the carrying value of the investment, consortium administrators and payment institutions must recognize the difference between these values as an offset to any long-term asset receivable from the investee that, in essence, is part of the investment in an affiliate, controlled entity, or jointly controlled entity, according to the priority defined for its liquidation.

§ 6º If the investor's share in the investee's losses exceeds the carrying value of the investment, the institutions mentioned in item I of the caput of Art. 1 must recognize the difference between these values as an offset to any long-term asset receivable from the investee that, in essence, is part of the investment in an affiliate, controlled entity, or jointly controlled entity, according to the priority defined for its liquidation. (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

§ 7º If the value of the difference referred to in § 6º exceeds the value of the operations mentioned therein, consortium administrators and payment institutions must recognize a liability, according to specific regulation, unless the absence of obligations towards third parties is proven.

§ 7º If the value of the difference referred to in § 6º exceeds the value of the operations mentioned therein, the institutions mentioned in item I of the caput of Art. 1 must recognize a liability, according to specific regulation, unless the absence of obligations towards third parties is proven. (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

§ 8º Consortium administrators and payment institutions that do not recognize a liability due to the provision in § 7º may only resume recognizing positive equity results of the investee in amounts that exceed the unrecognized losses.

§ 8º The institutions mentioned in item I of the caput of Art. 1 that do not recognize a liability due to the provision in § 7º may only resume recognizing positive equity results of the investee in amounts that exceed the unrecognized losses. (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

§ 9º The equity of the affiliate or controlled entity must be determined based on the most recent balance sheet or trial balance of these entities, with a difference of up to two months admitted for the base date of the investor's trial balance or balance sheet.

Art. 14. After making the adjustments referred to in Art. 13, consortium administrators and payment institutions must assess whether there is objective evidence of a reduction in the recoverable amount of the carrying value of the equity participation, according to specific regulation.

Art. 14. After making the adjustments referred to in Art. 13, the institutions mentioned in item I of the caput of Art. 1 must assess whether there is objective evidence of a reduction in the recoverable amount of the carrying value of the equity participation, according to specific regulation. (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

§ 1º Any impairment loss due to reduction in recoverable amount must be allocated:

I - to the value of the future profitability expectation premium (goodwill); or

II - to the carrying value of the consortium administrator's or payment institution's equity participation in the investee, if there is no balance related to the future profitability expectation premium (goodwill).

II - to the carrying value of the institution's equity participation in the investee, if there is no balance related to the future profitability expectation premium (goodwill). (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

§ 2º The reversal of losses allocated in the manner of § 1º, item I is prohibited.

Art. 15. If the investor reduces its participation in the investee's capital, any values related to the adjustments referred to in item "b" of item I of Art. 13 must be reclassified, in proportion to the reduced portion of the participation, to:

I - the account of accumulated profits or losses, in the case of items that, according to current regulation, should not affect income; and

II - the period's income, in other cases.

Sole Paragraph. In the case of a reduction in participation in the controlled entity without loss of control, the values referred to in item II of the caput must remain recorded in equity while the entity maintains control.

Art. 16. If the investee entity ceases to be characterized as an affiliate, controlled entity, or jointly controlled entity, the investor must classify, measure, recognize, and disclose investments in participations in this entity according to the specific accounting regulation applicable to financial instruments.

§ 1º The investment referred to in the caput must be measured, upon its initial recognition as a financial instrument, at its fair value.

§ 2º Any difference in the value of the instrument resulting from the application of the provision in § 1º must be recognized in the period's income.

§ 3º Any values related to the adjustments referred to in item "b" of item I of Art. 13 regarding the investment mentioned in the caput must be recorded according to Art. 15, caput.

Section IV
Investments Held for Sale

Art. 17. Investments in affiliates, controlled entities, and jointly controlled entities that the investor expects to realize through sale, that are available for immediate sale, and whose alienation is highly probable must be classified, measured, recognized, and disclosed according to the specific accounting regulation applicable to financial instruments.

§ 1º Consortium administrators and payment institutions must define in their accounting policy the expected period for the alienation of the investments referred to in the caput.

§ 1º The institutions mentioned in item I of the caput of Art. 1 must define in their accounting policy the expected period for the alienation of the investments referred to in the caput. (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

§ 2º The investments referred to in the caput that are not sold within the period defined by the consortium administrator or payment institution, according to § 1º, must be recognized and evaluated according to the norms contained in Sections I, II, and III of this Chapter, retrospectively to the date of acquisition of the investment.

§ 2º The investments referred to in the caput that are not sold within the period defined by the institution, according to § 1º, must be recognized and evaluated according to the norms contained in Sections I, II, and III of this Chapter, retrospectively to the date of acquisition of the investment. (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

§ 3º The Central Bank of Brazil may determine a change in the period referred to in § 1º if it identifies inadequacy in its definition.

Section V
Merger, Consolidation, and Spin-off Operations

Subsection I
Preliminary Procedures

Art. 18. In merger, consolidation, and spin-off operations involving the acquisition or transfer of participation, prior to the recognition of these operations, consortium administrators and payment institutions must:

Art. 18. In merger, consolidation, and spin-off operations involving the acquisition or transfer of participation, prior to the recognition of these operations, the institutions mentioned in item I of the caput of Art. 1 must: (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

I - define the acquiring entity and the seller of the transferred participation; and

II - apply the accounting procedures provided in Section I of this Chapter, for the measurement and recognition of the acquisition of the transferred participations.

Sole Paragraph. For the purposes of the provision in the caput, the acquirer is considered to be the consortium administrator or payment institution that obtains control of the incorporated entity or the entity resulting from the merger or spin-off.

Sole Paragraph. For the purposes of the provision in the caput, the acquirer is considered to be the institution that obtains control of the incorporated entity or the entity resulting from the merger or spin-off. (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

Subsection II
Recognition of Merger, Consolidation, and Spin-off Operations

Art. 19. In merger, consolidation, and spin-off operations, after carrying out the procedures defined in Art. 18, the assets and liabilities of the incorporated or merged entities or of the entities resulting from the spin-off must be recognized at their carrying value on the operation's base date.

Art. 20. Any values recorded by the parent company regarding the investment in the companies involved in the operation, when not written off at the time of merger or consolidation, must be accounted for:

I - in the accounts representing the assets and liabilities that gave rise to the recording in the investee, limited to their fair value, in the case of the difference referred to in item II of § 1º of Art. 3;

II - in the appropriate asset or liability accounts, limited to their fair value, in the case of that referred to in item III of § 1º of Art. 3; and

III - in intangible assets, in the case of future profitability expectation premium (goodwill).

Art. 21. Any future profitability expectation premium (goodwill) existing must be written off on the date of the operation:

I - in the incorporated entity:

a) in reverse merger operations; and

b) in the case of reciprocal participations, if permitted by law and current regulation; and

II - in merged entities that have participation in the capital of other entities involved in the merger.

Art. 22. In the case of the extinction of shares, the difference between the carrying value of the extinct shares and the value of the net equity that replaces them must be recorded:

I - when positive, as non-operating revenue; and

II - when negative, as non-operating expense.

Subsection III
Financial Statements and Other Accounting Documents

Art. 23. Consortium administrators and payment institutions involved in merger, consolidation, and spin-off operations must observe the following procedures for the publication and remittance of financial statements to the Central Bank of Brazil:

Art. 23. The institutions mentioned in item I of the caput of Art. 1 involved in merger, consolidation, and spin-off operations must observe the following procedures for the publication and remittance of financial statements to the Central Bank of Brazil: (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

I - prepare a balance sheet trial balance relative to the operation's base date, duly transcribed in the Daily Book or Daily Trial Balances and Balance Sheets; and

II - maintain, individually, the remittance and publication of financial statements during the period between the operation's base date and the date of publication in the Official Gazette of the Union of the authorization by the Central Bank of Brazil for the merger, consolidation, or spin-off operation, excluding this last date.

§ 1º The acquiring consortium administrators and payment institutions and those resulting from merger or spin-off operations must:

§ 1º The acquiring institutions and those resulting from merger or spin-off operations must: (Amended, effective from 1º/3/2024, by Resolution BCB No. 367, of 25/1/2024.)

I - observe the requirements regarding the remittance and publication of financial statements from the date of publication in the Official Gazette of the Union of the authorization by the Central Bank of Brazil for the carrying out of the respective operation; and

II - disclose in the explanatory notes related to the financial statements for the first mandatory disclosure period after the operation, in addition to the clarifications required by current legislation, all relevant information related to the merger, consolidation, or spin-off operations.

§ 2º Variations in the equity of the entities involved in the operation occurring between the base date and the day preceding the publication in the Official Gazette of the Union of the authorization by the Central Bank of Brazil for the respective merger, consolidation, or spin-off operation must be integrated into the accounting movement of these entities.

CHAPTER III
GENERAL PROVISIONS

Art. 24. The institutions mentioned in item I of the caput of art. 1º must keep for a minimum period of five years, or for a longer period due to express determination by the Central Bank of Brazil, the following documents: (Redacted, effective from 1/3/2024, by Resolution BCB No. 367, of 1/25/2024.)

I - in the case of institutions involved in merger, consolidation, and spin-off operations: (Redacted, effective from 1/3/2024, by Resolution BCB No. 367, of 1/25/2024.)

a) the financial statements prepared and published in the five fiscal years prior to the merger, consolidation, or spin-off process;

b) the Daily Journal or Daily Balances and Balance Sheets of the merged, consolidated, or split entities relative to the five fiscal years prior to the merger, consolidation, or spin-off process;

c) the general inventories and the reconciliation of asset and liability elements carried out during the quantification and qualification work of the equity elements for the purpose of the merger, consolidation, or spin-off;

d) the accounting documentation related to the bookkeeping, adjustments, and accounting reconciliation of the five fiscal years prior to the process, up to the base date of the operation; and

e) the other documents that served as the basis for the accounting equity valuation and the fair value valuations resulting from the merger, consolidation, or spin-off operation; and

II - in the case of investees abroad, the working papers, calculation memos, exchange rates used, the sources of these rates, and the documents relating to the conversions referred to in Chapter II, Section II, of this Title.

TITLE III
PROCEDURES APPLICABLE TO INSTITUTIONS AUTHORIZED TO OPERATE BY THE CENTRAL BANK OF BRAZIL IN DISCLOSURE IN EXPLANATORY NOTES

CHAPTER I
ACQUISITION OF INTERESTS IN AFFILIATES, CONTROLLED ENTITIES, AND JOINTLY CONTROLLED ENTITIES

Art. 25. Institutions authorized to operate by the Central Bank of Brazil must disclose in explanatory notes information regarding the significant judgments and assumptions they used in determining:

I - that they hold control, directly or indirectly, of another entity; and

II - that they hold joint control of a business or significant influence over another entity.

§ 1º In the disclosure referred to in the caput, at least the significant judgments and assumptions adopted by the institution in determining must be disclosed:

I - the non-existence of control, even if it holds more than 50% (fifty percent) of the voting capital of the investee;

II - the existence of control, even if it holds less than 50% (fifty percent) of the voting capital of the investee;

III - the non-existence of significant influence, even if it holds 20% (twenty percent) or more of the voting capital of the investee, without controlling it; and

IV - the existence of significant influence, even if it does not hold 20% (twenty percent) or more of the voting capital of the investee, without controlling it.

§ 2º The significant judgments and assumptions that, due to changes in facts and circumstances, have been used by institutions to modify, during the reporting period, their conclusion regarding the existence of control, joint control, or significant influence with respect to another entity must also be subject to disclosure.

Art. 26. The institutions mentioned in art. 25 must disclose in explanatory notes the following information related to the acquisition of interests in affiliates, controlled entities, and jointly controlled entities:

I - name and description of the acquired interest, indicating whether the entity is part of the same economic group as the acquirer;

II - date of acquisition;

III - percentage of voting capital acquired;

IV - percentage of total interest acquired;

V - main reasons for the acquisition;

VI - description of how the acquisition resulted in obtaining control of the acquiree, including in the case of step acquisitions, if applicable;

VII - description of the economic fundamentals that caused adjustments in the equity of the investee as a result of the acquisition process;

VIII - amounts recognized, on the acquisition date, for each of the main classes of assets acquired and liabilities assumed;

IX - contingent liabilities assumed in the acquisition of the interest separately from other contingent liabilities;

X - fair value, on the acquisition date, of the total consideration transferred, segregated by the most relevant types of consideration;

XI - description of the factors comprising the goodwill recognized;

XII - value of any positive difference between the acquisition value and the fair value of identifiable assets minus the fair value of assumed liabilities of the investee that has no economic foundation in future benefits; and

XIII - value of any bargain purchase determined by two independent specialized asset valuation firms.

CHAPTER II
INTERESTS IN AFFILIATES, CONTROLLED ENTITIES, AND JOINTLY CONTROLLED ENTITIES

Art. 27. The institutions mentioned in art. 25 must disclose in explanatory notes the following information relating to investees abroad:

I - the country of incorporation of the investee;

II - the functional currency of the investee;

III - any changes in the functional currency of the investee, accompanied by the justifications that motivated these changes;

IV - the amount of exchange variation recognized:

a) in the period result; and

b) in a separate account of equity; and

V - the reconciliation of the amount of exchange variations referred to in item "b" of item IV at the beginning and end of the accounting period.

Sole paragraph. If the recording currency is different from the functional currency, the institutions mentioned in the caput must disclose:

I - the recording currency; and

II - the motivation for using a recording currency different from the functional currency.

Art. 28. The institutions mentioned in art. 25 must disclose in explanatory notes information that allows the assessment of the nature, extent, and financial effects of their material interests in affiliates, controlled entities, and jointly controlled entities.

Sole paragraph. For each relevant affiliate, controlled entity, or jointly controlled entity, the following information must be disclosed, when applicable:

I - the name of the affiliate, controlled entity, or jointly controlled entity;

II - the nature of the relationship maintained with the affiliate, controlled entity, or jointly controlled entity, revealing whether the investment has or does not have a strategic character;

III - the headquarters of the affiliate, controlled entity, or jointly controlled entity;

IV - the proportion of shareholdings held and rights held by other means other than the acquisition of an interest, such as contractual agreements;

V - the proportion of voting rights held, when this differs from the proportions mentioned in item IV;

VI - the fair value of the investment made in the affiliate, controlled entity, or jointly controlled entity, if there is a quoted market price for the investment;

VII - the value of dividends or interest on equity received from the affiliate, controlled entity, or jointly controlled entity;

VIII - the nature and extent of any significant restrictions on the ability of the affiliate, controlled entity, or jointly controlled entity to honor the payment of dividends or interest on equity;

IX - a summary of relevant financial information about the affiliate, controlled entity, or jointly controlled entity, including, at minimum:

a) current and non-current assets;

b) current and non-current liabilities;

c) contingent liabilities;

d) other comprehensive income; and

e) total comprehensive income;

X - the end date of the reporting period of the affiliate, controlled entity, or jointly controlled entity and the reason for using a different date or period, when the financial statements of the affiliate, controlled entity, or jointly controlled entity have a date or period distinct from those of the investor;

XI - the investor's share of losses of the affiliate, controlled entity, or jointly controlled entity, relative to the reporting period and the accumulated previous periods, not recognized according to:

a) art. 13, § 7º, of this Resolution, for consortium administrators and payment institutions; and

a) art. 13, § 7º, of this Resolution, for the institutions mentioned in item I of the caput of art. 1º of this Resolution; and (Redacted, effective from 1/3/2024, by Resolution BCB No. 367, of 1/25/2024.)

b) art. 13, § 7º, of Resolution No. 4.817, of May 29, 2020, for other institutions authorized to operate by the Central Bank of Brazil;

XII - the positive equity method result not recognized in the reporting period due to the non-recognition of portions of losses from previous periods, according to:

a) art. 13, § 8º, of this Resolution, for consortium administrators and payment institutions; and

a) art. 13, § 8º, of this Resolution, for the institutions mentioned in item I of the caput of art. 1º of this Resolution; and (Redacted, effective from 1/3/2024, by Resolution BCB No. 367, of 1/25/2024.)

b) art. 13, § 8º, of Resolution No. 4.817, of 2020, for other institutions authorized to operate by the Central Bank of Brazil;

XIII - impairment losses on interests in the affiliate, controlled entity, or jointly controlled entity recognized in the reporting period, with a description of their allocation method; and

XIV - reversals of impairment losses on interests in the affiliate, controlled entity, or jointly controlled entity recognized in periods prior to the reporting period.

Art. 29. The institutions mentioned in art. 25 must disclose the following information related to investments in affiliates, controlled entities, and jointly controlled entities classified as held for sale:

I - the classification of the investment and the effect of its measurement as a financial asset;

II - the definition of the expected term for the disposal of the investment adopted in its accounting policy for the purpose of classifying the asset as held for sale; and

III - the portion of assets held for sale that were reclassified as investments in affiliates, controlled entities, and jointly controlled entities, highlighting the effects on the result and equity.

CHAPTER III
MERGER, CONSOLIDATION, AND SPIN-OFF OPERATIONS

Art. 30. The institutions mentioned in art. 25 identified as acquirers must disclose the following information relating to merger, consolidation, and spin-off operations:

I - any values recorded relating to the investment in the companies involved in the operation, not written off at the time of merger or consolidation;

II - the value of goodwill potentially existing in the incorporated entity and in the consolidated entities that hold participation in the capital of other entities involved in the merger; and

III - the recognized value of the difference between the book value of the extinguished shares and the value of the retained earnings that replace them, in the case of share extinction.

TITLE IV
FINAL PROVISIONS

SINGLE CHAPTER
FINAL PROVISIONS

Art. 31. The accounting procedures established by this Resolution must be applied prospectively from the date of its entry into force.

Sole paragraph. The effects of adjustments resulting from the initial application of this Resolution must be recorded in offset to a separate account of equity, by the net value of the tax effects.

Art. 32. The following are repealed:

I - Circular No. 1.963, of May 23, 1991; and

II - Circular No. 3.816, of December 14, 2016.

Art. 33. This Resolution enters into force on January 1, 2022.

Otávio Ribeiro Damaso
Regulation Director