Resolution CMN No. 174 - Approves the Regulation of the Participation Fund for the Execution of the Social Integration Program (PIS)

RESOLUTION No. 000174

The CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the MONETARY COUNCIL, in a session held on February 19, 1971, having reviewed the Draft Regulation submitted by the Federal Savings and Loan Association (Caixa Econômica Federal), in accordance with Article 11 of Complementary Law No. 7, of September 7, 1970,

RESOLVED:

To approve the attached Regulation that will govern the activities of the Participation Fund for the Execution of the Social Integration Program, instituted by Complementary Law No. 7, of September 7, 1970.

Annex.

Brasília-DF, February 25, 1971

CENTRAL BANK OF BRAZIL

Ernane Galvêas
President

REGULATION OF THE PARTICIPATION FUND FOR THE EXECUTION OF THE SOCIAL INTEGRATION PROGRAM

CHAPTER I

ON THE PARTICIPATION FUND AND CONTRIBUTIONS

Article 1. The PARTICIPATION FUND, constituted by the accumulation of resources through company deposits at the Federal Savings and Loan Association (CEF) for the execution of the Social Integration Program, has the purpose of integrating the employee into the life and development of the companies, in accordance with Articles 1, 2, and 3 of Complementary Law No. 7, of September 7, 1970, being represented by its own accounting personality, in accordance with this Regulation.

Sole Paragraph. The FUND, in accordance with its economic and social purposes, will provide for the formation of individual wealth, stimulating savings, correcting distortions in income distribution, and enabling the accumulation of resources that will be applied with the aim of increasing national production.

Article 2. The collection of resources will be carried out directly by the CEF, which, through agreements, may accredit agents for this purpose.

Article 3. The contributor to the FUND is the company defined as a legal entity in the Income Tax legislation.

Article 4. Companies are subject to two contributions for the constitution of the PARTICIPATION FUND:

a) with resources deducted from the Income Tax due, or as if it were due;

b) with own resources equivalent to those assessed according to the above letter, or calculated on turnover, or determined as a percentage on salaries.

§ 1º In the application of the provisions of this article, companies will contribute with the following installments:

a) the first, through deduction of the Income Tax due, in the manner established in § 2º of this article, with its collection to the FUND processed together with the payment of the Income Tax;

b) the second, with the company's own resources, calculated based on turnover, as follows:

1. in the fiscal year of 1971, 0.15%

2. in the fiscal year of 1972, 0.25%

3. in the fiscal year of 1973, 0.40%

4. in the fiscal year of 1974 and subsequent years, 0.50%.

§ 2º The deduction referred to in letter "a" of § 1º will be made without prejudice to the right to use the tax incentives provided for in the legislation in force, and calculated based on the value of the Income Tax due in the following proportions:

a) in the fiscal year of 1971, 2%

b) in the fiscal year of 1972, 3%

c) in the fiscal year of 1973 and subsequent years, 5%.

§ 3º Financial institutions, insurance companies, and other companies that do not carry out sales of merchandise operations will participate in the Social Integration Program with a contribution to the PARTICIPATION FUND of own resources in an amount identical to that assessed in the manner of the previous paragraph.

§ 4º Companies that, by virtue of tax incentives, are exempt, or may become exempt, from the payment of Income Tax, will contribute with own resources to the PARTICIPATION FUND, having as the calculation base the tax as if it were due, observing the percentages provided for in this article.

§ 5º Non-profit entities that have employees as defined by Labor Legislation will contribute to the FUND with a fixed quota of 1%, applied to the monthly payroll.

Article 5. The National Monetary Council may alter, by resolution, up to fifty percent (50%), up or down, the contribution percentages fixed in § 3º of the previous article, taking into account the proportionality of the contributions.

Article 6. The supervision of the contributions provided for in Article 4 of this Regulation shall be the responsibility of the Ministry of Finance, the Ministry of Labor and Social Security, the State Finance Secretariats, and the CEF, in the manner to be established in specific agreements.

Article 7. The effective deposit of the FUND corresponding to the contribution referred to in letter b of § 1º of Article 4 of this Regulation will be processed monthly starting from July 1, 1971.

§ 1º The contribution of July will be calculated based on the turnover of January, and so on successively.

§ 2º For the purpose provided for in this article, turnover is understood as the value defined in the Income Tax legislation as operational revenue, on which taxes of any nature may or may not be levied.

Article 8. The non-payment of the due installments, in their proper times, will subject the company to the incidence of interest, fines, and monetary correction that will revert to the benefit of the PARTICIPATION FUND, collectible in the manner of § 3º of Article 14 of this Regulation, without prejudice to the criminal sanctions provided for therein, observing the Income Tax legislation for the purpose of applying penalties.

Article 9. Entities belonging to the federal, state, or municipal public administration, the Territories, and the Federal District, directly or indirectly, are excluded from contribution to the PARTICIPATION FUND, adopting, at all levels for the purpose of conceptualization, as entities of indirect administration, the criteria contained in Decree-Laws No. 200, of February 25, 1967, and No. 900, of September 29, 1969.

CHAPTER II

ON PARTICIPANTS

Article 10. An employee of the companies shall be considered a participant of the FUND, understood as any natural person who provides services of a non-occasional nature to the employer, under their dependence and subordination, for a salary, without distinction regarding the type of employment and the condition of employee, nor regarding intellectual, technical, or manual work.

Article 11. The avulsary worker who provides services to various companies without an employment relationship will also participate in the FUND.

Article 12. The employee's participation in the FUND, observing the provisions of § 1º of Article 27, will be made through deposits made in individual accounts issued in the name of each employee, observing the following criteria:

a) 50% (fifty percent) of the value destined to the FUND will be divided into parts proportional to the amount of salaries received in the period;

b) the remaining 50% (fifty percent) will be divided into parts proportional to the five-year periods of services rendered by the employee.

Article 13. The accounts referred to in the previous article will also be credited:

a) by the annual monetary correction of the creditor balance, in the same proportion as the variation fixed for the National Treasury Adjustable Obligations;

b) by interest of 3% (three percent) per year, calculated annually on the corrected balance of the deposits;

c) by the net result of the operations carried out with FUND resources, minus administrative expenses and provisions and reserves whose constitution is indispensable, when the yield is higher than the sum of items a and b.

Article 14. The GENERAL REGISTRY of participating employees of the FUND will be made through instructions to be issued by the CEF.

§ 1º The fraudulent omission of the employee's name, or the false declaration regarding the salary and their time of service at the company, will result in the imposition of a fine, in the amount of 10 months of salaries, provided for in §§ 2º and 3º of Article 7º of Complementary Law No. 7, without prejudice to the obligation to pay the installments actually due, face the corrections made, as well as the criminal assessment resulting from these acts before the Federal Justice.

§ 2º The supervision of the companies' declarations will be carried out through the organs of the Ministry of Labor and Social Security, through an agreement to be established.

§ 3º The fines that are to be drawn up will be collected according to Decree-Law No. 960, of December 17, 1938, by the competent organs of the Attorney General's Office of the National Treasury, and for deposit at the CEF to the account of the PARTICIPATION FUND, to which they will revert.

§ 4º The non-payment of the contributions due to the PARTICIPATION FUND, within the deadlines determined in Complementary Law No. 7/70 and in this Regulation, will entail collection in the manner established in the previous paragraph.

CHAPTER III

ON ADMINISTRATION

Article 15. The PARTICIPATION FUND will be administered by the CEF, invested by Complementary Law No. 7, of September 7, 1970, with the general and special powers of administration and management, observing the faculties of representation and competence provided for in its Statute and Personnel Regulation.

Article 16. For the purpose of management and administration of the FUND, the CEF will create, within its structure, an executive body with provision for positions and functions, according to the needs and requirements of the services, without prejudice to the structure established in its Internal Regulations.

Article 17. For the execution and operation of the Social Integration Program and in the interest of the activities of the PARTICIPATION FUND, the CEF, as administrator, will use employees from its Cadre and may, through an act of its President, submitted to the Minister of Finance, requisition or hire for advisory, administration, and direction functions of specific services, specialized personnel from public or private institutions, and may also appoint Delegated Administrators.

CHAPTER IV

ON THE APPLICATION OF AVAILABILITIES

Article 18. The resources of the PARTICIPATION FUND will be channeled, for the granting of direct or indirect credits, to the activities of the various sectors of the national economy, through financing, refinancing, or investment operations, in accordance with the evident needs, observing the criteria of security and liquidity of the operations.

§ 1º The CEF may accredit agents, through agreements or contracts, for the purposes provided for in this article, observing the provisions of Article 6 of Complementary Law No. 8, of December 3, 1970.

§ 2º The rates of the applications, including the remuneration of the accredited agents, will be submitted to the approval of the National Monetary Council.

Article 19. The applications of the FUND will always be backed by negotiable papers in the capital market or by the effective guarantees conferred to the FUND, in the name or to the order of the CEF, according to the powers of management and administration inherent to it.

Article 20. The application programs of the PARTICIPATION FUND will be submitted to the National Monetary Council, in the manner provided for by § 1º of Article 22 of Law No. 4595, of December 31, 1964.

CHAPTER V

ON THE RESULT OF THE APPLICATIONS

Article 21. The gross results of the applications will revert in favor of the FUND, observing the criteria that may be established by the CEF.

Article 22. The administrative charges, operating costs, and all expenses that are carried out directly in the administration and management of the FUND will be borne by the same.

Article 23. The administration fee due to the CEF, for the management and administration of the FUND, is up to 1.5% (one and a half percent) per year, calculated annually on the net equity of the latter, with the approval of the Minister of Finance, which may be debited in monthly installments.

Article 24. The net equity of the FUND will be represented by participation quotas corresponding to an ideal part of it, distributed among the participants defined in Articles 10 and 11 of this Regulation.

Article 25. The financial year, for the purpose of calculating the result of the FUND, will be from July 1 to June 30 of the following year.

CHAPTER VI

ON DISTRIBUTION

Article 26. The distribution of the values collected to the PARTICIPATION FUND will be made through the quota system, observing the proportionality of the salary and five-year periods of service time of the employee, defined in Complementary Law No. 7/70.

§ 1º The distribution proportional to the employee's salary will obey the following weighting:

Weight Monthly Salary

---

1 up to 1 greater than the minimum wage in force in the Country, inclusive.
2 from more than 1 up to 2 MWS, inclusive
3 from more than 2 up to 5 MWS, inclusive
4 from more than 5 MWS

adding one unit of weight, from then on, for each ten of additional minimum wages.

§ 2º The distribution proportional to the five-year periods of work will obey the following weighting:

Weight Number of five-year periods (complete)

---

1 zero
2 1
3 2
4 3
5 4
6 5
7 6

Article 27. The distribution will be carried out at the end of each financial year, with the incorporation of the results, in the form of an increase in the number of existing quotas, preceding the distribution of new quotas.

§ 1º The participation account will be considered open at the time of the distribution of the collections.

§ 2º Upon request of the participant, duly registered with the CEF, the Participation Booklet - Social Integration Program will be issued, in accordance with instructions to be issued.

CHAPTER VII

ON WITHDRAWAL FROM THE PARTICIPATION FUND

Article 28. It will be optional for the participant of the FUND to withdraw the value of the interest, the monetary correction accounted for in the period, and the quota share produced by the net result of the operations carried out, credited in the manner of Article 13 of this Regulation.

Sole Paragraph. The CEF will notify up to 180 days, after the closing of the previous exercise, the start of the payments provided for in this article.

Article 29. The withdrawal can only be made by the participant at the agency where they maintain the participation account, through the use of a specific document to be defined by the CEF.

Article 30. On the value of the withdrawal made between two consecutive balance sheets, the earnings provided for in Article 28 will not accrue.

Article 31. The quotas of the participants may be withdrawn in accordance with Article 9 of Complementary Law No. 7/70, on the occasion of marriage, retirement, or permanent disability or purchase of a own house; in the event of the death of the holder, the deposit values will be attributed to the dependents, and, in their absence, to the successors, in the manner of § 1º, of Article 9, of the cited Complementary Law.

§ 1º The withdrawal intended for the purchase of a own house can only be made through the presentation of a suitable document and proof of the acquisition conditions, by which the seller or the financing entity of the balance attests, under responsibility, that the aforementioned withdrawal is a complement of the acquisition price of the property.

§ 2º To any of the aforementioned withdrawals, when made in the middle of a exercise, will correspond the credit of the participant's quota share, charged in the last balance sheet of the PARTICIPATION FUND, with no additional capitalization.

CHAPTER VIII

ON THE CHART OF ACCOUNTS

Article 32. The chart of accounts will be prepared by the CEF, in accordance with the pertinent technical standards.

CHAPTER IX

ON GENERAL PROVISIONS

Article 33. The obligations of the companies, arising from Complementary Law No. 7/70, are of an exclusively fiscal nature, not generating rights of a labor nature nor incidence of any social security contribution in relation to any installments due, by law or by judicial sentence, to the employee.

Sole Paragraph. The amounts incorporated into the FUND are not classified as work income, for any effect of Labor Legislation, Social Security, or Fiscal, and do not incorporate into salaries or gratuities, nor are they subject to the tax on income and proceeds of any nature.

Article 34. The CEF will resolve omitted cases in accordance with the criteria fixed by the National Monetary Council.

Article 35. The CEF, when necessary, will propose to the National Monetary Council the alterations of this Regulation that are required by the dynamics of the implementation and operation of the PARTICIPATION FUND.

Article 36. This Regulation will enter into force on the date of its publication.