Resolution CMN No. 1757 — Establishes Criteria for Accounting of Charges on Securities Subject to Restructuring Until December 31, 1990

RESOLUTION NO. 001757

ESTABLISHES CRITERIA FOR THE ACCOUNTING OF CHARGES ON THE SECURITIES SPECIFIED, SUBJECT TO RESTRUCTURING UNTIL 12.31.90.

THE CENTRAL BANK OF BRAZIL, IN ACCORDANCE WITH ART. 9 OF LAW NO. 4.595, OF 12.31.64, MAKES IT PUBLIC THAT THE PRESIDENT OF THE MONETARY COUNCIL, BY ACT OF 10.29.90, BASED ON PARAGRAPH 2 OF ART. 2 OF LAW NO. 8.056, OF 06.28.90, "AD REFERENDUM" OF THAT COUNCIL, BASED ON THE PROVISIONS OF ART. 4, ITEMS VI, XI AND XII, OF THE SAID LAW NO. 4.595,

RESOLVES:

ART. 1. DETERMINE THAT THE SECURITIES, ISSUED BY COMPANIES UNDER THE CONTROL OF THE UNION, INCLUDING THOSE REFERRED TO IN ART. 4 OF LAW NO. 8.029, OF 04.12.90, WITH THE GUARANTEE OR SURETY OF THE UNION, ARE SUBJECT TO THE PROVISIONS OF RESOLUTION NO. 1,748, OF 08.30.90.

ART. 2. ADMIT THAT FINANCIAL INSTITUTIONS, HOLDERS OF THE SECURITIES REFERRED TO IN THE PREVIOUS ARTICLE, WHICH COME TO BE RESTRUCTURED, UNTIL 12.31.90, UNDER THE CONDITIONS SPECIFIED IN PARAGRAPH 1 OF THIS ARTICLE, MAY:

I - REVERSE, FROM ACCOUNTS OF CREDITS IN LIQUIDATION OR ANOTHER ACCOUNT, TO THE SOURCE ACCOUNTS, THE VALUES RELATING TO THE SECURITIES PREVIOUSLY TRANSFERRED;

II - ACCOUNT, IN ACCOUNTS OF INCOME TO BE APPROPRIATED, THE CHARGES INCURRED IN THE SEMESTER OF THE RESTRUCTURING, WHICH SHALL ONLY BE RECOGNIZED AS EFFECTIVE REVENUE UPON THEIR RECEIPT;

III - REGISTER THE RESPECTIVE CHARGES TO ACCRUE, IN ACCOUNTS OF INCOME TO BE APPROPRIATED, OBSERVING MONTHLY PERIODICITY, WHICH SHALL ONLY BE RECOGNIZED AS EFFECTIVE REVENUE UPON THEIR RECEIPT.

PARAGRAPH 1. FOR THE PURPOSES OF THE PROVISIONS OF THIS ARTICLE, THE SECURITIES RESULTING FROM THE RESTRUCTURING MUST FULFILL, CUMULATIVELY, THE CONDITIONS OF:
A - BE NON-NEGOTIABLE UNTIL THEIR FINAL REDEMPTION; B - HAVE A FINAL REDEMPTION TERM EQUAL TO OR GREATER THAN 7 (SEVEN) YEARS; C - BE AMORTIZABLE IN A PERCENTAGE EQUAL TO OR LESS THAN 30% (THIRTY PERCENT) OF THEIR PRINCIPAL VALUE, IN THE FIRST 5 (FIVE) YEARS.

PARAGRAPH 2. INSTITUTIONS THAT UTILIZE THE FACULTY PROVIDED FOR IN ITEMS I TO III OF THIS ARTICLE MUST APPLY IT UNIFORMLY, DURING THE ENTIRE PERIOD OF VALIDITY OF THE RESPECTIVE SECURITIES, AND DISCLOSE IT IN AN EXPLANATORY NOTE IN THE PUBLISHED FINANCIAL STATEMENTS, QUANTIFYING ITS EFFECTS ON THE RESULT.

ART. 3. THE RESTRUCTURED SECURITIES THAT ARE NEGOTIABLE, OR WHOSE RESTRUCTURING IS CONCLUDED FROM 01.02.91, WILL BE SUBJECT TO THE FOLLOWING ACCOUNTING REGIME:

I - THE CHARGES INCORPORATED IN THE ACT OF RESTRUCTURING AND THOSE PREVIOUSLY REGISTERED IN ACCOUNTS OF INCOME TO BE APPROPRIATED MAY ONLY BE RECOGNIZED AS EFFECTIVE REVENUE UPON THE RESPECTIVE RECEIPTS;

II - FROM THE RESTRUCTURING ONWARD, THE CHARGES MUST BE APPROPRIATED AS EFFECTIVE REVENUES, OBSERVING MONTHLY PERIODICITY.

SINGLE PARAGRAPH. THE RESTRUCTURED SECURITIES, WITH THE NEGOTIABILITY CLAUSE TREATED IN THIS ARTICLE:
A - GIVEN THE GUARANTEE OR SURETY OF THE UNION, WILL BE SUBJECT TO THE TAX CREATED BY PROVISIONAL MEASURE NO. 195, OF 06.30.90, NOW SUCCEEDED BY PROVISIONAL MEASURE NO. 237, OF 09.28.90, TO THE RATES AND LIMITS CONSTANT IN COLUMN 1 OF THE TABLE ANNEXED TO DECREE NO. 99.374, OF 07.09.90; AND B - MAY BE SUBJECT TO COMMITTED OPERATIONS, UNDER THE TERMS OF RESOLUTION NO. 1,088, OF 01.30.86, SINCE REGISTERED IN THE CENTRAL CUSTODY AND FINANCIAL SETTLEMENT OF SECURITIES (CETIP), WITHIN THE LIMITS APPLICABLE TO PRIVATE SECURITIES, EXCEPT WITH REGARD TO THE CHARGES CAPITALIZED BY FORCE OF THE RESTRUCTURING, WHICH MAY EXCEED THOSE LIMITS.

ART. 4. DELEGATE COMPETENCE TO THE CENTRAL BANK OF BRAZIL TO ISSUE THE NORMS AND ADOPT THE MEASURES THAT PROVE NECESSARY FOR THE EXECUTION OF THIS RESOLUTION.

ART. 5. DETERMINE THAT THIS RESOLUTION ENTERS INTO FORCE ON THE DATE OF ITS PUBLICATION.

BRASÍLIA (DF), OCTOBER 29, 1990

IBRAHIM ERIS
PRESIDENT