Resolution CMN No. 1770 — Establishes conditions for the establishment, organization, and operation of foreign exchange brokerage companies

RESOLUTION NO. 1770

ESTABLISHES CONDITIONS FOR THE ESTABLISHMENT,
ORGANIZATION AND OPERATION OF FOREIGN EXCHANGE BROKERAGE COMPANIES.

THE CENTRAL BANK OF BRAZIL, IN ACCORDANCE WITH ART. 9 OF LAW NO. 4,595, OF DECEMBER 31, 1964, MAKES PUBLIC THAT THE NATIONAL MONETARY COUNCIL, IN A SESSION HELD ON NOVEMBER 28, 1990, HAVING REGARD TO THE PROVISIONS OF LAW NO. 5,601, OF AUGUST 26, 1970, AND ART. 9 OF LAW NO. 4,728, OF JULY 14, 1965,

HAS RESOLVED:

ART. 1. APPROVE THE ANNEXED REGULATIONS, WHICH DISCIPLINE THE ESTABLISHMENT, ORGANIZATION AND OPERATION OF FOREIGN EXCHANGE BROKERAGE COMPANIES.

ART. 2. THE PROVISIONS OF RESOLUTION NO. 1,649, OF OCTOBER 25, 1989, APPLY TO THE COMPANIES REFERRED TO IN THIS RESOLUTION.

ART. 3. THE CENTRAL BANK OF BRAZIL MAY ISSUE NORMS AND ADOPT MEASURES IT DEEMS NECESSARY FOR THE EXECUTION OF THE PROVISIONS OF THIS RESOLUTION.

ART. 4. THIS RESOLUTION ENTERS INTO FORCE ON THE DATE OF ITS PUBLICATION.

BRASILIA (DF), NOVEMBER 28, 1990

IBRAHIM ERIS
PRESIDENT

ANNEXED REGULATIONS TO RESOLUTION NO. 1,770, OF NOVEMBER 28, 1990, WHICH DISCIPLINES THE ESTABLISHMENT, ORGANIZATION AND OPERATION OF FOREIGN EXCHANGE BROKERAGE COMPANIES.

CHAPTER I
CHARACTERISTICS, ESTABLISHMENT AND OPERATION

ART. 1. THE FOREIGN EXCHANGE BROKERAGE COMPANY, CONSTITUTED IN ACCORDANCE WITH THESE REGULATIONS, HAS AS ITS EXCLUSIVE CORPORATE OBJECT THE INTERMEDIATION IN FOREIGN EXCHANGE OPERATIONS AND THE PRACTICE OF OPERATIONS IN THE FLOATING RATE FOREIGN EXCHANGE MARKET.

ART. 2. THE ESTABLISHMENT AND OPERATION OF A FOREIGN EXCHANGE BROKERAGE COMPANY AND ITS BRANCHES DEPEND ON PRIOR AUTHORIZATION FROM THE CENTRAL BANK OF BRAZIL.

SINGLE PARAGRAPH. THE BROKERAGE COMPANY MUST BE CONSTITUTED AS A STOCK CORPORATION OR A LIMITED LIABILITY COMPANY, AND ITS CORPORATE NAME MUST OBLIGATORILY CONTAIN THE EXPRESSION "FOREIGN EXCHANGE BROKERAGE".

ART. 3. THE FOREIGN EXCHANGE BROKERAGE COMPANY MUST OBSERVE, MONTHLY, A MINIMUM LIMIT OF PAID-UP CAPITAL AND NET EQUITY EQUIVALENT TO 100,000 (ONE HUNDRED THOUSAND) NATIONAL TREASURY BONDS (BTN), TAKING AS A BASIS THE VALUE OF THE BTN IN EFFECT DURING THE IMMEDIATELY PREVIOUS MONTH.

SINGLE PARAGRAPH. THE BROKERAGE COMPANY, AFTER MEETING THE LIMIT PROVIDED FOR IN THIS ARTICLE, MAY INSTALL UP TO 10 (TEN) BRANCHES, THE INSTALLATION BEYOND THIS NUMBER BEING PERMITTED, PROVIDED THAT IT PRESENTS, FOR EACH ONE, ADDITIONAL PAID-UP CAPITAL AND NET EQUITY OF 10% (TEN PERCENT) OF THE FIXED MINIMUM.

ART. 4. THE CENTRAL BANK OF BRAZIL WILL CANCEL THE AUTHORIZATION FOR THE OPERATION OF A FOREIGN EXCHANGE BROKERAGE COMPANY OR BRANCH THAT, WITHIN A PERIOD OF 6 (SIX) MONTHS, COUNTED FROM THE DATE OF GRANT, DOES NOT BEGIN ACTIVITIES.

SINGLE PARAGRAPH. IN FULLY JUSTIFIED CASES, THE CENTRAL BANK OF BRAZIL MAY EXTEND THE DEADLINE REFERRED TO IN THIS ARTICLE.

CHAPTER II
ADMINISTRATION

ART. 5. ONLY NATURAL PERSONS, RESIDENT IN BRAZIL, WHO MEET THE CONDITIONS PROVIDED FOR IN THE CURRENT LEGISLATION AND REGULATIONS, MAY SERVE AS ADMINISTRATORS OF A FOREIGN EXCHANGE BROKERAGE COMPANY.

ART. 6. IT IS PROHIBITED FOR ADMINISTRATORS OF FOREIGN EXCHANGE BROKERAGE COMPANIES TO PARTICIPATE, CONCURRENTLY, IN MORE THAN ONE AUTHORIZED FOREIGN EXCHANGE BROKERAGE COMPANY.

CHAPTER III
OPERATIONAL RULES

ART. 7. THE FOREIGN EXCHANGE BROKERAGE COMPANY WILL OBSERVE, IN THE INTERMEDIATION OF FOREIGN EXCHANGE OPERATIONS, THE CONDITIONS AND LIMITS ESTABLISHED IN THE CURRENT REGULATIONS.

ART. 8. IT IS PROHIBITED FOR THE FOREIGN EXCHANGE BROKERAGE COMPANY:

I - TO CARRY OUT FOREIGN EXCHANGE OPERATIONS ON ITS OWN ACCOUNT, EXCEPT FOR THE CASES EXPRESSLY PROVIDED FOR IN THE CURRENT REGULATIONS;

II - TO CARRY OUT OPERATIONS THAT CHARACTERIZE, IN ANY WAY, THE GRANTING OF FINANCING, LOANS OR ADVANCES TO ITS CLIENTS, INCLUDING THROUGH THE ASSIGNMENT OF RIGHTS;

III - TO ACQUIRE GOODS NOT DESTINED FOR ITS OWN USE, EXCEPT THOSE RECEIVED IN SETTLEMENT OF DIFFICULT OR DOUBTFUL DEBTS, IN WHICH CASE THEY MUST BE SOLD WITHIN A PERIOD OF 1 (ONE) YEAR, COUNTED FROM RECEIPT, RENEWABLE UP TO 2 (TWO) TIMES, AT THE DISCRETION OF THE CENTRAL BANK OF BRAZIL;

IV - TO OBTAIN LOANS OR FINANCING FROM FINANCIAL INSTITUTIONS, EXCEPT THOSE LINKED TO THE ACQUISITION OF GOODS FOR OWN USE.

ART. 9. THE FOREIGN EXCHANGE BROKERAGE COMPANY WILL PROVIDE ASSISTANCE TO THE CONTRACTING PARTIES IN THE OPERATIONS IN WHICH IT INTERVENES, UNTIL THE FINAL SETTLEMENT OF THE RESPECTIVE CONTRACTS.

ART. 10. THE FOREIGN EXCHANGE BROKERAGE COMPANY IS OBLIGED TO MAINTAIN CONFIDENTIALITY IN ITS OPERATIONS AND SERVICES PROVIDED, MUST KEEP SECRET THE NAMES AND OPERATIONS OF ITS CLIENTS, REVEALING THEM ONLY WITH THEIR AUTHORIZATION, GIVEN IN WRITING.

SINGLE PARAGRAPH. THE NAME AND OPERATIONS OF THE CLIENT MUST BE INFORMED BY ORDER OR WRITTEN REQUEST OF THE CENTRAL BANK OF BRAZIL OR JUDICIAL AUTHORITIES, AS WELL AS IN OTHER CASES PROVIDED FOR IN THE CURRENT LEGISLATION.

CHAPTER IV
FINANCIAL STATEMENTS

ART. 11. THE FOREIGN EXCHANGE BROKERAGE COMPANY MUST PREPARE MONTHLY BALANCE SHEETS AND, ON THE LAST DAY OF THE MONTHS OF JUNE AND DECEMBER OF EACH YEAR, FINANCIAL STATEMENTS, WHICH MUST BE AUDITED BY INDEPENDENT AUDITORS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION.

ART. 12. THE FOREIGN EXCHANGE BROKERAGE COMPANY IS SUBJECT TO THE BOOKKEEPING NORMS ISSUED BY THE NATIONAL MONETARY COUNCIL AND THE CENTRAL BANK OF BRAZIL.

CHAPTER V
GENERAL PROVISIONS

ART. 13. THE FOLLOWING ACTS RELATING TO THE FOREIGN EXCHANGE BROKERAGE COMPANY ARE SUBJECT TO PRIOR APPROVAL BY THE CENTRAL BANK OF BRAZIL, IN ADDITION TO THE AUTHORIZATION PROVIDED FOR IN ART. 2 OF THESE REGULATIONS:

I - TRANSFER OF HEADQUARTERS;

II - INSTALLATION, TRANSFER OR CLOSURE OF BRANCH ACTIVITIES;

III - ALTERATION OF SOCIAL CAPITAL VALUE;

IV - CHANGE OF LEGAL TYPE, MERGER, INCORPORATION AND SPIN-OFF;

V - APPOINTMENT OF ADMINISTRATORS, RESPONSIBLES AND AGENTS;

VI - APPOINTMENT OF FISCAL COUNSELORS AND MEMBERS OF OTHER STATUTORY BODIES;

VII - ALIENATION OF SHAREHOLDING CONTROL;

VIII - FOREIGN PARTICIPATION IN SOCIAL CAPITAL;

IX - ANY OTHER ALTERATION OF THE BYLAWS OR SOCIAL CONTRACT;

X - LIQUIDATION.

ART. 14. NON-COMPLIANCE WITH THE LEGAL AND REGULATORY NORMS GOVERNING THE ACTIVITIES OF THE FOREIGN EXCHANGE BROKERAGE COMPANY WILL SUBJECT THE OFFENDER AND ITS ADMINISTRATORS TO THE SANCTIONS PROVIDED FOR IN ART. 44 OF LAW NO. 4,595, OF DECEMBER 31, 1964.

CHAPTER VI
TRANSITORY PROVISIONS

ART. 15. THE FOREIGN EXCHANGE BROKERAGE COMPANY THAT, ON THIS DATE, POSSESSES GOODS NOT DESTINED FOR OWN USE MUST ADAPT TO THE PROVISIONS OF ITEM III OF ART. 8, WITHIN THE MAXIMUM DEADLINE ESTABLISHED THEREIN, COUNTED FROM THE DATE OF ENTRY INTO FORCE OF THESE REGULATIONS.