Resolution CMN No. 2660 — Establishes norms, conditions and procedures for corporate participation by financial institutions and other institutions authorized to operate by the Central Bank of Brazil

RESOLUTION NO. 2660

Establishes norms, conditions and procedures for corporate participation, in the country, by financial institutions and other institutions authorized to operate by the Central Bank of Brazil.

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the MONETARY NATIONAL COUNCIL, in a session held on October 28, 1999, based on Articles 4, items VIII, XI and XII, 10, paragraph 1, and 30 of the aforementioned Law and on Law No. 4,728, of July 14, 1965, and taking into account the provisions of Article 22 of Law No. 6,385, of December 7, 1976, with the changes introduced by Article 14 of Law No. 9,447, of March 14, 1997,

RESOLVES:

Article 1. Establish that corporate participations, direct or indirect, in the country, by financial institutions and other institutions authorized to operate by the Central Bank of Brazil, in the capital of other companies, shall henceforth be governed by the norms of this Resolution.

Article 2. The institutions referred to in Article 1 must prepare their financial statements, on a consolidated basis, including participations in companies in which they hold, directly or indirectly, alone or jointly with other partners, including due to the existence of voting agreements, partner rights that ensure them, alone or cumulatively:

I - preponderance in social deliberations;

II - power to elect or remove the majority of administrators;

III - operational control characterized by common administration or management, or by acting in the market under the same brand or trade name;

IV - corporate control represented, regardless of the percentage of participation held, by the sum of participations held, including those held by their administrators, controllers and affiliated companies, as well as those acquired, directly or indirectly, through investment funds in securities and/or investment funds in quotas of investment funds in securities.

Paragraph 1. Investments in shares made indirectly, through investment funds in securities and/or investment funds in quotas of investment funds in securities, must be treated as corporate participations for the purposes of this Resolution.

Paragraph 2. Corporate participations of the institutions referred to in the caput must be proportionally consolidated:

I - in companies, except for the institutions referred to in Article 1:

a) where there is shared control with other conglomerates, financial or non-financial;

b) belonging to the public sector;

II - in institutions referred to in Article 1 where there is shared control with institutions belonging to distinct financial conglomerates subject to supervision by the Central Bank of Brazil.

Paragraph 3. Proportional consolidation of financial statements is admitted to the extent of the corporate participation held, in the absence of corporate control, as defined in the terms of this article, provided that previously authorized by the Central Bank of Brazil.

Article 3. The corporate participations not consolidated under the terms of this Resolution registered in current assets, including those acquired through investment funds in securities and/or investment funds in quotas of investment funds in securities, directly or in the manner of the situations provided for in Article 2, item IV, must be computed for the purpose of verifying compliance with the limit on the application of resources in permanent assets, as provided for in Articles 3 and 4 of Resolution No. 2,283, of June 5, 1996, with the wording given by Resolution No. 2,481, of March 26, 1998.

Sole Paragraph. From the amount of resources applied in permanent assets, including the corporate participations referred to in the caput, the amount exceeding 50% (fifty percent) of the institution's net worth, adjusted in accordance with current regulations, must be deducted for the purpose of calculating the operational limits provided for in Article 1 of Resolution No. 2,283, of 1996.

Article 4. Reciprocal and/or successive corporate participations between the institutions referred to in Article 1, carried out directly or indirectly, remain prohibited.

Article 5. The institutions referred to in Article 1 must inform the Central Bank of Brazil, in the manner and within the timeframe to be published by that Autarchy, of the corporate participations held in the capital of other companies.

Article 6. Corporate participations in companies subject to consolidation imply that full and unrestricted access by the Central Bank of Brazil to all information, data, documents and verifications necessary to evaluate the active and passive operations and the risks assumed by the participations, regardless of their operational activity, is permitted, through the institutions referred to in Article 1.

Sole Paragraph. The financial statements of the participating companies must be sent to the Central Bank of Brazil by the participating institutions, together with the accounting documents of these companies.

Article 7. Financial institutions and other institutions authorized to operate by the Central Bank of Brazil subject to the preparation of consolidated financial statements under the terms of this Resolution must calculate the limits referred to in Resolution No. 2,283, of 1996, on a consolidated basis, observing the other conditions established therein.

Sole Paragraph. The provisions of this article do not exempt the institutions referred to in the caput from preparing and sending to the Central Bank of Brazil the consolidated financial statements regarding the financial conglomerate, in accordance with current regulations, as well as from calculating the limits mentioned therein based on these statements.

Article 8. The Central Bank of Brazil is authorized to issue norms and adopt measures deemed necessary for the execution of the provisions of this Resolution.

Article 9. This Resolution enters into force on the date of its publication, allowing that corporate participations currently held by the institutions referred to in Article 1 in disagreement with the provisions now established may be regularized until April 28, 2000.

Article 10. Resolutions Nos. 986, of December 13, 1984, 1,550, of December 22, 1988, and 1,992, of June 30, 1993, and Circulars Nos. 126, of March 20, 1969, 206, of May 17, 1973, and 261, of July 2, 1975, are hereby repealed.

Brasilia, October 28, 1999

Arminio Fraga Neto
President