Resolution CMN No. 4280 — Consolidated Financial Statements of the Prudential Conglomerate

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595 of December 31, 1964, makes public that the National Monetary Council, in a session held on October 31, 2013, based on Article 4, items VIII and XII, of the aforementioned Law, and considering the provisions of Article 44, § 8, of the same Law, and Article 61 of Law No. 11,941 of May 27, 2009,

R E S O L V E D:

Art. 1 Financial institutions and other institutions authorized to operate by the Central Bank of Brazil, except credit cooperatives, must prepare the financial statements mentioned in Article 2 in a consolidated manner, including data related to the entities listed below, located in the country or abroad, over which the institution holds direct or indirect control:

I - financial institutions;

II - other institutions authorized to operate by the Central Bank of Brazil;

III - consortium administrators;

IV - payment institutions;

V - companies that acquire credit operations, including real estate, or credit rights, such as merchant financing companies, securitization companies, and special purpose entities; and

VI - other legal entities headquartered in the country whose exclusive corporate purpose is equity participation in the entities mentioned in items I to V.

Art. 2 The consolidated financial statements mentioned in this article must be submitted to the Central Bank of Brazil, under the terms established by it, in the following manner:

I - on a monthly basis: Analytical Balance Sheet – Prudential Conglomerate; and

II - on a semi-annual basis, on the reference dates of June and December:

a) Balance Sheet – Prudential Conglomerate;

b) Income Statement – Prudential Conglomerate;

c) Statement of Changes in Shareholders' Equity – Prudential Conglomerate; and

d) Cash Flow Statement – Prudential Conglomerate.

§ 1 The consolidated financial statements mentioned in item II of the main text must be disclosed by the lead institution of the conglomerate, accompanied by explanatory notes.

§ 2 The Central Bank of Brazil is authorized to waive the submission of one or more of the financial statements listed in item II of the main text, with the aim of rationalizing the flow of information.

Art. 3 For the purposes of Article 1, the existence of control is characterized by:

I - shareholdings in companies located in the country or abroad in which the institution holds, directly or indirectly, alone or together with other partners, including due to the existence of voting agreements, partner rights that ensure predominance in social deliberations or the power to elect or remove the majority of administrators; or

II - effective operational control, characterized by common administration or management or by acting in the market under the same brand or trade name.

Art. 4 Investment funds in which entities belonging to the prudential conglomerate, in any form, assume or retain substantially all risks and benefits must be included in the financial statements governed by this Resolution.

Art. 5 Equity participations of the institutions referred to in Article 1 in which there is shared control must be consolidated proportionally to the share held by the institution.

Art. 6 The consolidated financial statements governed by this Resolution and their respective explanatory notes, relating to the reference dates of June 30 and December 31, must be subject to examination and a semi-annual report by an independent auditor, observing the minimum requirements established by the Central Bank of Brazil.

§ 1 The independent auditor must ensure that:

I - the values presented adequately represent the economic, financial, equity, and cash flow position of the prudential conglomerate; and

II - the consolidation procedures contained in the Accounting Plan of the Institutions of the National Financial System (Cosif) were observed.

§ 2 The report of the independent auditor mentioned in the main text must be disclosed together with the consolidated financial statements to which it refers.

Art. 7 In the preparation of the financial statements governed by this Resolution, the institutions mentioned in the main text of Article 1 must:

I - apply the definitions and criteria for valuation and recognition of assets, liabilities, revenues, and expenses provided for in the regulation consolidated in Cosif; and

II - make the necessary adjustments so that the valuation and recognition of assets, liabilities, revenues, and expenses of entities not subject to Cosif norms reflect the regulation consolidated therein.

Art. 8 In order to avoid distortions in the qualitative and quantitative representation of consolidated equity, the Central Bank of Brazil, considering the concrete situation of the prudential conglomerate, is authorized to determine the inclusion or exclusion of entities in the preparation of the consolidated financial statements governed by this Resolution.

Art. 9 The Central Bank of Brazil may, without prejudice to other appropriate measures, determine the new preparation and submission of the consolidated financial statements governed by this Resolution, with the necessary corrections, for the adequate expression of the economic and financial reality of the entity.

Art. 10 The institutions mentioned in the main text of Article 1 must ensure the Central Bank of Brazil integral and unrestricted access to all information, data, consolidation maps, documents, inquiries, questions, and verifications necessary for the adequate evaluation of active and passive operations and the risks assumed by the entities consolidated in the prudential conglomerate, regardless of their operational activity.

Art. 11 The provisions of this Resolution regarding the preparation, disclosure, and submission to the Central Bank of Brazil of the consolidated financial statements of the prudential conglomerate do not apply to consortium administrators, which will follow the accounting standards issued by the Central Bank of Brazil, in the exercise of its legal competence.

Art. 12 The Central Bank of Brazil will regulate the additional procedures to be observed in the preparation, submission, and disclosure of the consolidated financial statements governed by this Resolution, and may, in particular, provide for the deadline, form, and conditions for its submission and disclosure.

Art. 13 This Resolution enters into force on January 1, 2014.

Art. 14 Resolution No. 4,195 of March 1, 2013 is hereby revoked.

Alexandre Antonio Tombini
President of the Central Bank of Brazil