Tributário Extra

October, 2014
informa
informa
informa
Tributário
Extra
BankingBanking
BRAZILIAN NATIONAL MONETARY COUNCIL ENACTS
RESOLUTION THAT SHALL SIMPLIFY FOREIGN INVESTMENTS
IN THE BRAZILIAN FINANCIAL AND CAPITAL MARKETS AND
THE ACCESS OF BRAZILIAN COMPANIES AND BANKS TO CROSS
BORDER FINANCING SOURCES
On September 29, 2014, the Brazilian National Monetary Council (Conselho
Monetário Nacional) (“CMN”) enacted Resolution CMN No. 4373 (“Resolution
4373”), which revokes, among others, Resolution CMN No. 2689, dated as of
January 26, 2000 (“Resolution 2689”), and addresses the use of foreign funds
The Informa Banking periodically presents a
summary of the main legislative changes and
judicial and administrative decisions applicable
to banking transactions in Brazil. It is intended for
clients and members of Souza, Cescon, Barrieu &
Flesch Advogados. This Bulletin is not meant to
provide legal advice on the matters addressed
herein and shall not be understood as such.
São Paulo:
Luis Antonio Semeghini de Souza
[email protected]
in the financial and capital markets by non-resident investors.
Ronald Herscovici
[email protected]
According to the Central Bank of Brazil (“Central Bank”), the changes introduced
Joaquim José Aceturi Oliveira
[email protected]
by Resolution 4373 aimed at simplifying (i) the investments by foreign investors
in Brazil’s financial and capital markets, for example, by allowing the use of
funds out of non-resident accounts held in local currency in Brazil, and (ii) the
access of Brazilian companies and banks to cross border financing sources, for
example, by means of the issuance of “Depositary Receipts” (“DRs”) with fixed
Alexandre Barreto
[email protected]
Daniel Facó
[email protected]
Roberto Mario Amaral Lima Neto
[email protected]
Eduardo Herszkowicz
[email protected]
income securities as the underlying assets.
In a nutshell, Resolution 4373 regulates these matters as follows:
Instruments and Operational Modalities. Foreign investors remain entitled
to invest in the Brazilian financial and capital markets through the same
instruments and operational modalities available to investors that are resident
in Brazil.
Investments from Non-Resident Accounts. One of the major innovations of
Resolution 4373 is to allow the possibility for foreign investors of making
investments with funds in Reais held in their non-resident accounts in Brazil.
Registration with the Central Bank. The electronic registration of investments
remains a requirement to be fulfilled with the Central Bank by means of the
Financial Transaction Register (Registro de Operação Financeira - ROF).
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Karin Yamauti Hatanaka
[email protected]
Fernando de Melo Gomes
[email protected]
Rio de Janeiro:
Maurício Teixeira dos Santos
[email protected]
Carlos Augusto Junqueira
[email protected]
Rafael Baptista Baleroni
[email protected]
Belo Horizonte:
Frederico Viana Rodrigues
[email protected]
www.scbf.com.br
Symbolic Operations for Investment Migrations. Resolution
Tax Treatment. There is no formal pronouncement yet
4373 expressly allows the execution (regardless of prior
from Brazilian tax authorities regarding Resolution 4373.
authorization by the Central Bank) of simultaneous currency
However, in principle, it is not expected that Resolution 4373
exchange transactions and of international transfers in Reais
produces significant changes to the general tax treatment
without effective delivery of funds in the following cases:
currently applicable to foreign investments in the financial
(i) the conversion of non-resident’s assets into investments
market. In general, gains accrued by foreign investors
in the financial and capital markets, (ii) the transfer of non-
under transactions carried out in the Stock Exchange are
resident investor investments through the DRs mechanism
tax exempt. The inflow and outflow of funds into Brazil for
to foreign direct investments and to investments in the
the investment in the financial market is currently subject
financial and capital markets, and (iii) transfer of investments
to the IOF/FX at a zero percent rate.
of non-resident investors in the financial and capital markets
to the modality of foreign direct investments, and vice-versa.
investments in the Country’s Financial and Capital Markets
Foreign Investors’ Representation. Before operating in
in the applicable books, held in custody or maintained in
Brazil the foreign investor shall appoint a representative,
deposit accounts at an institution or entity authorized by
be registered with the Brazilian Securities and Exchange
the Central Bank or by the CVM, or (ii) be registered in a
Commission (Comissão de Valores Mobiliários) (“CVM”)
clearing and settlement agency authorized to operate by
and appoint one or more custodians authorized by
the Central Bank or the CVM.
the CVM. Unlike Resolution 2689 which sets forth that
Negotiations outside the Organized Market. Resources
the representative of foreign investors in Brazil could
entering the country cannot be used in sale and purchase
be either an individual or a non-financial corporation
transactions outside the organized market, except
(even though, in such cases, an institution authorized
as expressly authorized by the CVM. Currently, the
to operate by the Central Bank needed to be named as
prohibition does not entail, for example, subscriptions,
co-responsible), Resolution 4373 requires the
bonuses, conversion of debentures into shares, indexes
representative to be either a financial institution or an
pegged to securities, sale and purchase of quotas of
institution authorized to operate by the Central Bank.
open-end investment funds, delisting, cancellation or
The instrument granting powers to the representative
suspension of negotiation, judicial agreements and
must include powers and duties expressly mentioned in
trading of shares subject to shareholders’ agreements.
Resolution 4373, namely the execution and maintenance
of records, disclosure of information to the Central Bank
Investment Funds. Foreign investments in investment
and CVM, acceptance of subpoenas and notices, amongst
funds registered with the Central Bank, including Mutual
others. Such representative must not necessarily be the
Funds of Investment in Emerging Companies (Fundo
same as the tax representative, who is responsible for
Mútuo de Investimento em Empresas Emergentes - FMIEE)
taxes and fiscal issues on behalf of the investor before
and Real Estate Investment Funds (Fundo de Investimento
the Brazilian authorities.
Imobiliário - FII) are also subject to Resolution 4373.
Resolution 4373 imposes the obligation of such funds to
Register and Custody of Financial Assets and Securities.
adapt their rules in order to fully comply with Resolution
As stipulated by Resolution 2689, Resolution 4373
4373 within 180 days from its entry into force.
determines that the financial transactions executed by
non-resident investors must (i) be registered, recorded
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investments by Means of Depositary Receipts
Depositary Receipts. Resolution 4373 revokes Resolution
registration of DRs’ investments must be executed by the
CMN No. 1927, dated as of May 18, 1992 (“Resolution
custodian on behalf of the depository.
1927”), which regulates foreign investment through the
Maintenance of Earnings Abroad. The custodian may
issuance of DRs. The innovation of Resolution 4373 consists
accept deposits in custody of the program of outstanding
in the expansion of the role of securities that may back
securities which are owned by resident investors,
DRs. Resolution 1927 only allowed DRs to have stock as
domiciled or headquartered in Brazil to back the issuance
underlying assets. Resolution 4373 authorizes the use of any
of DRs abroad. The earnings obtained through the sale
securities issued by Brazilian publicly traded companies,
of securities deposited in custody to back the issuance of
such as debentures, as well as eligible securities composing
DRs may be kept abroad, except in case of DR programs of
the Equity of Reference (Patrimônio de Referência) issued by
financial institutions.
financial institutions and other publicly traded companies
authorized to operate by the Central Bank.
Resolution 4373 was enacted in September 29, 2014, will
Approvals and Registers. The CVM has the authority to
be effective from March 30, 2015 and is available for
approve DRs programs. In the case of financial institutions,
consultation on the website www.bcb.gov.br.
prior authorization by the Central Bank is also required. The
são Paulo
rio de janeiro
belo horizonte
Brasília
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salvador
www.scbf.com.br