The rules for the incorporation and control of financial institutions and the conditions to be elected as their officer or a member of their board have been modified. Resolution 3040/2002 was revoked and replaced by Resolution 4122/2012 that now deals with those and other matters.
The new rules seem better and have incorporated an accumulated experience of 10 years.
There are many aspects that must be analyzed and our intent is to review one by one in short articles.
We shall initially review the change in the concept of "relevant participation" or, in Portuguese "participação qualificada".
This is a significant concept because any individual or legal entity that intents to have a participation deemed relevant by the Brazilian Central Bank ("BCB") on a financial institution must present certain information and such participation requires the prior approval of the BCB.
Before the new rules, a 5% participation was considered relevant (Resolution 3040, Article 4 of its Annex). Such parameter was excessively conservative and has led to certain situations in which the authorities themselves had to agree that there was no reason for a more detailed analyzes of the application, but it had to be conducted anyway by reason of the rule in force.
Resolution 4122/2012 has established that a participation to be considered relevant must be of at least 15% of the capital stock of the financial institution. Such participation may be directly or indirectly held by the interested investor (Article 6, item I). So, if an interested investor is planning to acquire 15% or more of the capital stock of a financial institution in Brazil, the prior approval of the BCB must be secured.
It is worth noting that if a participation does not reach the 15% threshold but involves control (which may be achieved by shareholders agreement, for instance) the prior approval of the BCB is also required.
Any individual or legal entity interested in having a relevant participation on a financial institution must be prepared to authorize (i) the Brazilian Secretariat of the Federal Revenue Service to provide the Central Bank with the income tax return and the list of his/her/its assets and obligations related to the previous three fiscal years; (ii) the Central Bank to access any public or private data system storing information about the applicant, including judicial and administrative proceedings and police investigations. (Resolution 4122/2012, Article 4 of the Annex, item VII, sub items "a" and "b").
We shall continue our review on a next article.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.