On January 1st , 2019, the Resolution No. 4,693 / 2018, published by the “CMN” on October 30, 2018 (“Resolution No. 4,693 / 18”), came into effect and provides for conditions and limits for performing credit operations with related parties by financial institutions and leasing companies, for the purposes of the provisions of art. 34 of Law 4,595 / 1964.

Under the Resolution, are considered to be related parties of an institution:

  1. its shareholders, natural or legal persons, under the terms of art. 116 of Law 6,404 / 1976;
  2. its officers/directors and members of statutory or contractual bodies;
  3. the spouse, companion, and relatives, co-blood or the like, up to the second degree, of the natural persons mentioned in the above items;
  4. natural persons with qualified equity interest in their capital; and
  5. corporate entities (a) with a qualified equity interest in their capital; (b) in whose capital, directly or indirectly, there is a qualified shareholding; (c) in which there is effective operational control or preponderance in the deliberations, regardless of the equity interest; or (d) who has a director or member of a board of directors.

Thus, with the publication of the Resolution, financial institutions may, for example, lend resources to their controlling shareholders, to the companies with which they hold corporate relationship (direct or indirect) or even to its directors.

However, in order for credit operations with related parties to be carried out, requirements set forth in the Resolution must be observed, such as the obligation for such operations to be implemented under market conditions – including limits, interest rates, grace periods, guarantees requirements and criteria for risk classification – similar to those that the institution would adopt in operations with third parties.

The individual limits of (i) 1% of the adjusted Equity for hiring natural persons shall also be observed; and (ii) 5% of the adjusted Equity for contracting with a legal entity.

It should be noted that the institutions will have until April 1st , 2019 to establish their policies for the performance of credit operations with related parties.

Further information, as well as the full text of the Resolution, can be found on the “BACEN” website (https://www.bcb.gov.br/).