Bacen changes rules for foreign investment registration

Ana Paula Terra Caldeira and Luiza Elena Ribeiro Cardoso*

New rules issued by the Central Bank of Brazil (BACEN) simplify and modernize registration procedures in the foreign direct investment module (“RDE-IED”), which reduces costs and time, at the same time that create the obligation of periodic updating of information, with a deadline up to March, 31.

  • Exemption from prior registration for remittances abroad – It is no longer necessary the prior register to the contracting of the exchange contract in the Central Bank Information System (“Sisbacen”) of remittances to be made by the Brazilian company to the overseas investor under the distribution of profits, dividends, interests on own capital, and return of capital, either by reducing capital or disposing of equity interest, so that the investment is withdrawn from the country.
  • Automatic Register of Foreign Exchange Transactions – The operations of (i) foreign currency inflow; (ii) conversion into investment; (iii) transfers between categories of foreign capital; (iv) international conference of quotas or shares and (v) remittance abroad of dividends or interest on own capital, or return of capital, are now automatically registered in the RDE-IED module of Sisbacen, through the identification of information contained in exchange contracts or in the event of ‘TIR’, and there is, therefore, no need for manual declarations in the system. Despite this simplification, it should be noted that it is still necessary to update the corporate structure of the company invested in Sisbacen, within 30 days from the occurrence of events that change the corporate interest of foreign investors.
  • Responsibility for the registries – The responsibility for the registries of the operations and the provision of the required information will only be returned to the receiving company of the foreign resources, which will be responsible for the accuracy, legality and economic grounds of the statements made, and it is therefore, advisable to keep the supporting documents of the statements for at least 5 years.
  • Transparency – The non-resident investor can consult its registered investment through its agent in the country, as well as access the detailed list of all the foreign exchange and TIR operations linked to a specific RDE-FDI.

Acts that remain subject to manual registration

Although there has been a significant debureaucratization of the procedure with the innovations mentioned above, some events still depend on the specific registration, within 30 days from its occurrence, which are:

  • (i) the entry of assets for payment of the corporate capital of the beneficiary;
  • (ii) the corporate restructuring (merger, incorporation or spin-off) of companies holding foreign investments;
  • (iii) the sale or exchange of shares and quotas in the country, entered into between resident and non-resident investors, or between non-resident investors;
  • (iv) the transfer in lieu of payment of shares or quotas of Brazilian receiving companies held by non-resident investors for the pay-up of corporate capital in another Brazilian receiving company;
  • (v) reinvestment, such as capitalizations of incomes, dividends, interest on capital and profit reserves, and the investment in foreign currency is registered corresponding to the declared amount in reais;
  • (vi) the distribution of dividends, payment of interest on own capital, divestiture of shares, restitution of capital and net assets resulting from liquidation, used as reapplication in other receiving companies in Brazil;
  • (vii) the distribution of dividends, payment of interest on own capital, divestiture of shares, restitution of capital and net assets resulting from liquidation, used to make payments in Brazil or abroad.

Compulsory periodic information:

  • Receiving companies of foreign investment with assets or net worth equal to or greater than R$250 million are required to provide quarterly economic and financial statements, the first being as of June 30, with the base date of March 31, and maintaining its corporate structure duly updated , as below.
  • Companies receiving foreign investment whose assets and net worth are less than R$ 250 million should only maintain their corporate structure in Sisbacen until March 31 of each year, according to the situation of December 31 of the previous year.

The corporate consultancy team of Azevedo Sette Lawyers is available for any further clarification on the subject, including perform the necessary registration in each case.

Legal Basis: CMN Resolution n. 4,533, dated 11.24.16, regulated by Circular no. 3,814 dated 07.12.16 and no. 3,822, dated 20.01.17.

*Ana Paula Terra is a partner and Luiza Elena Ribeiro Cardoso is an associate with the Corporate consultancy team of Azevedo Sette Advogados.

Azevedo Sette Advogados