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The regulation of credit transactions between financial institutions and their related parties brought by resolution no. 4.693/18 of the Central Bank of Brazil

February / 2019

The Resolution no. 4.693/18 of the Central Bank of Brazil, which regulates credit transactions carried out between financial institutions and their related parties, entered into force on January 1, 2019. The issuance of the regulatory rule was expected ever since such operations were no longer considered, prima facie, a crime, which happened through the softening of the criminal rule that deemed such conduct illegal, as brought by Law no. 13.506/17.

Credit transactions between related parties were strictly forbidden due to article 17 of Law no. 7.492/86 combined with article 34 of Law no.4.595/64. With the new legislation, however, such transactions were expressly permitted, provided they are performed in condition compatible with those of the market, observing the limits generally employed to any other ordinary citizen who seeks to carry out credit transactions with the financial institution, among other requirements.

The credit transactions covered by the new legislation and by Resolution no. 4.693/18 of the Central Bank are foreseen in its article 4, which defines them as, inter alia, loans, financing, leasing operations, deposits and investments made abroad, credit availability, in short, almost the entire range of services normally offered by financial institutions that are related to credit.

The related parties are defined as the controllers of the financial institutions (either as a person or a legal entity), their directors and members of statutory or contractual bodies, spouses and relatives until the second degree, either consanguineous or related, of the persons mentioned above, in addition to persons and legal entities who own qualified corporate interest in the institution, as well as legal entities in which the institution has corporate interest, effective operational control or that acts as a director or member of their boards.

In addition to regulating such now allowed transactions – always based on the idea that the conditions involved are those common to the whole market, especially by granting equal conditions to those with similar profiles and risks –, the Resolution sets forth objective limitations aimed at preventing abuses, such as, for example, as provisioned in article 7, which establishes a maximum percentage of 10% of the institution’s net worth for the transactions, rendering it forbidden for the total sum to exceed such value. It also limits the individual percentage for natural persons at 1% (one percent) and at 5% (five percent) for legal entities.

Several other restrictions are foreseen in the Resolution, seeking the greatest normality possible and, thus, avoiding irregular situations, such as transaction shams to hide a not due extra benefit or compensation, disguise the financial health of the institution, violate the tax system and many other numerous ways of frustrating and detracting the original teleology that was sought when such transactions were enabled.

Notwithstanding such normative provisions, it is necessary to take into account the need to establish a strong compliance program, aiming at maximizing the efficiency and supervision when carrying out the transactions. In line with these purposes, the Resolution no. 4.693/18 established the obligation for the financial institution to create a policy for performing credit transactions with related parties, which shall be done until April 1, 2019. Such policy must be formalized by means of a written document approved by the institution’s Board of Directors and filed at the Central Bank of Brazil, with the purpose of complete transparency and access possibility by all parties and supervisory bodies.

Vernalha, Di Lascio, Mesquita & Associados is at the disposal of its clientes for more information on the subject.