Regulatory Framework on Foreign Direct Investment Registration Changes
Coming into force on January 30, 2017
As we informed on November 29, 2016, through Resolution N. 4,533, the National Monetary Council amended the rules about the registration of foreign direct investment with the Central Bank. Such Resolution, that will come into force next January 30, 2017, brought substantial modifications in the structure of the foreign capital registration procedures, its form, definition of responsibilities, and in the declaratory concept of the registration itself.
By editing Circulars 3,814/2016 and 3,822/2017, the Central Bank regulated the terms of Resolution 4,533/16 detailed addressing the changes including the ones in connection with the new parameters of registrations, which also will come into force next January 30. The most important changes are the following:
(i) the new rules bring back the obligation of the companies that receive direct foreign investment of periodically registering their financial economic statements (balance sheets) with the Central Bank as follows: (A) the companies with net equity of less than BRL 250,000,000.00 must register their financial statements with the Central Bank up to March 31 of the subsequent year, and (B) the companies with net equity equal or more than BRL 250,000,000.00 must provide for four registrations per year as follows: (1) related to the data base of March 31 - registration to be made up to June 30; (2) related to the data base of June 30 - registration to be made up to September 30; (3) related to the data base of September 30 - registration to be made up to December 31, and (4) related to the data base of December 31 - registration to be made up to March 31 (it is worth mentioning that the term to comply with this obligation will initiate in the first day of the date that the new rules come into force).
(ii) there will be no longer registration of distribution of profits and interest on equity, in the cases of payments to be made through the flow of funds from Brazil. Only in the cases where the distributions and payments of the amounts to the foreign investor are made directly overseas or in Brazil, or in cases of reinvestment of the amounts in Brazil that the transactions must be registered with the Central Bank;
(iii) the Brazilian company recipient of the foreign investment will be the sole responsible for the registration of the foreign investment;
(iv) the identification of both the Brazilian recipient of the foreign investment and the foreign investor must be made using the General Taxpayers' Registry ("CNPJ"); and
(v) the updating of each foreign investor participation will not be linked to any exchange agreement of inflow of funds or import statements (in the case investment with imported goods), as a means of evidencing each payment of capital stock.
We are at your entire disposal to promptly help you to comply and adequate to the new rules. Therefore, if you need additional information, please do not hesitate to contact us.