Electronic Registration of CCB and CCR by Financial Institutions

With the enactment of Law No. 13,986 on April 7 (resulting from the conversion of the Agribusiness Provisional Measure), the legislator instituted the Bank Credit Bill (“CCB”) and the Rural Credit Bill (“CCR”) electronically issued in book-entry form, whose issuance shall occur through entry in an electronic bookkeeping system maintained by financial institutions under the authorization of the Brazilian Central Bank.

In this context, the Central Bank issued on July 15, 2020, Circular No. 4,036, which provides for the exercise of electronic bookkeeping activities of CCB and CCR in book-entry form.

The new Circular authorizes the bookkeeping of the credit bills in an electronic system managed by the institutions that originated the credits underlying the bills issued. However, the institutions that originate the credits also have the option of transferring the bills registered in their electronic systems to those of other institutions in the case of definitive sale of the bills (provided that there is no co-obligation) and in the case of execution of an operational agreement that enables the recipient institution to carry out the registration activities.

Institutions responsible for electronic bookkeeping systems will be required to adopt procedures that ensure the integrity, authenticity, and validity of the registered bills.

It is also interesting to note that the Circular makes clear the possibility of using digital certification, as well as other secure methods of identification, including the use of electronic password, authentication code issued by a personal and non-transferable device, and biometric identification, provided they have been previously accepted by creditor and debtor.

The electronic issuance of certificates with full content of the bills is also one of the duties that shall be performed by the institutions managing the registration systems, and they shall do so within one business day of the date of their request. Certificates must contain information necessary for registration of guarantees before registering entities, central depositories, Real Estate Registry, Deeds and Documents Registry Offices or other types of Public Registry Offices.

As a condition to act in bookkeeping, institutions managing the electronic systems must carry out the following activities:

i. within the scope of their electronic bookkeeping systems: to issue bills in book-entry form, by order of the borrower; to insert information regarding the bills as legally established (Section 42-A of Law No. 10.931 and Section 10-D of Decree-Law No. 167); to control effective or fiduciary ownership of the bills;

ii. to make available to the debtor payment instruments to settle the obligations set out in the bill;

iii. to control the financial flow of the bills, including prepayments;

iv. to perform notification to debtors, when bills are negotiated;

v. to perform registration or deposit of bills in a centralized system of registration or deposit operated by registering entity or central depository authorized by the Central Bank;

vi. to make available information about bills to the debtors, to their holders or beneficiaries of guarantees constituted under them or to other legally qualified interested parties; and

vii. to issue, up to one business day from the request, electronic certificates with full content requested by the debtor or legally qualified interested party.

Demarest’s Banking and Finance team is closely monitoring these and other measures and is ready to assist you in any matters regarding this topic. For more information, please feel free to contact us.