Brazil: New Rules on Brazilian Financial Bills

On December 16, 2010, the Brazilian government announced two measures which deal with the issuance of Financial Bills (Letras Financeiras - LFs), created by means of article 39 of Law No. 12249, of June 11, 20101, and aims to foster long-term debt instruments which may be issued by certain financial institutions. The Brazilian Monetary Council (Conselho Monetário Nacional - CMN), by means of CMN Resolution No. 3836, of February 25, 2010, authorized the following financial institutions to issue LFs: multiservice, commercial and investment banks (bancos múltiplos, comerciais e de investimentos); savings banks (caixas econômicas); loan, finance and investment companies (sociedades de crédito, financiamento e investimento); mortgage companies (companhias hipotecárias) and real estate loan companies (sociedades de crédito imobiliário).

I. Like Other Brazilian Financial Institutions BNDES Can Also Issue Financial BNDES

CMN Resolution No. 3933, of December 16, 2010, authorized the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social – BNDES) to issue LFs, under the following conditions:

  1. the total aggregate amount to be issued is limited to the Capital Base (Patrimônio de Referência) value, level 1, of BNDES, which presently corresponds to BRL 40 billion; and
  2. preparation of a feasibility study, which should contain at least the economic and financial analysis on the use of the LF compared to other fund-raising alternatives and additional sources of funds available to BNDES, considering volume, term, fees, indexing, liabilities´ composition and other conditions of the issuance as well as the potential demand for long-term bonds and the planned destination for the proceeds.

II. The Public Offering of Financial Bills is Now Regulated

The Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM), by means of CVM Instruction No. 488, of December 16, 2010, amended the regulations on public offering distribution of securities established by CVM Instruction No. 400, of December 29, 2003, with the main purpose of also comprising the public offering distribution of LFs by multiservice, commercial and investment banks, development banks, savings banks and BNDES. These entities are now authorized to apply to CVM, at the Superintendency of Securities Registration (Superintendência de Registro de Valores Mobiliários - SRE), the registry of a Continuous Distribution Program (Programa de Distribuição Continuada - PDC).

The PDC must describe for each of the securities included in the program: (a) the main features; (b) the remuneration or criteria for determining it; (c) the estimated amount to be issued within the program; (d) the total estimated value of the issuance; (f) restrictions on movement, if any; (g) maturity or criteria for determining it; (h) restrictions imposed on the issuer regarding distribution of dividends, disposal of certain assets, contracting of new debt and issuing new securities; (l) conditions for changing the rights attributed to such securities; (j) other relevant characteristics; (k) designation of the markets in which the securities will be admitted for trading; (l) channels of distribution of securities; (m) any conditions applicable to the bids; (n) any other information that the issuer may deem relevant; and (o) the ISIN code, if any2.

According to CVM Instruction 488/2010, the above-mentioned entities may register automatically distributions of non-linked LFs, provided that they have previously registered a PDC and that they maintain such program duly updated under terms of the current regulations.

All these entities may register a PDC, regardless as to whether they are registered or not in the CVM as issuers of securities. Entities already registered as issuers of securities in any category (A or B)3 are not subject to any additional duty beyond the obligations that they are required to comply with as a result of their issuers´ registration status.

Non-registered issuers, however, are subject to a specific informational regime and they must place and maintain available to investors in its webpage and at its headquarters, quarterly financial information and financial statements audited year-end for the last three fiscal years and the current fiscal year, on the same date of delivery to the Central Bank of Brazil (Banco Central do Brasil - Bacen), and to observe the provisions regarding secrecy and restriction on trading, as set forth in specific rules on disclosure of material fact or act issued by CVM.

An important feature of the PDC is the authorization granted to the issuer to carry out several public offerings of the same type of LF. Thus, from time to time and depending on the market opportunities, the issuer may increase the volume of securities already issued by it in the past. With the adoption of this measure, CVM intends to encourage a more active secondary market for the LFs.

Instruction 488/2010 also promotes specific changes in CVM Instruction No. 476 of January 16, 2009, and in CVM Instruction No. 480 of December 7, 2009. CVM Instruction 476/2009 was amended in order to allow that LFs may also be distributed through a restricted tender offer. Since CVM Instruction 480/2009 was amended to exempt from registration the issuer of securities that will distribute publicly only LFs within a PDC.


1. The Financial Bill was created by Provisional Measure No. 472 of December 15, 2009, which was approved by the Brazilian Congress and converted into Law No. 12249, of June 11.2010.

2. ISO Norm 6166 or ISIN (International Securities Identification Number) has been created to standardize the codes of securities, assigning a unique international code which identifies each asset. BVMF is the Brazilian numbering agency, the only institution authorized to assign ISINs for securities in Brazil. The ISIN code provides a uniform structure to identify securities, contributing to the automatization of investors' activities and streamlining back office routines as well.

3. Under the rules of CVM Instruction No. 480, of December 7, 2009, there are two different categories of registry: (i) category A, which authorizes the trading of any types of securities; and (ii) category B, which excludes shares and share certificates of deposit as well as securities which attribute to the holder the right to acquire shares and share certificates of deposit as a result of the conversion or the exercise of inherent rights, provided that these securities are issued by the same issuer or by a company belonging to its economic group.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Walter Stuber
Adriana Maria Gödel Stuber
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.