Presentation of Periodic Information to the Central Bank by Brazilian Entities that have received Direct Foreign Investment in 2023

The new Legal Milestone for Foreign Exchange and the Brazilian Central Bank regulation brought new rules and deadlines for the provision of periodic information by entities that have received direct foreign investment.

1. New Legal Milestone for Foreign Exchange and New Regulation. Brazilian entities that have received direct foreign investment that meet the legal requirements must periodically provide information regarding the foreign investment received and its accounting data in the electronic system of the Brazilian Central Bank.

This obligation was modified as a result of the entry into force of Law no. 14,286/2021, which deliberates about the Brazilian exchange market, Brazilian capital abroad, foreign capital in the country, and the provision of information to the Brazilian Central Bank (the “New Legal Milestone for Foreign Exchange”), as well as Resolutions no. 278 and 281 enacted by the Central Bank.

2. New Values and Criteria for the Obligation of Provision of Quarterly, Annual and Five-Year Periodic Statements:

i) Quarterly Statement: Entities that have received direct foreign investment that have total assets in amount equal to or higher than three hundred million reais (BRL 300,000,000.00) shall submit statements through the electronic system of the Central Bank quarterly, under the following schedule:

The statement must be submitted by March 31th, 2023, in relation to the base date December 31^s^t, 2022;
The statement must be submitted by June 30th, 2023, in relation to the base date March 31^st, 2023;
The statement must be submitted by September 30th, 2023, in relation to the base date June 30^th, 2023; and
The statement must be submitted from November 1^s^t to December 31st, 2023, in relation to the base date September 30^th, 2023.

As a transitional provision of the regulation, for the base dates December 31st, 2022, March 31st, 2023, and June 30th, 2023, the information shall be provided through the Economic-Financial Statement (DEF) functionality of the Central Bank system.

ii) Annual Statement: Entities that have received direct foreign investment and that have net equity in an amount equal to or higher than one hundred million United States dollars (USD 100,000,000.00), as well as investment funds with non-resident quotaholders and net equity worth equal to or higher than the same amount, shall submit the statement annually. In these cases, as a transitional provision of the regulation, the information referring to the base date of December 31^st, 2022, shall be provided through the Census of Foreign Capital system (“Censo de Capitais Estrangeiros”), within the period between July 1^s^t and 6pm of August 15^t^h, 2023.

As of the base date of December 31^s^t, 2023, the Annual Statement shall be provided by the recipient of direct foreign investment that, on the base date of December 31^st of the previous year, had total assets in an amount equal to or higher than one hundred million reais (BRL 100,000,000.00).

iii) Five-Year Statement: Entities that have received direct foreign investment that, on the base date of December 31^st of the previous year, had total assets in amount equal to or higher than one hundred thousand reais (BRL 100,000.00), shall submit the Five-Year Statement, whose base date is December 31^st of a calendar year ending in 0 (zero) or 5 (five).

It is noted that there will be no Annual Statement in the years of Five-Year Statement.

3. Effects. The failure to provide information (or the failure to provide it within the deadline established), as well as the provision of false, incomplete, or incorrect information may subject the Brazilian entities that have received foreign investment to the imposition of penalties by the Central Bank.

Araújo e Policastro team is at your disposal to provide clarification on this matter and to assist you with the required measures before the Brazilian Central Bank.