Banking and Finance Operations - updated on Apr 07 at 05:58 pm
BRAZILIAN CENTRAL BANK TEMPORARILY PROHIBITS FINANCIAL INSTITUTIONS TO MAKE DISTRIBUTION OF PROCEEDS AND ANY INCREASES IN MANAGEMENT COMPENSATION IN ORDER TO SOFTEN IMPACTS OF COVID-19
The Brazilian Central Bank (BACEN) published on Monday, April 6, 2020, with immediate effect, the Resolution No. 4,797, which establishes restrictions on the distribution of proceeds and on the increase in management compensation to be observed by financial institutions and other institutions authorized to operate by BACEN.
The measure aims to mitigate the effects of the crisis caused by the COVID-19 pandemic and is implemented on a transitory basis, with the objective of ensuring the solidity, stability and regular functioning of the National Financial System.
According to the Resolution, it is expressly forbidden until September 30, 2020:
The imposed prohibitions are applicable to all payments to be made from April 6 to September 30, 2020, as well as those calculated on the base date included in that period. In addition, the amounts retained as a result of the imposed prohibition cannot be subject of a future obligation or be linked to any dividend payments in the future.