Walter Stuber on Current Regulations for Debentures and Financial Bills in Brazil

Walter Stuber on Current Regulations for Debentures and Financial Bills in Brazil

By Walter Stuber

 A new law for the Brazilian legal regime of debentures was established in June 2011, which introduced important changes to the Brazilian Corporation Law (BCL). 1 The law's aim is to improve and adapt the system to which debentures are subject, in order to bring more flexibility to the process of issuing debentures and to facilitate the formation of a dynamic secondary market for the negotiation of these securities. This new regime expressly allows for using debentures and financial bills (letras financeiras (LFs)) as long-term financing instruments in Brazil.


Debentures are debt instruments issued by a corporation (sociedade anônima) that will confer upon its holders (debenture holders) credit rights against the issuer, under the conditions specified in the respective indenture (deed of issue) and certificates, if any. In Brazil, debentures are governed by Law No. 6.404, of December 15, 1976, as amended under BCL.


LFs are debt instruments issued by certain financial institutions duly authorized to operate in the country by the Central Bank of Brazil (Banco Central do Brasil (Bacen)). On December 16, 2010, the Brazilian government announced two measures which deal with the issuance of LFs, 2 and aim to foster long-term debt instruments which may be issued by certain financial institutions. The Brazilian Monetary Council (Conselho Monetario Nacional (CMN)) authorized the following financial institutions to issue LFs: multiservice, commercial, and investment banks (bancos multiplos, comerciais e de investimentos); savings banks (caixas economicas); loan, finance, and investment companies (sociedades de credito, financiamento e investimento); and mortgage companies (companhias hipotecarias) and real estate loan companies (sociedades de credito imobiliario). 3

n1 Law No. 12431, of June 24, 2011 (Law 12431/2011). Originally, this new regime had been established by Provisional Measure No. 517, of December 30, 2010 (MP 517/2010), which was subsequently approved by the Brazilian Congress and converted into the new Law 12431/2011.

n2 These measures were created by means of article 39 of Law No. 12249, of June 11, 2010. The Brazilian financial bill was created by Provisional Measure No. 472, of December 15, 2009, which was approved by the Brazilian Congress and then converted into Law No. 12249, as of June 11, 2010.

n3 By means of CMN Resolution No. 3836, February 25, 2010.

About the Author:

Walter Stuber is the founding partner of the law firm of Walter Stuber Consultoria Juridica, in Sao Paulo, Brazil. He specializes in corporate law, mergers and acquisitions, joint ventures, banking and finance law, international financial transactions, capital markets, securities, project finance, foreign investments, privatization, arbitration, contracts, and international law. Mr. Stuber has practiced law in Brazil for many years, including as a partner with Pinheiro Neto Advogados. He is the author of many articles for Brazilian and international law journals, magazines, and newspapers. subscribers can access the complete commentary, Walter Stuber on Current Regulations for Debentures and Financial Bills in Brazil Additional fees may be incurred. (approx. 9 pages)

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