Paper
Brazil: Resolution No 002627 on the Constitution and the Operation of Societies of Credit to the Microenterprise
Regulation of Credit Societies in Brazil
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4 pages
This paper is a legislation containing a regulation and a circular issued by the Central Bank of Brazil related to the functioning of microenterprise credit societies in Brazil.The Ruling 002627 is concerned with the constitution and operation of the microenterprise credit societies and highlights the following:
- Guidelines for formation and establishment;
- Conversion of microcredit organizations into microenterprise credit societies, subject to the clauses of this resolution;
- Capital adequacy and loan disbursement stipulations;
- Geographical domain for operation and for raising capital;
- Norms for branch expansion and other regulations of operations;
- Discretionary powers of the regulating agency, i.e. the Central Bank of Brazil.
Finally, the circular 002915 establishes procedures relating to the authorization and operation of the microenterprise credit societies, and emphasizes the following:
- Authorization concession requires the approval of the Central Bank of Brazil;
- Credit Societies are not obliged to submit the financial statements to an independent auditor;
- It is not essential to maintain net worth compatible with the risk profile of the assets;
- Prior approval is necessary in matters of corporate governance, mergers and acquisitions, and liquidation.
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