Compliance Report ISSA Recommendations 2000

ISSA - International Securtities Services Association

Compliance to the ISSA Recommendations 2000

Market: Brazil

Status: December 6, 2001

Recommendation 1
Recommendation 2
Recommendation 3
Recommendation 4

Recommendation 5
Recommendation 6
Recommendation 7
Recommendation 8

Market selection

Recommendation 7

Investor compliance with the laws and regulations in the home countries of their investments should be part of their regulators' due diligence process. They, in turn, should be treated equitably in the home country of their investments especially in respect to their rights to shareholder benefits and concessionary arrangements under double tax agreements.

1. Do domestic regulators monitor the procedures in place at their locally based cross-border custodians to assure compliance with the laws and regulations of the home countries of their investments? No. Domestic regulators do only supervise the adequacy of the procedures adopted in relation to the Brazilian legislation.

2. What are the areas (e.g. benefits, investor compensation) where foreign investors are not treated in the same way as local investors? The unique difference between foreign and local investors is that foreign investors have to be approved by the Brazilian Securities Commission which issues an identification number used to identify the investor in the clearing, settlement and depository services.

3. Can sales proceeds and income be repatriated without any restrictions? Yes. Although there are specific registration procedures within the Central Bank for FOREX transactions, there are no restriction for income repatriation. According to the Monetary Council legislation, the legal representative of the foreign investor in Brazil is responsible for the FOREX transaction.

4. Are double tax agreements simple to apply, and do foreign investors receive promptly their full entitlement to dividends and interest payments? Yes. For the equity market, foreign investors are exempt for payment taxes. For the fixed income market, there are double tax agreements. In both cases, CBLC processes corporate events indistinctly whether the investor is local or foreign. Dividends or interest payments are credited to the local custodian (depository agent of CBLC) who is responsible for transferring those entitlements to the investor. The procedures vary from custodian to custodian.

1.	Do domestic regulators monitor the procedures in place at their locally based cross-border custodians to assure compliance with the laws and regulations of the home countries of their investments?	No. Domestic regulators do only supervise the adequacy of the procedures adopted in relation to the Brazilian legislation.
2.	What are the areas (e.g. benefits, investor compensation) where foreign investors are not treated in the same way as local investors?	The unique difference between foreign and local investors is that foreign investors have to be approved by the Brazilian Securities Commission which issues an identification number used to identify the investor in the clearing, settlement and depository services.
3.	Can sales proceeds and income be repatriated without any restrictions?	Yes. Although there are specific registration procedures within the Central Bank for FOREX transactions, there are no restriction for income repatriation. According to the Monetary Council legislation, the legal representative of the foreign investor in Brazil is responsible for the FOREX transaction.
4.	Are double tax agreements simple to apply, and do foreign investors receive promptly their full entitlement to dividends and interest payments?	Yes. For the equity market, foreign investors are exempt for payment taxes. For the fixed income market, there are double tax agreements. In both cases, CBLC processes corporate events indistinctly whether the investor is local or foreign. Dividends or interest payments are credited to the local custodian (depository agent of CBLC) who is responsible for transferring those entitlements to the investor. The procedures vary from custodian to custodian.