Brazil’s Federal Revenue Service publishes regulation on CNPJ updating the rules concerning beneficial owners

By Luís Eduardo Galvão and André Maruch

Brazil’s Federal Revenue Service published on August 15 Normative Ruling (IN) No. 1,729/2017 to specifically change Normative Ruling (IN) No. 1,634/2016, which regulates the National Register of Corporate Taxpayer (CNPJ) and, among other things, provides for the obligation to disclose the chain of ownership of companies until the natural person who ultimately owns the company, the so-called “beneficial owner”.

The new IN now includes, within the list of entities that are not required to be mentioned in the chain of ownership, (i) investment funds set up specifically for complementary pension plan and individuals’ insurance funds, provided that such investment funds are regulated and supervised in their country of origin, (ii) collective investment vehicles abroad whose quotas or securities are allowed to be traded on organized market regulated by an entity accredited by the Brazilian Securities and Exchange Commission (CVM), and (iii) collective investment vehicles abroad which are subject to certain specific conditions such as a minimum number of 100 investors and no investor holding more than 25% of the capital, as well as a diversified asset portfolio. For the entities mentioned above as well as those listed in the new IN (paragraph 3, section 8), reference to the entities’ administrators and controlling owners suffice.

In addition, the new IN clarifies that entities which have been registered in the CNPJ prior to July 1, 2017 and perform any update on their enrollment information after such date will have until December 31, 2018 to submit all required documents and inform their beneficial owners. Disclosure of beneficial owners by Brazilian companies will be mandatory upon enactment of a specific regulation on the subject (item IV, section 51 of IN No. 1,634/2016).

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