We would like to remind you that 12/31/2018 is the deadline for legal entities enrolled in the National Register of Legal Entities (CNPJ) before July 1, 2017 to inform the Federal Revenue Service (“RFB”) on their chain of shareholders up to individuals that hold 25% of the capital stock or have significant influence in the management of the registered entity (“Ultimate Beneficiary Owner”), as determined by RFB Normative Instruction No. 1634/2016 (“IN/RFB 1634“).
According to the IN/RFB 1634, as a general rule the following legal entities are required to inform their Ultimate Beneficiary Owners:
- Brazilian limited liability companies and corporations that have among their partners a domestic or foreign legal entity, whose equity interest in said companies was acquired outside the capital market;
- foreign entities that are holders of rights on real estates, vehicles, vessels, aircrafts, bank current accounts and investments in the Brazilian financial and capital markets and equity interest in legal entities constituted outside the capital markets;
- joint ventures (SCPs) bound to Brazilian general partners;
- foreign bank institutions that perform foreign exchange transactions with banks established in Brazil, receiving and delivering Brazilian currency in cash to liquidate such transactions; and
- clubs and investment funds registered in the Brazilian Securities and Exchange Commission (CVM).
It is worth noting that the relevant legislation includes some situations where the disclosure of the Ultimate Beneficiary Owner is not required, such as multinational groups that are controlled by publicly-held companies, collective investment vehicles that meet specific requirements, multilateral organizations, etc.
As we had indicated earlier, the purpose of Brazilian authorities upon introducing this obligation was to grant increased transparency to the corporate structures of legal entities constituted in Brazil and/or holders of assets and rights in Brazil.
The submission of the relevant information concerning Ultimate Beneficiary Owners shall be a condition for the reporting entity’s good standing before the RFB. Overall, the failure to submit such information within the legal term might subject the foreign legal entity to the suspension of its CNPJ, in addition to preventing it from making business with banking institutions in Brazil, including bank account transactions, financial investments, etc.
Please contact us for further information. We are always available to assist you.
