Regulation of the New Brazilian Legal Framework for the foreign exchange market and international capital (Law No. 14,286/2021)

The enactment of Law No. 14,286 on December 30, 2021 (“Law No. 14,286/2021”), established the Legal Framework for the foreign exchange market and international capital. Due to such Law, a few important amendments were noticed, which will certainly impact negotiations of commercial contracts. However, Law No. 14,286/2021 still depends on regulation by the Central Bank of Brazil (“BACEN”).

In order to regulate aspects concerning the foreign exchange market, within the scope of Law No. 14,286/2021, BACEN published on May 05, 2022,  Notice of Public Consultation 90/2022, which announces proposals for regulatory acts.

It is important to highlight that one of the changes introduced by Law No. 14,286/2021,  which still requires regulation, was the possibility of privately offsetting credits or amounts between residents and non-residents in Brazil, in certain cases (Article 12 of Law No. 14,286/2021), which was previously prohibited.

The situations in which the private offsetting of credits will be authorized will be defined in BACEN’s regulation. Notwithstanding, BACEN was already authorized by Law No. 14,286/2021 to require residents to provide information on the private offsetting of credits, subject to deadlines, required forms and other conditions to be regulated.

Violations of the provisions of article 12 and of the regulations to be issued by BACEN will result in penalties to be applied by BACEN, pursuant to the sole paragraph of art. 20 of Law No. 14,286/2021.

Another important innovation introduced by Law No. 14,286/2021 was the provision in article 13, which allows for the stipulation of payment in foreign currency of certain obligations enforceable in the Brazilian territory. Accordingly, the stipulation of payment in foreign currency was authorized for the following contracts and obligations:

• contracts and instruments referring to the foreign trade of goods and services, their financing and their guarantees;
• obligations whose creditor or debtor is a non-resident, including those arising from credit or leasing operations, except in lease agreements of properties located in the national territory;
• leasing agreements entered into between residents, based on fundraising from abroad;
• assignment, transfer, delegation, assumption or modification of the obligations referred to in items (i), (ii) and (iii) above, even if the parties involved are residents;
• purchase and sale of foreign currency;
• indirect export referred to in Law No. 9,529, of December 10, 1997;
• contracts entered into by exporters, in which the counterparty is a concessionaire, licensee, authorized representative or lessee in the infrastructure sectors;
• situations provided for in the regulations issued by the Brazilian National Monetary Council, when the stipulation in foreign currency can mitigate the exchange risk or increase business efficiency; (ix) other situations provided for in the legislation.

It is important to note that the prohibition on stipulation of payment in foreign currency for lease agreements of properties located in the Brazilian territory was maintained.

The sole paragraph of article 13 of Law No. 14,286/2021 is very straightforward in mentioning that any stipulation of payment in foreign currency  that goes against the provisions of the aforementioned article is null and void.

In light of the amendment above, item I of the sole paragraph of article 1 of Law No. 10,192, of February 14, 2001, became effective with the following wording: “Art. 1 (…)

Sole paragraph. (…)

I – payment expressed in or associated to gold or foreign currency, except in cases provided for by law or in regulations issued by the Central Bank of Brazil; (…)”

Demarest’s Commercial Agreements and Negotiations team is available to provide further clarifications on the new legal framework and other related matters.