Financial institutions and the new obligation to disclose: the reputation of shareholders, board members, and directors

The National Monetary Council (“CMN”), with the objective of improving corporate governance rules applicable to financial institutions, determined, through Resolution No. 4,567, of April 27, 2017 (“Resolution”), that financial institutions and other entities authorized to operate by the Central Bank of Brazil (“Bacen”) must report any situation that may affect the reputation of their: (i) controlling shareholders; (ii) shareholders holding qualified participation; and (iii) members of statutory and contractual bodies (board members, directors, etc.), within 10 days of becoming aware of it. The Resolution will enter into force on July 31, 2017.

The following situations are considered relevant for the purposes of assessing the reputation of such persons: (i) criminal investigations or proceedings against the person or any company controlled or managed by such person at the time of the events; (ii) administrative or judicial proceedings related to the National Financial System; and/or (iii) other similar situations deemed relevant by Bacen.

Among other rules, the Resolution also mandates the provision of a communication channel for employees, collaborators, clients, users, partners, or suppliers, which allows for the reporting of suspected wrongdoing without any identification.