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Ownership and organisational requirements
Ownership of (re)insurers
Are there any restrictions on ownership of or investment in (re)insurers in your jurisdiction, including any limits on foreign ownership/investment?
Insurers must be incorporated in the form of a corporation and cannot exploit any other branch of commerce or industry.
In terms of investments, insurers and reinsurers must comply with strict rules set down by the National Monetary Council and the National Private Insurance System, in particular relating to limits on the application of technical reserves and provisions. The rules for the flow of foreign investment into Brazil must also be observed, as well as the Corporate Law (6,404/76).
What regulations, procedures and eligibility criteria govern the transfer of control of/acquisition of a stake in a (re)insurer?
The procedures for the transfer of control of an insurer or local reinsurer are set out by National Council of Private Insurance (CNSP) Resolution 330/15 and Superintendence of Private Insurance (SUSEP) Circular 529/16. These regulations impose a series of formalities to obtain prior authorisation, such as the delivery of documents, evidence and technical interviews. The prior authorisation must subsequently be homologated by SUSEP.
Admitted and occasional reinsurers are submitted to local government criteria.
Must (re)insurers adopt a certain legal structure in order to operate? If no mandatory company organisation applies, what are the common structures used?
Yes. According to Article 72 of Decree-Law 73/66, combined with Article 25 of Law 4595/64, an insurance company must be incorporated in the form of a corporation. A local reinsurance company must also be incorporated in the form of a corporation, according to Complementary Law 126/07.
Also according to Complementary Law 126/07, admitted reinsurers must be headquartered abroad, with a representative office in Brazil, and occasional reinsurers must be registered by the supervisory authority and must be headquartered abroad, without a representative office in Brazil.
Do any particular corporate governance requirements apply to (re)insurers, including any eligibility criteria for directors and officers?
Yes. Insurers and reinsurers must follow corporate governance criteria based on the pillars of internal control, which also set out definitions of responsibilities, the segregation of activities, risk management and the systematic monitoring of activities.
In addition, some conditions must be fulfilled by those who intend to fill statutory or non-statutory positions in insurers or reinsurers. These conditions are set out in Appendix II of CNSP Resolution 330/15, including:
- having unblemished reputation;
- being resident in Brazil;
- not being impeded by bankruptcy crime;
- possessing technical expertise for the exercise of the position, duly proven with academic qualification; and
- having professional experience.
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