BRAZIL Law and Practice Contributed by: Caio Ferreira Silva, Thiago Braga Junqueira, Vinícius Pimenta Seixas and Rodrigo Vieira, Pinheiro Neto Advogados
or aeroplanes. The mortgage’s structure and enforcement rights are similar to those of the pledge, provided that the creation of a lien on specific types of collateral (such as real estate property) is subject to specific additional formali- ties set forth by law (such as by means of the execution of public deeds and registration with the competent real estate registry, etc, depend- ing on the type of assets being collateralised). Nevertheless, Law No 14,711, of 30 October 2023, modified Decree Law 911/69 and cre- ated a new extrajudicial procedure for enforc- ing creditors’ rights under fiduciary sales or assignments. The new provisions of Decree Law 911/69 allow the creditor to cause the notifica- tion of the debtor and proceed with the consoli- dation of the property of the assets granted as security under a fiduciary sale or assignment by means of a procedure conducted directly via the competent Registry of Deeds and Documents. 5.2 Form Requirements One of the most important aspects with a bear- ing on the effectiveness of security interests in Brazil is formalisation. In order to be valid and effective vis-à-vis third parties, liens on collat- eral must be perfected in writing by means of a security agreement (such agreement contains specific requirements depending on the type of security to be granted). Under the general regime of guarantee agree- ments, the security documents will provide for: • the total amount of the debt, or its estimated value;
It is of the utmost importance for security agree- ments to properly individualise and identify the collateral subject to the lien created within the financing arrangements so that the creditor has a valid security interest on the assets and is able to quickly foreclose on the guarantee in the event of default under the secured credit transaction. 5.3 Registration Process In general, to be effective vis-à-vis third parties, all security documents must be duly filed with the competent Registry of Deeds and Docu- ments located in the domicile of: • the parties, when located/resident in the same territorial jurisdiction; • one of the debtors or guarantors, when the parties are located/resident in different territo- rial jurisdictions; or • one of the parties, when there is no debtor or guarantor as a party. Rural pledges (ie, on agricultural assets or cattle) and industrial pledges (ie, on machinery, equip- ment or other industrial tools or products) are subject to registration with the competent real estate registry of the place where the assets are located. Liens on receivables are also subject to the debtor being informed of such credit rights. Perfection of a security interest over certain classes of collateral may be subject to additional specific procedures. Security interests over the following have the following requirements: • shares of Brazilian corporations must be reg- istered in the relevant Share Registry Book (or with the custodian bank, if applicable); • quotas of limited liability companies must be registered in the company’s articles of asso- ciation;
• the term or time of payment; • the interest rate, if any; and
• the description of the asset subject to the security interest, with the key characteristics for its identification.
73
CHAMBERS.COM
Powered by FlippingBook