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Brazilian government simplifies foreign investment in Brazilian fintechs

Banking and Finance; Technology, Innovation and Digital Business

As a rule, the investment in the capital stock of financial institutions in Brazil by foreign investors depends on a presidential decree that analyzes the interest of the Brazilian government in such investment, as determined by applicable laws. This analysis is performed on a case by case basis and can be a longstanding and burdensome procedure.

On October 29th, the Brazilian government enacted Decree No. 9.544, which declares the Brazilian government interest in foreign participation (up to 100%) in the capital stock of financial institutions authorized to operate by the Brazilian Central Bank as direct lending entities (Sociedades de Crédito Direto SCD) and peer to peer lending entities (Sociedades de Empréstimo entre Pessoas – SEP), usually referred to as "online lending fintechs".

This measure exempts fintechs from obtaining specific presidential decrees, facilitating the investment process, in order for it to be more compatible with the nature and dynamic of foreign investments in startup companies, which are usually the case of fintechs. 

In the recent years, Brazilian Central Bank has publicly announced its intention to foster competition and promote innovation in financial services in Brazil, as part of its "BC+ agenda". According to the regulator "foreign investment in fintechs is essential to foster continuous advances in technological innovations and to enable such institutions to expand the range of differentiated and innovative financial products."

If the investment represents a controlling position or a qualified investment (above 15% of the financial institution capital stock), it remains subject to an authorization from the Brazilian Central Bank.

Our lawyers are available to provide further information and clarification on the subject.

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