Bank Financing

Last verified on Wednesday 28th February 2018

Paraguay

Yolanda Pereira, Jose Valdivieso, Federico Valinotti and Hugo Alexander Berkemeyer
BKM – Berkemeyer
  1. 1.

    What are the most common forms of bank financing in your jurisdiction?

  2. The most common forms of bank financing for legal entities and companies in Paraguay are:

    • Business loans, for investment in capital assets (loans secured through warrants, pledge, mortgage);
    • Overdraft lines of credit in current accounts;
    • Business credit cards;
    • Discount of checks and documents;
    • Factoring;
    • Financial and commercial leasing;
    • International business: standby letters; import letters of credit; export letters of credit;
    • Certificates of call money (interfinancial call between banks and financial entities, involving short-term loans among them);
    • Issuance of bonds;
    • Issuance of subordinated bonds;
    • The most common forms of bank financing for individuals are:
    • Personal loans (unsecured loans, personal guarantee loans, registered secured loans, mortgage loans or loans against other forms of guarantees, including fiduciary guarantee operations);
    • Overdraft lines of credit in current accounts;
    • Credit cards; and
    • Discount of checks and documents.
  3. 2.

    Are any governmental or central bank registrations or approvals required for a foreign lender (being a lender not incorporated in your jurisdiction or operating through a branch or office outside of your jurisdiction) to lend to a borrower in your jurisdiction?

  4. According to Paraguayan law, no governmental or central bank registrations or approvals are required for a foreign lender that grants a credit to a debtor in Paraguay.

    However, banking and financial entities that are part of the local financial system, in their dealings with foreign financial entities, may not have any correspondent relationship or link with foreign financial entities that have no physical presence in any country. Physical presence is understood a fixed address where the foreign financial entity is authorised to carry out its activities and the registered place where it is subject to inspections by the surveillance and supervision authorities that grant licence to operate.

  5. 3.

    Are there any foreign exchange provisions restricting, or governmental or central bank registrations or approvals required for, a borrower in your jurisdiction to contract debt obligations in a foreign currency or to remit funds abroad?

  6. The Central Bank of Paraguay may require to be informed in writing about the execution of certain foreign exchange transactions, through documents previously provided by the entity, in order to verify the origin and legality of such operations; this way, the State Central Bank must identify, accurately and specifically, the exchange operations affected to the aforementioned obligation.

    It must also be noted that the obligations in foreign currency may be guaranteed by the registration of pledges, mortgages, warrants or other forms of guarantees in the amount expressed in the currency of the obligation and must be registered before the relevant Public Registry (Public Records Office), expressing the amount of the obligation and guarantee. Banking and financial entities, subject to the supervision of the Central Bank of Paraguay, that perform credit operations abroad must notify the Central Bank, except for banking operations considered as ordinary.

    There is no legal provision in Paraguay that prevents a borrower from remitting funds abroad to cover a debt obligation acquired in foreign currency, except what must be observed with regard to tax regulations in force, relating to value added tax and corporate income tax known by its acronym IRACIS because it includes commercial, industrial and non-personal services incomes, as seen in the answer to question 8.

  7. 4.

    Are there any governmental or central bank registrations or approvals required for the prepayment of loans abroad?

  8. There is no governmental or Central Bank registrations or approvals required for the prepayment of loans abroad.

    Regarding credit operations granted within the territory of Paraguay for safety’s sake of the borrower, at least the following information must be stated:

    •  amount of interest, annual or monthly rate to calculate, and the rate for punitive interest;
    • any charges that may exist as commission, administrative costs, taxes, others;
    • number of payments to be made, and frequency thereof;
    • total sum to pay for the credit transaction, including interest, commission charges, administrative costs or fees; and
    • rights and obligations of the parties before a default event.
  9. 5.

    Are any mandatory governmental or central bank deposits required to be made from loan proceeds?

  10. The law governing the Central Bank of Paraguay provides that foreign currency loans may be subject of legal reserve. However, to this date, there is no resolution that establishes a legal reserve requirement on foreign currency loans.

  11. 6.

    Describe any governmental measures that may be taken to declare a moratorium on the loan obligations of private companies.

  12. There are no governmental measures addressed to declare a moratorium on the loan obligations of private companies, and if a moratorium is sought for such obligations, then the Congress should enact a law in that sense. 

  13. 7.

    Describe any environmental liabilities and any other areas of lender liability that may arise as a result of the activities of a borrower or the realisation of a security interest.

  14. Usually, a lender assumes no environmental responsibility for the specific activity developed by a borrower, since an implicit risk is assumed when granting the credit, the same may also have proper and sufficient guarantee, for the purpose of decreasing the mentioned own risk. 

    Notwithstanding, the Law on Environmental Impact Assessment requires that the environmental impact statement is an essential requirement for the provision of loans or guarantees and lenders should require this environmental impact statement when granting a loan.

  15. 8.

    Are interest payments or loan fees subject to a withholding tax?

  16. Yes, this type of operation is subject to a withholding tax in Paraguay, even if the lender is a company non-resident.

    According to regulations on value added tax (VAT) services are considered as rendered in the country if they are utilised or used in Paraguay, according to article 81 of Law 125/91, text updated by Law 2421/04.

    Also, regarding the income tax that includes commercial, industrial or service activities, hereinafter referred to as IRACIS, services have similar liability criteria than income; therefore borrower payments sent abroad will be subject to VAT and IRACIS withholding taxes at source.

    Regarding the VAT, the debtor/payer should apply the withholding at a 10 per cent rate calculated on interest, commissions and any other charge other than repayment of capital.

    As for the IRACIS, the applicable rate is 30 per cent but the tax base may range between 20, 50 and 100 per cent of the amount paid as interest, commissions and any other concept other than repayment of capital, which leave us the following direct taxes: 6, 15 and 30 per cent.

    Accordingly, the rate or aliquot of IRACIS will range according to subjective qualities of the creditor, as follows:

    • If the creditor is a bank or financial entity or any other lending entity well known in the international financial market, or a multilateral credit agency, the direct rate to apply is 6 per cent.
      • There are various interpretations regarding the requirement that the lending entity is "well-known in the international financial market", it should be noted that, on the one hand, the rule is ambiguous, and on the other the Tax Administration does not provide any regulation regarding this requirement and when asked during incumbent consultations they merely stated that such requirement will be deemed as met if the entity is recognised as such in the jurisdiction of its domicile.
      • In our opinion, the above requirement – being an entity with recognised background – is not required for banks or financial entities; it is only required for "other lending entities".
    • If creditor and debtor are related companies, then the direct rate to be applied is 30 per cent.
    • If the case does not fall within any of the above, the direct rate to be applied is 15 per cent.
  17. 9.

    What other taxes or mandatory fees, for example, transaction, registration or documentary, apply to loan transactions?

  18. There are no other applicable internal and/or municipal taxes.

  19. 10.

    Are there different taxes applicable to loans repayable to lenders in your jurisdiction and loans repayable to lenders in a foreign jurisdiction?

  20. Taxes applicable to loans repayable to lenders that reside in Paraguay and loans repayable to lenders in a foreign jurisdiction are subject to the same taxes, VAT and IRACIS.

    However, both cases differ in regard to the tax settlement methods.

    For VAT, a local taxpayer basically settles the tax on a monthly basis by the difference between the tax debit and the tax credit, the positive difference is taxed at the rate of 10 per cent, a non-resident taxpayer will apply the rate directly on the tax base, namely interests or any other charge other than repayment of capital.

    Regarding the IRACIS, a local taxpayer calculates the income tax on taxable profit (accounting profit with adjustments according to the tax rules) for a given year, being the overall rate of IRACIS 10 per cent, additional fees are applied: (i) 5 per cent: when the company decides to distribute profits, and (ii) 15 per cent: when the company sends dividends to shareholders who do not reside in Paraguay. If the company has local shareholders, 50 per cent of the income of these shareholders will be subject to Personal Income Tax, IRP, at the rates of 8 per cent or 10 per cent as appropriate.

  21. 11.

    Is your country party to any double taxation treaties that reduce taxes payable by borrowers in respect of loan payments abroad?

  22. Paraguay is signatory of two International Conventions (following the OECD Model) addressed to avoid double international taxation on Income Tax and Property Tax:

    a. with the Republic of China (Taiwan), approved by Law 3972/2010: it states that interest arising in a contracting state, eg, Paraguay, and paid to a resident from other contracting state, eg, Republic of China, Taiwan, may be taxed in that other state.

    However, they may also be taxed in the contracting state where they were originated and according to the laws of that state, but if the beneficiary is the actual owner of such interests, the tax so applied may not exceed 10 per cent of the gross amount of the interests.

    b. with the Republic of Chile, approved by Law 2965/2010: the operation is subject to the same provisions, except for the percentage applied, as follows:

    • 10 per cent of the gross amount of the interests on loans granted by banks and insurance companies, regulated by the respective laws of each country;
    • 15 per cent of the gross amount of the interest on all other cases.
  23. 12.

    Do any financing structures receive favourable tax treatment, such as prepayments of exports?

  24. None other than those described above.

  25. 13.

    Describe any limitations on interest rates or the ability of lenders to charge default interest under loan agreements.

  26. The Central Bank of Paraguay provides that the rates of compensatory interest, on active or passive transactions in local or foreign currency shall be freely determined according to the supply and demand for money, within the limitations set forth in the Law. This Law states that the compensatory interest is converted, based on the arrears, into default interest and will be charged at a rate not higher than the rate originally agreed. The default interest shall be calculated on the outstanding debt and capitalised interest may not be applied on late payment interest or punitive interest. Additionally, creditors may receive a punitive interest, at a rate not higher than 30 per cent of the fees to be charged as punitive interest. Punitive interest, if applicable, will only be calculated on the balance of the overdue debt.

    The Central Bank considers as usurious interest rates those compensatory and punitive fees which effective rates exceed 30 per cent of the average annual effective rates. The Central Bank determines consumer loans, terms and currencies considered for calculating interest rates and publishes monthly rates in two newspapers of national circulation.

  27. 14.

    Describe any restrictions that may apply to the choice of law, for example, whether a choice of New York or English law will be recognised and enforced in your jurisdiction.

  28. Individuals and private legal entities in Paraguay, based on the autonomy of the will, can agree that in the event of disputes and controversies may be submitted to foreign law, arbitration and courts.

    The Organic Law of the Central Bank even provides that in international agreements of economic or financial nature, in which the Central Bank of Paraguay is party, it may be subject to foreign laws or courts or arbitral. 

  29. 15.

    Describe generally the requirements for the enforceability of a foreign judgment in your jurisdiction in respect of an outstanding loan.

  30. A judgment rendered by foreign courts shall be enforceable under the terms of international treaties entered with the country it comes from. When there are no treaties, it will be enforceable if the following requirements are met:

    • if the judgment, with res judicata status in the state in which it was pronounced, was rendered by a court of law competent at international level and is the result of the exercise of a personal action, or a real action on a chattel property, if this was relocated in the country during or after the time the trial was conducted and processed abroad;
    • no legal dispute (action) is pending before a court of law of the Republic of Paraguay for the same matter and between the same parties;
    • the convicted, a resident of the Republic of Paraguay, shall have been cited in legal and proper form, and represented at the trial, or declared in default under the law of the country where the proceedings were carried out;
    • the obligations subject of judgment are valid under the laws of Paraguay;
    • the judgment does not contain provisions contrary to internal public order;
    • the judgment meets the requirements to be considered as such in the place in which it was rendered, and the conditions of authenticity required by national law; and,
    • the judgment is not inconsistent with other previously or simultaneously pronounced by a court of Paraguay.

    For proper substantiation and execution of a judgment from a foreign court of justice, a first instance judge will be formally asked to handle it, attaching a legalised and translated testimony, as well as testimonies of the steps that show that it has become final and any other requirement was met, if not contained on the judgment. Prior to render a judgment, the case shall be notified to the person convicted in the ruling, for a six-day term, being served by legal notice; and the Prosecutor's Office for the same term. If opposition exists, the rules relating to incidents (namely all additional issues related to the main matter of the action) will be applied. If the requested execution is ordered this will be processed in accordance with the relevant provisions on enforcement of judgments by the Courts of Justice.

  31. 16.

    Upon the closing of a loan, what procedural requirements (execution formalities, notarisation, registration, recordation or filing) should be observed to ensure that a loan agreement or related judgment is enforceable in your jurisdiction?

  32. To ensure that a loan agreement is enforceable in Paraguay, if it is not in Spanish, it will require official translation of the various documents relating to the loan agreement, legalised and translated testimony, and testimonies of the steps that show that it has become final and any other requirement was met and the payment of a filing fee.

    According to the Central Bank, payment privileges or preferences of obligations in foreign currencies against third-party rights shall be determined definitively in local currency (Guarani) in the amount of the final payment made in the process of execution or enforcement of a judgment. When such payment privileges or preferences must be determined in actions brought by third parties, the judge will order that, with the proceeds of the judicial sale of auctioned goods, the amount of foreign currency of the obligation whose privilege or preference is claimed shall be acquired in the exchange market, and order the opening of a judicial account in the Central Bank, where the amount of purchased foreign currency will be deposited.

  33. 17.

    Does a loan agreement in English need to be translated or locally registered to be enforceable in your jurisdiction?

  34. Yes, it will require official translation into Spanish. These documents also must be apostilled or legalised.

  35. 18.

    Must a foreign bank be registered in your jurisdiction to enforce any rights under the applicable loan documentation?

  36. No.

  37. 19.

    Are foreign lenders treated any differently from local lenders in enforcing loan documentation in the courts of your jurisdiction?

  38. No, they are treated the same way as local lenders.

  39. 20.

    Is consideration required for the enforceability of a contractual obligation or guarantee?

  40. No consideration is required, only the payment of the filing fee to start an action in the legal field.

  41. 21.

    To enforce a loan in your jurisdiction, need the loan be evidenced by a promissory note or other form of título executivo?

  42. To enforce a loan more quickly in Paraguay it is desirable that the loan be formalised through a promissory note or other executive title. However, a loan may be enforced in this jurisdiction through other documents that are not necessarily considered as título executivo.

    A título executivo implies the possibility of its execution and enforceability of the obligation through a claim for providing a liquid amount of money; in case the debt amount of this título executivo is formed by a liquid part and another illiquid, execution of the liquid debt amount shall take place.

    Not only promissory notes are considered enforceable, other examples of executive titles include:

    • bill of exchange;
    • public deeds;
    • private instruments signed and endorsed by the debtor, legally acknowledged or with signature authenticated by a notary public, with the intervention of debtor and recorded in the respective book;
    • confession of liquid and claimable debt given before a competent judge;
    • certified invoice; among others that, under a law, are enforceable.
  43. 22.

    To enforce a guarantee (aval) in your jurisdiction, is it necessary that the guarantee be evidenced by a guarantee agreement or other form of título executivo?

  44. See question 21.

  45. 23.

    Are there any restrictions on loans to multiple borrowers or on a guarantee in respect of a loan to an affiliated entity?

  46. No, there are no restrictions.

  47. 24.

    Can a party grant a secured or unsecured guarantee in respect of a loan to an unaffiliated third party?

  48. There is a difference in the respect to individuals and legal entities.

    • Individuals can grant a guarantee, insured or not, in connection with a loan to a third party, not affiliated, and if the person giving the guarantee is single, or married but under division of marital properties, no objection is foreseen to grant it; however, if the party is married and has community property regime it will require the consent of the spouse to grant such a guarantee and engage the community property.
    • Legal entities: If the party (legal entity) seeks to grant a guarantee, insured or not, in connection with a loan to a third party, not affiliated, it needs the approval of the board (board of directors) or the general meeting (composed of shareholders or partners), as applicable according to the by-laws of that legal entity to provide such a guarantee, insured or not, leaving express written statement about such purpose (ie, this to avoid any claim about the legal representative exceeding its powers).
  49. 25.

    Is there a distinction between the granting of a security interest and the perfection of a security interest?

  50. The Paraguayan system provides specific procedures for both mortgage and pledge securities. Also, in cases of trust, a legal procedure is to be observed.

    With respect to the real security of mortgage (real estate, aircraft, and ships with over six tons of gross tonnage), we will proceed to briefly detail some aspects (form conditions) that must be taken into account: (i) constitution must be done by public deed, (ii) it must be accepted by the creditor (if this does not accept, then must do so later), (iii) registration of the mortgage before the Public Registry Office, as a mandatory step to have legal effects against third parties.

    With respect to the real security of pledge (chattel or a credit title), we will proceed to briefly detail some aspects (form conditions) that must be taken into account: (i) the constitution may be set up by public or private instrument at a given date, as a mandatory step to act against third parties; (ii) the instrument must mention the amount of credit and contain a detailed description, mentioning the kind and nature, quality, weight and measure of the pledged objects, if necessary to identify those objects; (iii) If the pledge is on securities negotiable by endorsement, the title must be delivered to the creditor and the debtor notified that the credit has been pawned. Should the case be of an endorsable instrument, its transfer does not require notification to the debtor; (iv) in case of registered pledge, namely a pledge without displacement, no delivery of the pledged object to the creditor is required (debtor is set as regular depositary); however, it must be registered before the Public Registry Office, as a mandatory step to have legal effects against third parties (its constitution must be formal and solemn). This registered pledge may be done on all livestock species and their products, all kinds of industrial and agricultural machinery, including any working tool whether or not immobilised by their adherence to the ground, motor vehicles and their trailers, vessels of small cabotage, fruits of any kind, whether pending or separated, cut and marked lumber, and mining and industry products.

    In case of perfecting trust business under the laws of Paraguay, it should be taken into account the legal nature of the trust property, since the trust business that does not involve the transfer of ownership of goods, will not be subject to the observance of special solemnity or formality for its conclusion and improvement. However, physical delivery shall be made, fact that should be recorded in writing. If the trust business has as sole object the transfer of ownership of moveable property, this fiduciary operation is perfected by mere consent of the contracting parties expressed by written contract, and delivery will be effected by the physical delivery of the same; if the transfer of ownership of the trust property is subject to registration, the respective fiduciary operation must be recorded in public instruments to be recorded before the Public Registry Office in which those trust assets were recorded. If real property is turned over, the trust business will not be perfected until the public deed is executed and the title recorded before the Public Registry Office. For practical purposes, the Public Registry Office specifies the acquisition mode for ownership rights regarding trust business.

  51. 26.

    What is the most common form of granting and perfecting a security interest in movable assets?

  52. The most common form of granting and perfecting a security interest in movable assets is through the constitution of a pledge. Although aircraft and ships are both movable assets, they can be mortgaged. In this case, ships need to be over six tons of gross tonnage.

  53. 27.

    What is the most common form of granting and perfecting a security interest in real estate?

  54. The most common form of granting and perfecting a security interest in real estate is the constitution of real security of mortgage.

  55. 28.

    What is the most common form of granting and perfecting a security interest in receivables and accounts?

  56. The most common form of granting and perfecting a security interest in receivables and accounts is through the establishment of a pledge, or also through the use of the legal concept of trust, either through a fiduciary operation for transfer of ownership or fiduciary management without transfer of ownership.

  57. 29.

    Does your jurisdiction recognise the transfer of assets to a trust for the benefit of a lender as a means of granting a security interest in such assets?

  58. Yes, Paraguay does recognise this type of transfer. In this sense, the Law defines guarantee trust as the trust business under which the trustor transfers the trustee, irrevocably, the ownership of a right or ownership of one or more specified goods in order to ensure compliance with certain obligations, present or future, constituted or to constitute, under his or third party's responsibility to which this wishes to serve as a guarantor, and for one or more creditors beneficiaries, establishing the purpose of, upon default by the debtor, secured loans are cancelled by the Trust through the sale (realisation) of the trust property. Using this mechanism, the trustor provides a form of support of the undertaken obligation in the event that it cannot be satisfied and fulfilled in a timely manner in the future, taking into account that the creditor is not the one that would transfer the pledge, but a third party, the trustee, in accordance with the instructions of the trustor in the trust document. The trust guarantee shows the clear and firm intention to pay of the debtor, which will be the trustor in most cases, who jointly with the trustee performed agreed mechanisms to sell trusted property, for the purpose of cancelling overdue debts that are not paid in a timely manner. Undoubtedly this is an act of good faith, putting aside any situation for the guarantee trust to behave as a fraud before the law, it does not imply in itself a violation of the same or, in particular, it does not contradict the rules of the Civil Code, which prohibits the form known as "pignorative covenant" or "forfeiture covenant" in consideration of the following: (i) the trustee is not the creditor; (ii) the beneficiary-creditor has a security interest in the trust property;  (iii) the beneficiary-creditor is not the one performing (selling) fiduciary guarantee in his or her favour, and (iv) the trustee, by paying the debt, meets a contractual obligation.

  59. 30.

    Does your jurisdiction recognise the fiduciary transfer of assets (such as an alienação fiduciária) to a lender as a means of granting a security interest in such assets?

  60. No.

  61. 31.

    Are there any types of asset that cannot be pledged as collateral under the laws of your jurisdiction?

  62. No.

  63. 32.

    Describe any restrictions on enforcement of security. For example, any statutory regime that may stay the enforcement of the security or provide that enforcement is limited to public sale through the courts.

  64. Under our legislation, foreclosure occurs when the executive title is secured by mortgage. In the decision ordering the injunction, payment communication and auction citation, taking note of the mortgaged property and notice will be ordered before the Public Registry to report about: (i) any precautionary measures and levies affecting the mortgaged property, indicating the amount of credits, their holders and address; and (ii) transfers made by the same from the date of setting up the mortgage, and names and addresses of purchasers. If the report referred to above, or claim by the debtor, proves that he transferred the mortgaged property, once the auction order was issued, the purchaser will be notified within five days to pay the debt or make abandonment of the asset. When there are assets under mortgage, procedures will be addressed against them rather than against any other asset, and the embargo will be limited to them; and only an unpaid balance remains after selling such assets then the other assets of the debtor will be taken. Mortgage, according to the Civil Code, ends: (i) by the total extinction of the principal obligation; (ii) waiver of the right of the mortgagee made in a public deed; (iii) owner and mortgagee being the same person; and, (iv) 20 years from the day of registration, although a longer period was agreed. In addition, the mortgage is extinguished when the property is sold in judicial auction, conciliation of mortgagees, provided that after approving the auction, the winning bidder judicially assigns the selling price. The privilege will survive this. When the debt payment is made by a third party subrogated to the rights of the creditor, the mortgage subsist in favor of the former. The debtor who has verified the payment, or has been sentenced to do it, is subrogated to the rights of the creditor against the owner of the mortgaged property that assumed the obligation to pay the debt as a direct debtor, and as such, has taken over the charge (this rule applies to the case of confusion).

    The collateral execution occurs when the executive title is secured by a pledge. The provisions governing foreclosure and enforcement of registered pledge collateral shall apply for implementation.

    In case that mortgages and pledges are made in favour of a financial entity, that is duly registered in the respective public registry and pledges without conveyance, they survive with all legal purposes until complete cancellation of the obligation guaranteed by a period of 20 years from the day of registration, a re-enrolment must be made before the legal deadline; however, the creditor may liberate debtors from security rights on the properties affected by the unpaid balance of the obligation, provided they had amortised over 50 per cent thereof; this special rule of the General Law of Banks regarding financial entities, prevails over specific articles of the Civil Procedure Code and on an article of the Civil Code; Similarly, in mortgage obligations or pledges in favour of financial entities, it may proceed with the judicial sale of the property, together or divided into lots, serving as a base, if the parties had not set price in the writing, the value of debt including interest and costs, without appraisal by experts. In the case of no bidders in the first auction, a new auction is called with 25 per cent or award to the creditor by two-thirds will be held; mortgage and pledge executions promoted by entities of the financial system, in case of death of the debtor, they may not be accumulated to the main trial and can only lead to the succession assets the value of any surplus after paying capital, expenses and costs. Finally, in the executive procedure the financial entities are not required to give security in cases where the laws so provide.

  65. 33.

    Describe any other relevant legal considerations in connection with loans to a borrower in your jurisdiction.

  66. The nationality of the lender has no implication regarding taxes applicable to cross-border lending operations, however, the address has, regarding the way of settlement of taxes.

Interested in contributing to Latin Lawyer Reference?


Questions

  1. 1.

    What are the most common forms of bank financing in your jurisdiction?


  2. 2.

    Are any governmental or central bank registrations or approvals required for a foreign lender (being a lender not incorporated in your jurisdiction or operating through a branch or office outside of your jurisdiction) to lend to a borrower in your jurisdiction?


  3. 3.

    Are there any foreign exchange provisions restricting, or governmental or central bank registrations or approvals required for, a borrower in your jurisdiction to contract debt obligations in a foreign currency or to remit funds abroad?


  4. 4.

    Are there any governmental or central bank registrations or approvals required for the prepayment of loans abroad?


  5. 5.

    Are any mandatory governmental or central bank deposits required to be made from loan proceeds?


  6. 6.

    Describe any governmental measures that may be taken to declare a moratorium on the loan obligations of private companies.


  7. 7.

    Describe any environmental liabilities and any other areas of lender liability that may arise as a result of the activities of a borrower or the realisation of a security interest.


  8. 8.

    Are interest payments or loan fees subject to a withholding tax?


  9. 9.

    What other taxes or mandatory fees, for example, transaction, registration or documentary, apply to loan transactions?


  10. 10.

    Are there different taxes applicable to loans repayable to lenders in your jurisdiction and loans repayable to lenders in a foreign jurisdiction?


  11. 11.

    Is your country party to any double taxation treaties that reduce taxes payable by borrowers in respect of loan payments abroad?


  12. 12.

    Do any financing structures receive favourable tax treatment, such as prepayments of exports?


  13. 13.

    Describe any limitations on interest rates or the ability of lenders to charge default interest under loan agreements.


  14. 14.

    Describe any restrictions that may apply to the choice of law, for example, whether a choice of New York or English law will be recognised and enforced in your jurisdiction.


  15. 15.

    Describe generally the requirements for the enforceability of a foreign judgment in your jurisdiction in respect of an outstanding loan.


  16. 16.

    Upon the closing of a loan, what procedural requirements (execution formalities, notarisation, registration, recordation or filing) should be observed to ensure that a loan agreement or related judgment is enforceable in your jurisdiction?


  17. 17.

    Does a loan agreement in English need to be translated or locally registered to be enforceable in your jurisdiction?


  18. 18.

    Must a foreign bank be registered in your jurisdiction to enforce any rights under the applicable loan documentation?


  19. 19.

    Are foreign lenders treated any differently from local lenders in enforcing loan documentation in the courts of your jurisdiction?


  20. 20.

    Is consideration required for the enforceability of a contractual obligation or guarantee?


  21. 21.

    To enforce a loan in your jurisdiction, need the loan be evidenced by a promissory note or other form of título executivo?


  22. 22.

    To enforce a guarantee (aval) in your jurisdiction, is it necessary that the guarantee be evidenced by a guarantee agreement or other form of título executivo?


  23. 23.

    Are there any restrictions on loans to multiple borrowers or on a guarantee in respect of a loan to an affiliated entity?


  24. 24.

    Can a party grant a secured or unsecured guarantee in respect of a loan to an unaffiliated third party?


  25. 25.

    Is there a distinction between the granting of a security interest and the perfection of a security interest?


  26. 26.

    What is the most common form of granting and perfecting a security interest in movable assets?


  27. 27.

    What is the most common form of granting and perfecting a security interest in real estate?


  28. 28.

    What is the most common form of granting and perfecting a security interest in receivables and accounts?


  29. 29.

    Does your jurisdiction recognise the transfer of assets to a trust for the benefit of a lender as a means of granting a security interest in such assets?


  30. 30.

    Does your jurisdiction recognise the fiduciary transfer of assets (such as an alienação fiduciária) to a lender as a means of granting a security interest in such assets?


  31. 31.

    Are there any types of asset that cannot be pledged as collateral under the laws of your jurisdiction?


  32. 32.

    Describe any restrictions on enforcement of security. For example, any statutory regime that may stay the enforcement of the security or provide that enforcement is limited to public sale through the courts.


  33. 33.

    Describe any other relevant legal considerations in connection with loans to a borrower in your jurisdiction.


Other chapters in Bank Financing