Trade; Receivables | Unveiling Trade of Receivables in Brazil Using ‘Duplicata Escritural’: Legal Impacts for Suppliers, Buyers and Lenders of a US$1.8 Trillion Market

Brazilian financial institutions will only be able to acquire, discount, or receive as collateral commercial receivables from Brazilian companies through “duplicata escritural” – an electronic form of draft, starting in 2027.

The current schedule set by Brazilian Central Bank (BCB) foresees the transition starting with large issuing companies in April 2027, followed by medium-sized companies (October 2027) and reaching small companies (April 2028).

This mandatory requirement imposed on Brazilian financial institutions (by CMN Resolution 4.815/2020) will dramatically impact the legal form of how part of the annual volume of BRL10 trillion (~US$1.8 trillion) in duplicatas will be negotiated with lender – financial institutions, receivables investment funds (FIDCs), fintechs, and others.

The duplicata escritural (Federal Law 13.775/2018) will introduce in Brazil not only a new form of issuing an enforceable note (from physical to digital), but a complete transformation of how it will be drawn, recorded, accepted, circulated, registered, and paid.

The entire process will take place through centralized electronic systems that will carry out the bookkepping (escrituração), registration, and deposit of duplicata escritural, managed by registrars, registration entities, and depositaries authorized by the BCB.

By guaranteeing the uniqueness of the duplicata escritural (combating fraud), interoperability of electronic systems, and transparency of information, it will be possible to increase the supply of credit linked to commercial receivables and reduce cost of funds.

The implementation of duplicata escritural and access to electronic systems will require that suppliers (drawers of duplicata), buyer (drawees) and lenders review and adapt their legal instruments, as described below:

1. Legal Impacts for Suppliers – Drawers of Duplicata Escritural: Suppliers/Drawers must (i) enter into a contract with one of the bookkeeping entities (escrituradoras) for the drawing of duplicata escritural through the electronic system, presentation to the drawees (aceite), collection of acceptance, control of ownership and payments, and (ii) review their contracts with lenders for the sale, discounting, or guaranteed funding based on the duplicata escritural.

2. Legal Impacts for Buyers – Drawees of Duplicata Escritural: Buyers/Drawees must, among other things, ensure that their ERP systems integrate with the electronic system to enable communication regarding duplicatas issued against them, acceptance or refusal, making payments through one of the settlement methods (direct or in two stages) provided for in the BCB regulation, and filing disputes (if any).

For those that have what is called a “buyer risk” programs (programas risco sacado) entered into with lenders, they should review these instruments to address two key points: (i) how payments of duplicata escritural will be implemented, and (ii) what additional services the lender will eventually provide to drawers (e.g., acting as agent to notify about drawn duplicatas, enable acceptance or refusal, and make payments).

3. Legal Impacts on Financial Institutions, FIDCs, and Fintechs: Lenders will need to (i) contract with one of the registering entities to access the electronic system and obtain, when authorized, a view of the schedule of drawn duplicatas escriturais from drawers and related acts, as well as perform acts of change of ownership, creation of promise/lien and contestation, and also be allowed to provide additional services as a registrar/intermediary for drawees, (ii) review their contracts with drawers for acquisition, discounting or guaranteed funding based on the duplicata escritural, and (iii) review their “buyer risk” (risco sacado) program contracts with drawees in the 2 key points already mentioned in item 2 above.

The phased introduction of duplicata escritural in 2027 will dramatically impact the way commercial receivables are negotiated in Brazil. Due to its relevance, this topic should be a priority on the agenda of suppliers, buyers and lenders, considering the sizeable legal adaptations that will be necessary.