The Brazilian financial system is highly sophisticated and subject to the regulation and supervision of the Central Bank of Brazil. Brazil has faced boom-and-bust economic cycles throughout its history. In the early 2000s, Brazil benefited from rising commodity prices and political stability.

In recent years, however, the fall in commodity prices, the high level of government spending and corruption scandals led Brazil into a deep recession, and Brazilian GDP decreased 3.8 per cent in 2015 and 3.6 per cent in 2016.2

This bearish trend was reverted in 2017 and 2018, when the Brazilian GDP increased by 1 per cent per year; indices of consumer confidence – in both consumption and services – continued to improve, and the domestic interest rate decreased significantly. There was also an improvement in credit indicators, due to the combination of a decrease in portfolio risk and a greater credit supply, and this positive scenario led to an increase in lending activities; the volume of credit in the financial markets increased from 3.1 trillion reais in December 2017 to 3.257 trillion reais in December 2018,3 an increase of approximately 5 per cent. This result derives mainly from consumer credit, which rose approximately 8.6 per cent in 2018.4


Despite the liberalisation of banking practice in the past decades, local financial institutions still dominate the Brazilian credit market; according to the Central Bank, four local banks (Itaú Unibanco, Bradesco, Banco do Brasil and Caixa Econômica Federal) are responsible for almost 80 per cent of all credit in Brazil. Foreign-owned banks still play an important role in the financial markets, but mainly in corporate lending activities.

The Central Bank is taking several actions to foster competition among financial institutions and reduce fund costs. The major legal and regulatory development of 2018 was the regulation of credit fintechs. According to the Central Bank, this new regulatory framework seeks to foster innovation as well as to improve competitiveness and increase competition among financial institutions in the credit market.

The regulation of credit fintechs created two new types of financial institutions: the direct credit company (SCD) and the peer-to-peer lending company (SEP), which have smaller capital, regulatory and licensing requirements than traditional financial institutions.

As financial institutions, SCDs and SEPs (1) are free to charge any compensatory interest rates, without caps or limitations, being excluded from the restrictions imposed by the Brazilian usury law, (2) will have direct access to the credit risk data system of the Central Bank for credit purposes analysis and (3) may opt to have direct access to the Brazilian payment system, which allows the performance of domestic wire transfers and issuance of payment slips without the intervention of a traditional financial institution.


The business model of an SCD encompasses lending, financing and acquiring receivables exclusively through an electronic platform with its own financial funds. An SCD is prohibited from raising funds from the public or collecting deposits to be used in its financial activities.

The regulatory framework for SCDs is simpler than the regulatory framework applicable to banks and other financial institutions, considering that such institutions have a limited and less complex scope of activity (focusing exclusively on the extension of loans and financing, as well as on the acquisition of receivables, without leverage).

The regulation of credit fintechs allows SCDs to sell the loans they originate to (1) other financial institutions, (2) receivable investment funds invested in exclusively by qualified investors and (3) securitisation companies that distribute securitised assets solely to qualified investors. As a result, credit securitisation structures are expressly available to SCDs as a funding alternative.

ii SEP

An SEP is a financial institution that, exclusively through an electronic platform, brings creditors and borrowers together in a peer-to-peer lending arrangement. By so doing, SEPs will intermediate the borrower–creditor relations, thus engaging in a typical financial intermediation activity.

The regulation of credit fintechs has set a more robust regulatory framework for SEPs by regulating how the financial intermediation shall take place and determining specific mechanisms for managing the credit risks in these transactions, among other issues. The regulation makes it clear that, unlike SCDs, SEPs cannot carry out lending or financing transactions using their own funds (thus, underscoring the peer-to-peer nature of such activity). Further, as a rule, neither the SEPs nor their controlling persons and affiliates can directly or indirectly hold the credit risk inherent to loan transactions carried out by the SEPs.

Only individuals or legal entities resident and domiciled in Brazil may act as borrowers in transactions intermediated by SEPs. However, creditors may comprise the following:

  1. individuals;
  2. financial institutions;
  3. receivables investment funds invested in exclusively by qualified investors;
  4. securitisation companies that distribute securitised assets solely to qualified investors; and
  5. non-financial legal entities.

Nevertheless, creditors other than qualified investors can lend up to 15,000 reais to one single borrower at the same SEP.


The tax treatment of loan transactions granted by local banks is more complex and substantially different to cross-border loans.

Under Brazilian tax legislation, foreign loan transactions may be subject to assessment for two main taxes: financial transaction tax (IOF) and withholding income tax (WHT). The former tax assesses foreign exchange transactions carried out for the inflow or outflow of funds to and from Brazil (with rates varying in accordance with the type of transaction that has caused the entry or exit of funds), and the latter is generally levied upon interest payable by the Brazilian party to the foreign lender.

As a rule, the IOF taxpayer in cross-border loan transactions is the Brazilian borrower. Nonetheless, the Brazilian financial institution bears the burden of collecting the IOF owed by the Brazilian borrower and paying this tax to the federal government.

For foreign loans granted to Brazilian companies, current IOF regulations determine that a 6 per cent flat rate shall apply on the inflow of funds into the country if the minimum average maturity term of the loan is equal to or shorter than 180 days. Otherwise, if a foreign loan is granted for a longer term, the 6 per cent rate upon the entry of the resources into the county is reduced to zero. If the loan enters into the country expecting to comply with the minimum average term for benefiting from the reduced IOF rate, but if for any reason the Brazilian borrower fails to meet the minimum requirement, the IOF will be considered as being due at a 6 per cent rate as from the date of the inflow of the corresponding funds, with a 20 per cent late payment penalty and interest on arrears based on the special clearance and escrow system rate also being applied.

IOF may also be levied in the event of the renegotiation of loan transactions. Brazilian foreign exchange regulation sets forth that certain types of amendments of the terms and conditions of foreign loans (such as an assignment of credit) require the execution of 'simultaneous foreign exchange transactions' (i.e., foreign exchange transactions that are contractually entered into as though the original loan was repaid and a new loan would be executed between the parties, even though no actual flow of funds would take place). In view of that, it is necessary to assess whether a renegotiation requires a simultaneous foreign exchange transaction and whether IOF is applicable to each part of the transaction. Within certain limits, the IOF can be changed by the Brazilian government at any time, with no need of prior approval from Congress.

In addition to IOF, the amounts paid as interest abroad are subject to WHT at a 15 per cent rate. There are two main exceptions to this rule:

  1. if the beneficiary of the interest is on a jurisdiction blacklisted by the Brazilian tax regulation as a tax haven, the applicable rate will be 25 per cent; and
  2. if the beneficiary of the interest is domiciled in Japan or is a branch of a Japanese bank in another jurisdiction, the applicable rate will be 12.5 per cent.

The Brazilian borrower will be held responsible for withholding and paying WHT upon the interest paid, credited, delivered, used or remitted to the lender. This tax should be discounted from the gross amounts to be paid abroad, so that if the borrower wishes to receive the actual amounts charged without reductions for taxes collected in Brazil, the tax base on the interest payments should be grossed up accordingly.

In principle, interest paid by a Brazilian borrower to a foreign lender on foreign loans is deemed to be tax-deductible for local corporate income tax purposes. Certain limitations apply to transactions entered into between related parties, such as Brazilian transfer pricing and thin capitalisation rules.


i Security

This section provides an overview of the common methods of taking securities over different types of assets in Brazil.

The following methods of credit support are available:

  1. in rem guarantees;
  2. personal guarantees;
  3. contract bonds;
  4. standby letters of credit or demand guarantees; and
  5. avals on promissory notes.

A fiduciary sale or assignment, mortgages and pledges are in rem guarantees, which create a privilege over the collateral in favour of the creditor, with this being the asset granted in collateral bound to the secured obligation. In such cases, creditors do not have recourse against the guarantor that provided an in rem guarantee to collect outstanding amounts after the foreclosure of the collateral, unless agreed otherwise.

The most common types of in rem guarantees are the fiduciary sale, mortgage and pledge.

A fiduciary sale is a type of security interest pursuant to which the guarantor assigns to the creditor the title of certain assets. Therefore, the guarantor continues to have possession of the assets, still being liable for the duties of an escrow agent or bailee, or a trust in relation to them. Title of the asset granted in a fiduciary sale is only given back to the guarantor when the latter has fulfilled all of its obligations under the guaranteed credit.

The fiduciary sale was introduced in Brazil in 1965, but the applicable legal framework changed in the early 2000s with the enactment of a new Civil Code and other laws. These modifications fostered the use of fiduciary sale, which is currently one of the main credit support transactions, especially because of its bankruptcy remoteness feature. Since a fiduciary sale entails the transfer of the ownership of the underlying assets to the creditors, the creditors are not exposed to the risks inherent to a guarantor's bankruptcy.5 This is the main difference between a fiduciary sale and the other guarantees, which do not entail the transfer of ownership of collateral and, therefore, the creditor may be subject to bankruptcy apportionment of the guarantor.

There are two regimes applicable to fiduciary sales. On one hand, Law No. 4,728/1965 and Law No. 10,931/2004 regulate fiduciary sales within the scope of the financial and capital markets, expressly allowing the fiduciary sale of fungible6 and non-fungible property and credit rights. On the other hand, the Civil Code applies to fiduciary sales that are not within the scope of the above-mentioned markets. Although the Civil Code makes no provision regarding the characteristics of the asset given as collateral in a fiduciary sale, there are precedents of the Brazilian Superior Court of Justice (STJ) narrowing the fiduciary sale under the Civil Code to non-fungible assets.7 Since foreign lenders do not qualify as financial institutions under Brazilian law, it is disputable whether a transaction with such entities would qualify as a transaction within the scope of the financial or capital markets and, therefore, it is also disputable whether these entities could benefit from a fiduciary sale of fungible assets or credit rights.

Pledges and mortgages are also commonly used as collateral in lending transactions, with pledges being applicable to movable assets and rights (e.g., machinery, inventory, vehicles, credits and shares) and mortgages to immovable assets (e.g., real estate). Different from the fiduciary sale, in pledges and mortgages the guarantor keeps the title of the collateral and, therefore, creditors may be affected by the bankruptcy of the guarantor. In addition to that, pledges and mortgages are subject to multiple liens (first, second, third priority or more); therefore, the creditor may not necessarily receive a first priority security interest with respect to a particular asset if the asset has already been encumbered in favour of another creditor. Fiduciary sale is not subject to multiple liens, since it involves a transfer of ownership to the creditor.

Brazilian law does not provide any specific restriction on taking security over all or substantially all of the assets of a debtor or guarantor. Nonetheless, it is impossible to document such a security interest in a single document, since in rem guarantees need to be registered before different authorities depending on the type and location of the asset granted as collateral (registration with the competent authorities is a condition for perfection of such security interests).

Brazilian law forbids the creditor to keep or obtain title of collateral in the event of default (prohibition of commissoria lex), unless the guarantor grants express consent after the maturity date of the debt or its acceleration. In view of that, if the guarantor does not grant this consent, the collateral should be sold at a public auction, the proceeds of which will be applied to the payment of the principal and interest of the debt, judicial expenses and legal fees, provided that, in the case of attachment of quotas or shares8 requested by a creditor who is not a shareholder or partner (as the case may be) of the company, the company shall be summoned for the purposes of securing the right of first refusal of its shareholders or partners.9 In any case, the balance amount (surplus), if any, shall be returned to the guarantor.

ii Guarantees and other forms of credit support

Besides in rem guarantees, lending transactions may be secured by personal guarantees. Under Brazilian law, a personal guarantee is likely to be perceived as a surety and may be defined as a contract of a person or corporate entity by which one guarantees, in whole or in part, the performance of an obligation of someone else.

In summary, under Brazilian law:

  1. personal guarantees may encompass the principal amount and ancillary charges (monetary correction, interest and other fees);
  2. personal guarantees are granted by a guarantor and do not require the debtor's prior consent;
  3. if the personal guarantee is granted by a married individual, consent of the spouse is required; and
  4. the guarantor has a series of benefits granted by law, which are generally waived by the parties.

Contract bonds are a type of insurance wherein the insurance company guarantees the performance of the insurance taker's (the debtor's) underlying obligations under the lending agreement by providing the funds for the insured party to contract another company to perform the insured obligations. Local companies or individuals domiciled in Brazil shall take out insurance coverage before local insurers for risks run in Brazil. There are a few exceptions to this rule; for example, local companies or individuals are allowed to take out insurance coverage abroad if the insurance in question is not offered by local insurance companies.

Standby letters of credit and demand guarantees are also used to guarantee loan transactions. Brazilian banks and affiliates of international banks in Brazil in general do not issue standby letters of credit or demand guarantees for local transactions. These guarantees are usually issued in connection with cross-border transactions or by financial institutions headquartered abroad.

Promissory notes are documents that represent amounts owed. Although promissory notes are not considered additional guarantees for the payment of debts, they are used to represent amounts owed under the lending transaction, and the debt stated in the promissory note may be guaranteed by a third party by means of an aval guarantee. Any legal entity or individual may issue a promissory note or grant an aval guarantee (additional requirements may be applicable if the aval guarantee is granted by individuals).

iii Priorities and subordination

In the event of bankruptcy liquidation, certain credits are excluded from bankruptcy apportionment, such as assets granted in a fiduciary sale, post-petition claims and certain labour claims. After those credits are paid, the balance of the funds received from the liquidation of the assets must be used to pay the pre-petition claims, in accordance with the following order:

  1. labour-related claims, limited to 150 minimum wages per creditor, and occupational accident claims;
  2. secured claims, up to value of the collateral;
  3. tax claims, except for tax fines;
  4. special priority claims;
  5. general priority claims;
  6. unsecured claims;
  7. contractual penalties and monetary penalties for breach of criminal or administrative law, including tax law; and
  8. subordinated claims.

Exception is made for a fiduciary sale, which is bankruptcy-remote and is, therefore, not subject to this list of priorities.


i Legal reservations

Lending transactions and collateral may be limited by the validity of the underlying obligation, since under Brazilian law guarantees are considered an accessory duty to the underlying obligation, and the nullity of the principal obligation causes the nullity of all the accessories obligations. These limitations are not applicable to independent guarantees, such as standby letters of credit, demand guarantees and aval guarantees on promissory notes.

In addition, bankruptcy, governmental intervention, extrajudicial liquidation, insolvency, fraudulent transfer, judicial and out-of-court reorganisation procedures may impact lending transactions and guarantees (an exception is made for the independent guarantees listed above and for contract bonds).

The Brazilian Bankruptcy Law governs the insolvency proceedings involving companies and corporations, and provides three procedures to address insolvency situations, as follows:

  1. judicial reorganisation;
  2. out-of-court reorganisation or prepackaged reorganisation; and
  3. bankruptcy liquidation.

Judicial and prepackaged reorganisations are similar, respectively, to Chapter 11 and prepackaged arrangements under the US Bankruptcy Code. Creditors holding pre-bankruptcy claims are subject to reorganisation and generally precluded to enforce their credit rights against the debtor. Initially, claims are also not enforceable during the stay period in a judicial reorganisation proceeding. Further, if the plan of reorganisation or prepackage plan is confirmed, creditors will be bound by the plans (payment terms and corresponding rights will be governed by the relevant instrument). In a bankruptcy scenario, creditors are subject to bankruptcy apportionment of the guarantor.

ii Opinions practice

Brazilian law does not require lenders or borrowers to obtain legal opinions to enter into loan transactions, but such documents may be used to ensure that directors and officers have complied with their fiduciary duties, and to provide comfort to borrowers entering into the transaction.

Legal opinions are mainly required in loan transactions involving large amounts. Creditors generally request debtor counsel to provide legal opinions on the corporate powers of the debtor entering the transaction; observations on financial covenants with other creditors; and opinions on legality and enforceability of the loan, and the relevant collateral or guarantees. Legal opinions are especially relevant if the loan is granted to a distressed debtor, because according to the Brazilian Bankruptcy Law and in the event of bankruptcy of the debtor, certain acts are ineffective with regard to the bankruptcy estate, whether the lender was aware of the counterparty's economic and financial distress, and whether the debtor intended to defraud creditors.10

iii Governing law and choice of jurisdiction

Governing law

In rem guarantees of assets located in Brazil must be governed by Brazilian law. Other agreements (including credit agreements secured by in rem guarantees of assets located in Brazil) may be governed by foreign law in a contract if there is a connection between the foreign law chosen and the places where the agreement could be enforced or the place where the parties to the agreements are based. Nonetheless, discussions on the applicable law are not broadly, technically and deeply assessed before the Brazilian courts. In the event of litigation in Brazil involving an agreement governed by foreign law, Brazilian courts tend to disregard foreign law and apply Brazilian laws to the case. There is a different scenario if disputes are solved by arbitration, because arbitration law expressly allows parties to freely choose the governing law.

Foreign awards (judicial or arbitral) can be enforced in Brazil without re-examination of the merits of the case, provided the decision is as follows:

  1. final and unappealable; and
  2. previously confirmed by the STJ.

This confirmation generally takes from six to 18 months to be granted, and is available only if the decision fulfils certain formalities and if it does not violate Brazilian national sovereignty, public policy, or good morals and ethics. The STJ does not analyse the merits of the case to confirm a foreign award.

Choice of jurisdiction

Under Brazilian law, courts shall have jurisdiction (in addition to any other valid choice of jurisdiction that may have been made by virtue of contract) whenever:

  1. the defendant is domiciled in Brazil;
  2. the obligation must be performed in Brazil; or
  3. the fact under dispute has taken place in Brazil.

Besides the above, courts have exclusive jurisdiction in actions relating to real estate assets situated in Brazil. Parties may agree to submit disputes related to disposable rights to arbitration, but arbitration panels do not have the power to enforce a decision. The enforcement should be carried out by Brazilian courts.


Loan transactions may be structured as bilateral or syndicated loans. In both transactions, the agreement with the borrower is generally entered into only by one lender.

In syndicated loans, the lenders that provided the funding may freely trade their participation, providing notice to the syndicate leader. These transactions impact neither the borrower nor the guarantors. Nevertheless, the substitution of the syndicate leader does impact these transactions.

The sale of the transaction by the single creditor in a bilateral loan or by the syndicate leader in a syndicated loan may be made by assignment of the loan agreement, endorsement of the loan agreement or novation of the loan, depending on the terms and conditions of the original loan. In an assignment of a loan, the lender should notify the borrower of the assignment. This should not affect in rem or aval guarantees, but may cause the release of personal guarantees, contract bonds and standby letters of credit depending on the wording of the documents. In an endorsement, all the guarantees set forth in the endorsed document should survive the transaction. However, novation causes the release of all guarantees.


i Enforcement

In Brazil, loan agreements can be judicially enforced if the debtor fails to comply with its loan obligations. The enforcement may be made through three different types of lawsuits:

  1. a summary or an enforcement procedure, where the judge may immediately order payment of the debt and the foreclosure of collateral. This lawsuit is available if:
    • ascertainable through simple calculation, certain and undisputable; and
    • the debt is represented by a document that qualifies as an extrajudicial enforcement instrument under Brazilian civil procedure rules;
  2. an ordinary collection action, whereby an order of payment of the debt and definitive foreclosure of assets can only be carried out after a final, unappealable decision is rendered (which would take from five to 10 years to be issued, depending on the complexity of the underlying credit transaction); or
  3. a monition action, which is similar to a summary procedure if the debtor does not file a defence, and which is similar to an ordinary collection action if the debtor files defence.

In view of these differences, loan transactions are usually structured to allow the lender to file a summary or an enforcement procedure to collect the debt or foreclose collateral, avoiding time-consuming ordinary collection and monition actions.

ii Agreements using a foreign currency

As a rule, agreements and obligations enforceable in Brazil must state the amounts due in Brazilian currency. Parties may state amounts in foreign currency in certain cases, such as obligations involving foreign parties. Nonetheless, any judgment for payment of a certain debt in foreign currency obtained in Brazilian courts should be payable in Brazilian currency in an equivalent amount on the date of actual payment. In the event of bankruptcy, all credits denominated in foreign currency shall be converted into local currency at the exchange rate prevailing in Brazil on the date of declaration of bankruptcy. In view of this, creditors must be aware that they hold an exchange rate risk in the event of bankruptcy.

iii Registration of foreign loans before Brazilian authorities

Cross-border loan transactions with a tenor greater than 360 days must be registered before the Central Bank registry of financial transactions (ROF). Registration allows the inflow and outflow of funds relating to the registered transactions, and shall be obtained in the name of the parties to the transaction (i.e., the lender and borrower). If the guaranteed transaction is registered before the ROF, the collateral or guarantee should also be registered to allow the guarantor to remit the funds abroad.

In addition to the ROF required by the Central Bank, the Federal Revenue Office requires that foreign entities carrying out transactions be subject to enrolment with the National Registry of Legal Entities. To obtain this enrolment, the foreign entity should also be registered with the Companies Register of the Central Bank through the Central Bank data system.

iv Limitations to lending and secured finance

Brazilian financial institutions are not allowed to grant loans, advances or guarantees; enter into derivative transactions; underwrite; or hold in their investment portfolio securities of any clients or group of affiliated clients that, in aggregate, give rise to exposure to a client or group of affiliated clients that exceeds 25 per cent of their regulatory capital.11

Government and government-controlled corporations are subject to borrowing limits and cannot grant guarantees without proper authorisation.

However, there is no limitation on borrowing by a non-regulated company or on it guaranteeing the borrowings of its subsidiaries or affiliates.


The legal, regulatory and market outlook is significantly changing in 2019. During the past two decades, the Brazilian Social Democracy Party and the Worker's Party alternated in power in the federal government. These parties, however, were affected by Operation Car Wash corruption investigations, the impeachment of Dilma Rousseff in 2016, the imprisonment of Luiz Inácio Lula da Silva (President of Brazil from 2003 to 2010), the unpopular government of Michel Temer (President of Brazil from 2016 to 2018, recently charged for corruption and money laundering) and a series of corruption accusations involving many politicians. In the last quarter of 2018, Brazilians elected the candidate of the once tiny Social Liberal Party, Mr Jair Bolsonaro, as President. In addition, the Social Liberal Party became a congressional powerhouse, being the second party in number of seats in the Lower House of Congress.

In 2019, Mr Jair Bolsonaro prepared a draft bill to overhaul the Brazilian social security system, raising the minimum retirement age and cutting several privileges, which could save more than 1 trillion reais in the next 10 years. If approved by Congress, this pension reform could provide stability and boost Brazilian economy; however, failure to reform the Brazilian social security system and cut government spending would likely drive the Brazilian economy downwards to another recession.


1 Bruno Balduccini is a partner and Roberto Panucci Filho is an associate at Pinheiro Neto Advogados.

2 Central Bank of Brazil.

3 ibid.

4 ibid.

5 The Brazilian Bankruptcy Law: assets granted by means of fiduciary arrangements can have their foreclosure suspended for 180 days should the judge consider the assets as being 'essential' for the company's activities. An asset may be considered essential if the guarantor cannot perform its activities without it or when the performance of its activities is jeopardised in the absence of the asset. Brazilian courts tend not to hold financial assets and investments as essential asset, but this analysis must always be done on a case-by-case basis, since it depends on the business of the guarantor.

6 Regarded as commercially interchangeable with other property of the same kind.

7 Special Appeal No. 1.101.375, decided on 4 June 2013; Special Appeal No. 346.240, decided on 30 August 2002; and Special Appeal No. 97.952, decided on 6 April 2000.

8 Brazilian law presently in force does not expressly contemplate the creation of a pledge of quotas of a limited liability company. However, such a pledge of quotas has been accepted by Brazilian courts on the basis of provisions of law relating to the pledging of rights, contract rights and Law No. 6,404/76, as amended.

9 In certain cases, the transfer of shares or quotas may be subject to antitrust clearance and if the new, different, owner is a foreign entity, certain formalities before the Central Bank must be observed by the foreign entity.

10 The following acts are ineffective with regard to the bankruptcy estate: (1) payment by the counterparty within the bankruptcy legal term (up to 90 days as of the petition of bankruptcy) of debts not yet fallen due, by any means of extinguishment of the credit right, including by discount of the relevant instrument; (2) payment made within the bankruptcy legal term of debts fallen due and enforceable, in any way other than as provided for in the relevant contract; (3) creation of a security interest, including a lien, within the bankruptcy legal term, in the case of a debt contracted previously; if the mortgaged assets are given in a subsequent mortgage, the bankruptcy estate shall receive the portion otherwise applying to the creditor of the revoked mortgage; (4) acts performed free of charge during the two years preceding the decree of bankruptcy; (5) waiver of inheritance or legacy during the two years preceding the decree of bankruptcy; (6) sale or transfer of an establishment without the express consent of or payment to all creditors existing at the time, if the debtor has not kept sufficient assets to settle his or her liabilities, unless within 30 days there is no opposition by creditors after being duly notified by a court clerk or by an officer of the Registry of Deeds and Documents; and (7) registration of in rem guarantees and of property transfer, for a consideration or free of charge, or an annotation of real property made after the decree of bankruptcy, unless there is a previous annotation thereof.

11 For the purpose of this limit, the following public sector entities are to be considered as separate customers: (1) the government; (2) an entity controlled directly or indirectly by the government that is not financially dependent on another entity controlled directly or indirectly by the government; (3) entities controlled directly or indirectly by the government that are financially dependent among themselves; (4) a state or the federal district, jointly with all entities directly or indirectly controlled by it; and (5) a municipal district, jointly with all entities directly or indirectly controlled by it.