Fundo Da Marinha Mercante - FMM

. Fundo da Marinha Mercante – FMM (Merchant Marine Fund)

The FMM is a public fund established in 1958 to develop the Brazilian Merchant Marine and Shipbuilding Industry in Brazil.

2. FMM Legislation

 Law nº. 10.893, of 07/14/2004 – Provides for the freight Surcharge for the Renewal of the Merchant Marine – AFRMM and the Merchant Marine Fund.

 Decree nº. 5.140 and Decree nº. 5.543 of 05/04/2004 and 09/21/2005 – Regulate articles of the Law nº. 10.893.

 Ordinance MT nº. 253, of 12/16/2009 – Procedures and rules for granting priority by the Board of Directors of the Merchant Marine Fund (CDFMM) and the release of funds from the Merchant Marine Fund (FMM).

 Bacen Resolution nº. 3.828, and Bacen Resolution nº. 4239, of 12/18/2009 and 06/28/2013 – Provides for the application of the FMM resources.

3. The AFRMM

The Freight Surcharge for Renovation of the Merchant Marine fleet (AFRMM), FMM’s primary source of revenue, is levied on all water transport earned income at the following rates:

 25% on overseas import freights

 10% on cabotage freights at discharge port

 40% on river and lake transport freights at port of discharge (only on liquid bulk cargo in the north-northeast regions)

4. Basics Terms of Funding

Supported percentage

Up to 90%

Amortization Period Up to 20 years

Grace period Up to 4 years

Interest 2% to 7% p.a.

Other charges US$ or TJLP

Warranties At the discretion of the Financial Agent (130% of the loan)

5. Distribution of the AFRMM

The resources are distributed over three accounts:

 FMM account (government)

 Escrow account (companies)

 Special account (companies)

Distribution System - Shipping Escrow Acc. % Special Acc. % FMM Acc. %

Overseas (foreign Companies) 0 0 100

Overseas Brazilian Companies (REB) 83 9 8

Cabotage 100 0 0

Lake and river 100 0 0

Chartered vessels replacing vessels under construction have the same benefits of Brazilian vessels (limited to 36 months).

New legislation – the government deposits + 75% on the escrow account for vessels delivered as of 26/03/2004 (valid for 8 years).

Special account prorated among Brazilian companies operating cabotage and river/lake “feeder service” systems.