Circular Letter CVM/SEP 01/2003: General Guidelines on Procedures

CIRCULAR LETTER/CVM/SEP/N° 01/2003
Rio de Janeiro, March 6, 2003
Subject: General guidelines on procedures

Dear Director of Investor Relations,

This circular letter aims to guide publicly held companies on procedural aspects that must be observed when submitting periodic and occasional information, as well as inquiries, to the CVM.

These points were verified throughout the year 2002 based on the analysis of documents and information provided and the requirements made by the CVM to publicly held companies.

Observance of the recommendations listed below will contribute to minimizing eventual deviations and, consequently, reducing the need to formulate requirements.

a. IAN – ANNUAL INFORMATION b. ITR – QUARTERLY INFORMATION
c. FINANCIAL STATEMENTS – FSs
d. CONVENING NOTICES e. CAPITAL BUDGET f. NOTICES UNDER ARTICLE 11, of CVM Instruction No. 358 – TRADING BY ADMINISTRATORS AND RELATED PARTIES g. DISCLOSURE POLICY FOR RELEVANT ACTS OR FACTS – CVM INSTRUCTION NO. 358/02 h. INQUIRIES FROM PUBLICLY HELD COMPANIES

Sincerely,

Signed Original by
ELIZABETH LOPEZ RIOS MACHADO
Superintendent of Corporate Relations

To the
DIRECTOR OF INVESTOR RELATIONS

a) IAN – ANNUAL INFORMATION

The Annual Information (IAN) form should be understood as a dynamic document regarding the evolution of the company's business and not static, linked to a specific fiscal year, despite the fact that a date for its presentation is set year after year.

In this sense, CVM Instruction No. 351/2001 altered the wording of Article 16 of CVM Instruction No. 202/93, which provides for the registration of a company for trading its securities on a stock exchange, in the organized over-the-counter market, or in the over-the-counter market, and its update, emphasizing the need to update the IAN form whenever any facts occur that modify the information already provided.

Therefore, it is essential that publicly held companies pay attention to the need to resubmit the IAN, spontaneously, whenever corporate changes are verified whose information is required in the form, especially information regarding the composition of the members of the board of directors, regarding any statutory amendments, regarding changes in shareholding composition (shareholders with more than 5% participation in voting capital).

It should be noted that, in the case of registration of public issuance of securities, the information inserted in the issuance prospectus must also be part of the IAN, and the same must be resubmitted spontaneously upon request for the mentioned registration.

We emphasize that the final date for submitting the IAN form is May 31 of the current year, as established in item IV of Article 16 of CVM Instruction No. 202/93, with the wording given by CVM Instruction No. 351/01, being non-extendable, since there is no express authorization in the legislation to authorize, for any reason, a request for extension of the submission deadline for the form.

We alert that a publicly held company that does not keep its registration updated, in accordance with Articles 13, 16, and 17 of CVM Instruction No. 202, is subject to a daily coercive fine, according to the values listed in the table contained in Article 18 of the aforementioned Instruction.

Back

b) ITR – QUARTERLY INFORMATION

The business projections eventually presented in the IAN form must be subject to systematic monitoring in the Quarterly Information (ITR) form. Thus, if the company made projections about its business in the IAN, the realization or non-realization of the planned steps must be included in the ITR, since the form is also a monitoring instrument for investors regarding the progress of the company's projects.

We emphasize that the deadline for submitting the ITR forms is established in item VIII of CVM Instruction No. 202/93, and in Article 1, item V, of CVM Instruction No. 245, being non-extendable, since there is no express authorization in the legislation to authorize, for any reason, requests for extension of the submission deadline for the form.

We alert that a publicly held company that does not keep its registration updated, in accordance with Articles 13, 16, and 17 of CVM Instruction No. 202, is subject to a daily coercive fine, according to the values listed in the table contained in Article 18 of the aforementioned Instruction.

Back

c) FINANCIAL STATEMENTS – FSs

Items "a" and "b" of item I, of Article 16 of CVM Instruction No. 202/93 establish the deadlines for submitting financial statements to the CVM.

These financial statements must be sent through the Periodic and Occasional Information system (IPE) – Economic and Financial Data – Annual Financial Statements subject to publication.

We point out that the financial statements to be sent by IPE must be accompanied by the management report and the independent auditor's opinion, in a single file in doc or pdf format, not to be confused with eventual publications in summarized form of the statement.

Back

d) CONVENING NOTICES

Convening notices for Ordinary and/or Extraordinary General Assemblies must explicitly enumerate, in the agenda order, all matters to be deliberated, not admitting that under the heading "general matters" there are matters that require assembly deliberation, as established in CVM Instruction No. 341/2000.

Additionally, it should be noted that, in the case of the election of the Board of Directors with the adoption of the multiple voting system, in accordance with Article 141 of Law 6404/76, the minimum percentage of participation in voting capital necessary to request the adoption of multiple voting must be included, obligatorily, in the convening notice of the Assemblies intended for the election of the members of the Board of Directors of publicly held companies, as determined by CVM Instruction No. 165/91, amended by CVM Instruction No. 282/98.

Back

e) CAPITAL BUDGET

The capital budget submitted to the General Assembly by the administration bodies with the justification of the eventual retention of profits being proposed, in the manner provided for in Article 196 of Law No. 6404/76, must include indications of all sources of resources and applications of the capital to which that portion of net profit will be destined. It is not, therefore, a mere mathematical demonstration, but rather a reasoned demonstration regarding the uses and sources of resources of the current fiscal year.

Back

f) NOTICES UNDER ARTICLE 11/358 – TRADING BY ADMINISTRATORS AND RELATED PARTIES

We request that individual and consolidated information be sent monthly to the CVM, by the 10 (ten) days after the end of each month, even in the case where no movement or alteration in the positions of administrators and related parties has been verified. In this case, the individual form must be filled out with the information that in that competence there was no trading of securities by administrators of the company, its subsidiary, holding company, or affiliate, repeating the initial balance values in the final balance.

We clarify that the information must be forwarded in only two files, one containing the forms of the individual positions held by administrators and related parties, and the other, the consolidated position of each group (management, board of directors, and technical or advisory bodies), which will be available on the CVM website.

Back

g) DISCLOSURE POLICY FOR RELEVANT ACTS OR FACTS – CVM INSTRUCTION NO. 358/02

The relevant act or fact disclosure policy is a mandatory document established in Article 16 of CVM Instruction No. 358/02 for all publicly held companies.

CVM Instruction No. 358/02 did not make any restriction or exception to the obligation to adopt the document. Therefore, it is sufficient for the company to be regularly registered with the CVM, regardless of corporate organization and the nature of the securities issued, to have the duty to adopt the document.

Thus, publicly held companies that have not yet approved their policy in accordance with the aforementioned instruction must do so, noting that they are subject to the application of a coercive fine, in accordance with Article 23 of the said instruction.

Back

h) INQUIRIES FROM PUBLICLY HELD COMPANIES

Inquiries regarding the application of norms and regulations issued by the CVM and understanding regarding provisions of Laws No. 6.385/76 and 6.404/76 and subsequent amendments, must be submitted in writing, via protocol, by the Director of Investor Relations to the Superintendent of Corporate Relations, with the identification of the publicly held company. If the inquiry is made by legal representatives of the companies, it must be accompanied by their respective powers of representation.

The formulation of the inquiry must be clear regarding its object, avoiding generic forms and theoretical inquiries, orienting towards the presentation of all elements and arguments deemed important for the conclusive manifestation of the CVM.

Back

Contact the CVM