Circular Letter CVM/SEP 02/06

CIRCULAR LETTER/CVM/SEP/N°002/2006
Rio de Janeiro, March 14, 2006
SUBJECT: General guidelines on procedures for publicly held companies

Dear Director of Investor Relations,

The Circular Letters issued by the Superintendence of Corporate Relations (SEP) have as their main objective to guide publicly held companies on procedural aspects that must be observed when submitting periodic and occasional information, among other matters.

Through this document, the Superintendence of Corporate Relations intends to foster the disclosure of corporate information in a manner consistent with best corporate governance practices, aiming for transparency and equity in relationships with investors and the market, as well as to minimize potential deviations and, consequently, reduce the need for formulation of demands and application of penalties.

This instrument, through the recommendations contained in the items listed below, consolidates the Circular Letters previously issued by the Superintendence of Corporate Relations, summarizes the provisions of CIRCULAR LETTER/CVM/SGE/Nº01/2003, reinforces the guidance made in CIRCULAR LETTER/CVM/SEP/Nº01/2006, and adds new guidelines.

This Circular Letter does not dispense with the reading of applicable rules; the update of corporate legislation and CVM regulation, especially those occurring after this date, must be observed.

It is also suggested to read CIRCULAR LETTER/CVM/SNC/SEP/Nº01/2006, of 02/22/06, available on the CVM website, containing guidance on the preparation of accounting information by publicly held companies.

PERIODIC FORMS – ITR, DFP and IAN
1.1. QUARTERLY INFORMATION – ITR
1.2. STANDARDIZED FINANCIAL STATEMENTS – DFP
1.3. ANNUAL INFORMATION IAN
1.4. COMMON OBSERVATIONS FOR ITR, DFP AND IAN FORMS
FINANCIAL STATEMENTS
REPORTS OF BANKRUPT AND LIQUIDATING COMPANIES
ORDINARY GENERAL ASSEMBLY – OGA
MAIN OCCASIONAL INFORMATION
5.1. EXTRAORDINARY GENERAL ASSEMBLY – EGA AND SPECIAL ASSEMBLY
5.2. SHAREHOLDERS' AGREEMENT
5.3. GROUP OF COMPANIES CONVENTION
5.4. RELEVANT ACT AND FACT
5.5. BANKRUPTCY AND CONCORDAT SENTENCE
5.6. DOCUMENTS RELATING TO COMPANIES IN JUDICIAL AND EXTRAJUDICIAL RECOVERY
5.7. SECURITIES OF ADMINISTRATORS AND RELATED PERSONS
5.8. RELEVANT SHAREHOLDING PARTICIPATION
5.9. TRADING POLICY
5.10. DISCLOSURE POLICY
5.11. MEETINGS OF THE BOARD OF DIRECTORS AND MANAGEMENT
CONSEQUENCES OF REGISTER UPDATES
6.1. COERCIVE FINES
6.2. PUBLICATION OF THE LIST OF DELINQUENT COMPANIES
6.3. SUSPENSION OF PUBLICLY HELD COMPANY REGISTRATION EX OFFICIO
6.4. CANCELLATION OF PUBLICLY HELD COMPANY REGISTRATION EX OFFICIO
6.5. SANCTIONING ADMINISTRATIVE PROCESS
CANCELLATION OF PUBLICLY HELD COMPANY REGISTRATION
ELIMINATION OF LISTING OF PUBLICLY HELD COMPANIES
ARTICLE 203 OF THE S.A. LAW
ELECTION OF MEMBERS OF THE BOARD OF DIRECTORS
ELECTION OF AUDIT COUNCIL
PROJECTIONS
CAPITAL BUDGET
PUBLICLY HELD COMPANIES REGISTRATION SYSTEM CVMWEB
INQUIRIES OF PUBLICLY HELD COMPANIES
COMMUNICATIONS WITH THE SUPERINTENDENCE OF CORPORATE RELATIONS (SEP)
REQUESTS FOR AUDIENCES WITH PRIVATE INDIVIDUALS
REQUEST FOR PROCESS VIEWING
PERIODIC AND OCCASIONAL INFORMATION SYSTEM IPE
19.1. NEW CATEGORIES IN IPE
19.2. IPE MANUAL
PERIODIC FORMS – ITR, DFP and IAN
Publicly held companies registered with the CVM must pay attention to compliance with legal and regulatory requirements imposed, including the presentation of periodic and occasional information, as provided for in CVM Instruction No. 202/93 and CVM Instruction No. 358/02.

1.1. QUARTERLY INFORMATION – ITR
Article 16, item VIII, of CVM Instruction No. 202/93 provides for the submission of forms regarding quarterly information (ITR).

The deadline for submitting the ITR is up to 45 (forty-five) days after the end of each quarter of the fiscal year, except for the last one, or when the company discloses the information to shareholders or third parties, if this occurs on an earlier date.

It should be clarified that the information from the last quarter will be included in the DFP form (item II of the same article), which includes the entire fiscal year. If there is a statutory amendment that results in a fiscal year longer or shorter than 1 year (sole paragraph of article 175 of Law No. 6.404/76), it may be the case that the company presents more or less than 3 (three) ITR forms.

According to CVM Instruction No. 245/96, only publicly held companies registered for trading their securities on a stock exchange or organized over-the-counter market, and whose consolidated gross annual revenue in the immediately preceding fiscal year was less than R$ 100,000,000.00, are exempt from presenting the Special Review Report of the ITR (article 1, item I, letter "b"). For such Companies, the delivery deadline established in item VIII of article 16 of CVM Instruction No. 202/93 is increased by 15 days, i.e., it becomes 60 (sixty) days (article 1, item V).

In accordance with art. 8 of CVM Instruction No. 202/93, if the Company discloses projections, these must be informed and are subject to systematic monitoring in the Quarterly Information form (ITR). Thus, if the company made projections about its business, the realization or non-realization of the planned stages must appear in the ITR, since the form is also an instrument for investors to monitor the progress of the company's projects.

As provided in the sole paragraph of art. 3 of CVM Instruction No. 414/04, securitizing companies must add to the forms for Quarterly Information – ITR and Standardized Financial Statements – DFP:
I – report on the acquisition, retrocession, payment, and default of credits linked to the issuance of CRI; II – independent financial statements, for the issuance of CRI under the fiduciary regime, provided for in art. 12 of Law No. 9.514, of November 20, 1997; and III – the quarterly update of the risk classification reports of the CRIs issued referred to in § 7 of art. 7 of CVM Instruction No. 414/04, if applicable.

Although there is no legal requirement, it is considered important to present consolidated quarterly information (if applicable) for broad disclosure. In this sense, it is worth highlighting that, due to a requirement of BOVESPA, and in line with good corporate governance practices, companies listed in Level I, II, and Novo Mercado must present consolidated quarterly information.

1.2. STANDARDIZED FINANCIAL STATEMENTS – DFP
Art. 16, item II, of CVM Instruction No. 202/93 provides for the submission of the Standardized Financial Statements form (DFP). The final deadline for submission is up to 3 (three) months after the closing of the fiscal year, or on the same day of its publication in the press or its availability to shareholders, if this occurs on a date prior to the first deadline.

It should be noted that the indication regarding the nature of the Independent Auditor's Opinion presented in the DFP form ("Unqualified", "Qualified", "Disclaimer of Opinion", and "Adverse") must be strictly in accordance with the content of said document.

In accordance with the sole paragraph of art. 3 of CVM Instruction No. 414/04, securitizing companies must add to the forms for Quarterly Information – ITR and Standardized Financial Statements – DFP:
I – report on the acquisition, retrocession, payment, and default of credits linked to the issuance of CRI; II – independent financial statements, for the issuance of CRI under the fiduciary regime, provided for in art. 12 of Law No. 9.514, of November 20, 1997; and, III – the quarterly update of the risk classification reports of the CRIs issued referred to in § 7 of art. 7 of CVM Instruction No. 414/04, if applicable.

It is emphasized that the DFP form is not confused with the Complete Annual Financial Statement (item I of art 16 of CVM Instruction No. 202/93), so the presentation of the DFP form does not eliminate the obligation to present the complete FS, as explained in item 2 below.

1.3. ANNUAL INFORMATION IAN
The Annual Information form (IAN) must be presented by virtue of article 16, item IV, of CVM Instruction No. 202/93.

The final deadline for submitting the IAN form is 5 (five) months after the closing of the fiscal year or within a maximum period of one month, from the holding of the annual ordinary general assembly, if this deadline ends before the first, as established in letters "a" and "b" of item IV of article 16 of CVM Instruction No. 202/93, with the wording given by CVM Instruction No. 351/01.

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

In this sense, and in accordance with § 7 of art. 1 of CVM Instruction No. 351/2001 (which altered the wording of article 16 of CVM Instruction No. 202/93), the IAN must be updated whenever any facts that alter information provided occur, within a period of ten days counted from the date of the occurrence of the fact.

Therefore, it is fundamental that publicly held companies pay attention to the need to resubmit the IAN whenever corporate changes occur whose information is required in the form, especially information on the composition of the members of the board of directors, on any statutory amendments, and on changes in shareholding composition.

Regarding the specific issue of the vacancy of seats of members of the audit council and assumption by the respective alternate, the SEP has received constant inquiries about the appropriate way to update the form, whose formatting does not accept the imbalance between the number of principal and alternate councilors, by virtue of art.161, §1º, of Law No.6.404/76.

In this case, it is recommended that the company resubmit the IAN, making include, in Table 14.02 "Other Information Considered Important for a Better Understanding of the Company", observations regarding the events that altered the situation of the composition of the Audit Council.

When the balance is restored, the company must resubmit the IAN, within 10 (ten) business days from the election of the new alternate, with the appropriate updates, in accordance with art.16, §7º, of CVM Instruction No. 202/93.

Due to its permanent update, it may occur the suppression of previous and relevant information from the IAN form, such as the exercise of mandates of company administration positions in a certain period, for which the CVM recommends that companies always preserve the logical continuity and integrity of the disclosed information.

Cases like this and other eventual difficulties in harmonizing information provision with the pattern offered by the form, can and should be circumvented through the best use of Table 14.02 – "Other Information Considered Important for a Better Understanding of the Company".

It is emphasized that, from April 2004, additional information has been required in the IAN form, as explained in CIRCULAR LETTER/CVM/SEP/Nº 03/2004, with companies required to include in said form, among others, the following information:
Identification of the audit council, as well as who elected each member – controlling shareholders, preferred shareholders, or ordinary minority shareholders (table 02.01.02); Indication of who elected each member of the board of directors – whether controlling or not (item 07 of table 02.01.01); Indication of shares in circulation in the market (items 09 to 14 of table 03.01); Information regarding Corporate Governance practices ("Practice or Explain" – CVM Corporate Governance Guide – table 20.00); Indication of the company's electronic address on the worldwide computer network (item 07 of table 01.01).

Regarding the indication of shares in circulation, attention should be paid to the fact that, according to the legal concept itself contained in art.4º, §2º, of Law No.6.404/76 and, also, stated in the help text of the CVMWIN System, shares that are in the possession of the controlling shareholder, persons linked to him or company administrators, and shares kept in treasury must be excluded from this count, since the latter, based on art.16 of CVM Instruction No. 10/80, have their patrimonial and political rights suspended.

In turn, the "Corporate Governance Information" table is intended for companies to indicate practices adopted in this regard, as well as to include justification for the non-application of recommendations expressed in the CVM Guide.

From March 1, 2006, new changes were implemented in the IAN form, with the availability of the new version 7.0 of CVMWIN (later updated to version 7.1), which was the subject of guidance to companies through CIRCULAR LETTER/CVM/SEP/Nº 001/2006, namely:
Inclusion of field to inform about the existence of preferred shares with class; Inclusion of field to identify, by class, the preferred shares in circulation in the market; Increase in the capacity of the number of items in the table indicating shareholding position, in order to enable the inclusion of the shareholding position of holders of more than 5% of ordinary and preferred shares; Inclusion of field to identify, by class, the quantity of preferred shares held by shareholder; Inclusion of field to inform the total value of judicial shares and field to include observations regarding it; and Inclusion, in the System help, of the definition of "Linked Person", to guide the filling of fields related to shares in circulation in the market, in "Group 3 – Capital Distribution", "Table 1 – Events related to Capital Distribution".

It should be noted that, in the case of registration of public distribution of securities, the information inserted in the issuance prospectus must also be part of the IAN.
It is important to clarify that companies in the pre-operational phase must provide, when submitting said form, updated information on the progress of the project presented to the CVM at the time of the registration request, in accordance with §1º of article 16 of CVM Instruction No. 202/93.

1.4. COMMON OBSERVATIONS FOR ITR, DFP AND IAN FORMS
As allowed by article 14, §1º, of CVM Instruction No. 202/93, the CVM may dispense with the presentation of periodic and occasional information, when the administrators consider that its disclosure will put at risk the legitimate interest of the company, applying, where applicable, the provisions of article 157, §5º, of Law No.6.404/76 and articles 6º and 7º, §1º, of CVM Instruction No. 358/02.

According to §§ 1º, 2º and 3º of article 14, when administrators decide not to reveal the information, they must present their reasons, sending the confidential information to the President of the CVM, in a separate document in a sealed envelope, which must contain the word "Confidential".

In line with a decision of the Collegiate Body of 07/13/2004 (available on the CVM website), bankrupt or liquidating publicly held companies are exempt from providing the information provided for in items II, IV, and VIII of article 16 of Instruction No. 202/93, with them being required, in a special manner, those enumerated in paragraphs 2º and 3º of said article (see item 3).

The final deadlines for submitting periodic forms are non-extendable, as there is no express authorization in the legislation to authorize, for any reason, a request for extension of the deadline for submitting forms.

Coinciding with Saturday, Sunday, or national holiday, the final date for submitting forms will be the next business day, as established by art. 66 of Law No. 9.784, of 01/29/1999.

A publicly held company that does not keep its registration updated, in accordance with articles 13, 16 and 17 of CVM Instruction No. 202/93, is subject to a daily coercive fine, according to the values related in the table contained in article 18 of said Instruction, without prejudice to the responsibility of administrators in accordance with articles 9º, item V, and 11 of Law No. 6.385/76.

In accordance with CIRCULAR LETTER/CVM/SEP/Nº 01/2006, the submission of ITR, DFP and IAN forms, as well as their resubmissions, must be carried out through the CVMWIN program, whose version 7.0 (later updated to version 7.1) has been available for download on the CVM website (www.cvm.gov.br), in the MARKET PARTICIPANTS section, DOCUMENT SUBMISSION item, subitem PROGRAM) and on the Bovespa website (www.bovespa.com.br), in the COMPANIES section, FOR COMPANIES item, subitem FOR LISTED COS, link ITR/DFP/IAN SYSTEM since February 06, 2006. The new version of CVMWIN brings two relevant changes in all forms (ITR, DFP and IAN), namely:
creation of new activity sectors in substitution to the "Admin. Cos. and Part." sector; and creation of "Judicial Recovery" and "Extrajudicial Recovery" publicly held company situations.

The installation of the new version must be done in the same directory where the previous version is located and does not imply loss of any information existing there. It is recommended that, before installing the new version, backups of existing files be made. It is important to read the system help before sending any electronic file.

Doubts can be clarified by the CVM Computer Systems Support.

FINANCIAL STATEMENTS
Financial statements and, if applicable, consolidated statements, prepared in accordance with article 176 of Law No.6.404/76 and with the relevant CVM regulation, must be presented, as established in item I of article 16 of CVM Instruction No. 202/93, independent of the presentation of the DFP form, as already commented in subitem 1.2.

The final deadline for submitting financial statements is up to 3 (three) months after the closing of the fiscal year or on the same day of its publication in the press or its availability to shareholders, if this occurs on a date prior to the first deadline.

The statements must be accompanied by the management report and the independent auditor's opinion, in a single file in doc or pdf format, not being confused with their eventual publications in summarized form, as allowed by art. 3 of CVM Instruction No. 207/94.

The sending of these statements must be carried out through the Periodic and Occasional Information System (IPE), in the category "Economic Financial Data – Complete Annual Financial Statements", filling in the fields related to the dates and newspapers of the publications.

Article 133 of Law No.6.404/76 provides for the need to publish the financial statements of companies up to 5 (five) days before the holding of the Ordinary General Assembly. In this case, it is also necessary to publish a Notice to Shareholders, 1 (one) month before the OGA, informing of the availability of the statements in question, at the company's headquarters, considering this requirement met if disclosed on the company's electronic page, with its filing at the CVM on the same date.

If the publication is made with a 1 (one) month advance from the date of the OGA, the publication of the mentioned notice becomes unnecessary.

Article 289 of Law No.6.404/76 determines that the publications ordered therein must be made in the official organ of the Union, State, or Federal District, depending on the location of the company's headquarters, and in another newspaper of large circulation edited in the locality where the company's headquarters is located.

As provided in CVM Instruction No. 207/94, publicly held companies whose values

securities admitted to trading on stock exchanges must also carry out the publications ordered by law, in a major newspaper, published in the locality where the stock exchange is located, in which, in the 2 (two) last fiscal years, the largest number of transactions with securities issued by the company has been verified, its requirement being waived in the event that that locality coincides with the company's headquarters.

Instruction CVM No. 207/94 also allowed for the publication of financial statements in a summarized form compared to the data from the previous fiscal year, provided that at least the information specified in its Article 3 is disclosed.

The publications will always be made in the same newspaper, chosen in a meeting of the Board of Directors, and any change must be preceded by notice to shareholders in the minutes of the Ordinary General Assembly, in accordance with §3 of Article 289 of Law No. 6,404/76.

The publicly held company that does not keep its registration updated, in accordance with Articles 13, 16, and 17 of CVM Instruction No. 202/93, is subject to a daily coercive fine, according to the values listed in the table contained in Article 18 of the aforementioned Instruction, without prejudice to the liability of the administrators under Articles 9, item V, and 11 of Law No. 6,385/76.

REPORTS OF BANKRUPT AND LIQUIDATED COMPANIES

The bankruptcy or liquidation of the company does not exempt it from complying with legal requirements imposed on publicly held companies, notably the provisions of §§ 2 and 3 of Article 16 of CVM Instruction No. 202/93.

In this sense, the decision of the Collegiate Body, in a meeting on 13.07.2004 (available on the CVM website), is highlighted, in which publicly held companies in bankruptcy or liquidation are exempt from providing the information provided for in items II, IV, and VIII of Article 16 of Instruction No. 202/93 (DFP, IAN, and ITR Forms), with those stated in paragraphs 2 and 3 of the aforementioned article being required in return.

According to §2 of Article 16 of CVM Instruction No. 202/93, the trustee of companies declared bankrupt must provide semi-annual information on fixed deadlines, stages reached, assets sold, funds collected, amounts disbursed, and other information considered relevant for the securities market, within 45 (forty-five) days after the end of the semester.

In the case of companies in extrajudicial liquidation, the aforementioned information must be presented within 45 (forty-five) days after the end of each quarter of the fiscal year, as provided for in §3 of Article 16 of CVM Instruction No. 202/93.

It should be noted that both information regarding the petition or confession of bankruptcy and the declaratory judgment of bankruptcy, as stated in Article 17, items IX and X of CVM Instruction No. 202/93, are occasional information that must be provided by the company (see subitem 5.5), constituting, furthermore, a Relevant Event, in accordance with CVM Instruction No. 358/02.

The information must be sent, mandatorily, through the IPE System, on the CVM website.

The publicly held company that does not keep its registration updated, in accordance with Articles 13, 16, and 17 of CVM Instruction No. 202/93, is subject to a daily coercive fine, according to the values listed in the table contained in Article 18 of the aforementioned Instruction, without prejudice to the liability of the administrators (and, where applicable, the receiver, trustee, or liquidator), under Articles 9, item V, and 11 of Law No. 6,385/76.

ORDINARY GENERAL ASSEMBLY – OGA

According to the wording of Article 132 of Law No. 6,404/76, annually, within the first four months following the end of the fiscal year, there must be a general assembly to take the accounts of the administrators, examine, discuss, and vote on the financial statements, deliberate on the allocation of the net profit of the year and the distribution of dividends, elect the administrators and the members of the Fiscal Council.

In accordance with item II, of §1, of Article 124, of Law No. 6,404/76, with the wording given by Law No. 10,303/01, the convocation of a general assembly of a publicly held company shall be made by means of an announcement published at least three times, containing, in addition to the location, date, and time of the assembly, the agenda, and, in the case of statute reform, the indication of the matter, with the deadline for the first convocation being 15 (fifteen) days and that of the second convocation being 8 (eight) days.

The notices of convocation of Ordinary and/or Extraordinary General Assemblies must explicitly enumerate, in the agenda, all matters to be deliberated, not admitting that under the heading "general matters" there are matters that depend on assembly deliberation, as established in CVM Instruction No. 341/00, with its transgression being considered a serious offense for the purposes provided for in §3 of Article 11 of Law No. 6,385/76.

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 No. 6,404/76, the minimum percentage of participation in voting capital necessary to request the adoption of multiple voting must be included, mandatorily, in the notice of convocation 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.

A copy of the notice of convocation of the ordinary general assembly must be sent to the CVM, through the IPE System, on the same day of its publication by the press, in accordance with item III of Article 16 of CVM Instruction No. 202/93.

According to items V and VI of Article 16 of CVM Instruction No. 202/93, summaries of decisions of the ordinary general assembly must also be sent, on the day following its realization, as well as the minutes of the OGAs, within 10 (ten) days of its realization, indicating the dates and newspapers of their publication.

In this sense, it should be observed that the summary of decisions taken in the assembly (provided for in item V of Article 16 of CVM Instruction No. 202/93) is not confused with the minutes of the OGA (provided for in item VI of Article 16 of CVM Instruction No. 202/93), which, in accordance with §1 of Article 130 of Law No. 6,404/76, may be drawn up in the form of a summary of the events that occurred.

Therefore, the summary provided for in item V of Article 16 of CVM Instruction No. 202/93 deals only with the result of the assembly's deliberations, which must be sent, via the IPE System, in the category "Assembly," type "Summary of Decisions," and the minutes of the OGA, provided for in item VI of the same article, drawn up in full or in the form of a summary of the events that occurred, must be sent by the type "Minutes."

It is requested that the minutes of OGAs archived at the CVM contain the attendance list, with the qualification of the shareholders, specifying the quantity, type, and class of shares held by each, as well as that they be accompanied, in the same file, by all documents referenced in the minutes and related to the assembly's deliberations, such as contracts, opinions, and statements of dissenting votes by shareholders.

Given the expiration of the deadline provided for in §4 of Article 8 of Law No. 10,303/01, the Board of Directors members to be elected in the form of Article 141, §4, II, or §5, of Law No. 6,404/76, will henceforth be freely indicated by the shareholders starting from the OGA to be held in 2006.

Thus, in accordance with the decision of the CVM Collegiate Body in a meeting held on March 3, 2006 (see item 10 below), publicly held companies are recommended to include in the notice of convocation of general assemblies where the election of board members is planned the possibility of exercising the powers dealt with in the aforementioned paragraphs of Article 141 of Law No. 6,404/76.

It should be noted that, in accordance with Article 19, item II, of CVM Instruction No. 202/93, failure to observe the deadline fixed in Article 132 of Law No. 6,404/76 for holding the ordinary general assembly is considered a serious offense.

MAIN OCCASIONAL INFORMATION

5.1. EXTRAORDINARY GENERAL ASSEMBLY – EGA AND SPECIAL ASSEMBLY

According to items I, II, and III of Article 17 of CVM Instruction No. 202/93, in addition to the mandatory sending, via the IPE System, of the notices of convocation of extraordinary, special, and debentureholders' assemblies, whose publications follow the mold of Article 124, §1, item II of Law No. 6,404/76, companies are obliged to send the summaries of decisions, on the day following their realization, and the minutes of the assemblies, within 10 (ten) days of their realization.

In this sense, it should be observed that the summary of decisions taken in the assembly (provided for in item II of Article 17 of CVM Instruction No. 202/93) is not confused with the minutes of the EGA (provided for in item III of Article 17 of CVM Instruction No. 202/93), which, in accordance with §1 of Article 130 of Law No. 6,404/76, may be drawn up in the form of a summary of the events that occurred.

Therefore, the summary provided for in item II of Article 17 of CVM Instruction No. 202/93 deals only with the result of the assembly's deliberations, which must be sent, via the IPE System, in the category "Assembly," type "Summary of Decisions," and the minutes of the EGA, provided for in item III of the same article, drawn up in full or in the form of a summary of the events that occurred, must be sent by the type "Minutes."

It is requested that the minutes of Extraordinary, Special, and Debentureholders' General Assemblies archived at the CVM contain the attendance list, with the qualification of the debentureholders or shareholders, specifying the quantity of debentures and shares (with designation of their type and class) held by each, as well as that they be accompanied, in the same file, by all documents referenced in the minutes and related to the assembly's deliberations, such as contracts, opinions, and statements of votes by debentureholders or shareholders.

5.2. SHAREHOLDER AGREEMENTS

Shareholder agreements regarding the purchase and sale of their shares, preference to acquire them, exercise of voting rights, or control power (Article 118 of Law No. 6,404/76) must be sent to the CVM, via the IPE System, when archived in the Company, in accordance with item IV of Article 17 of CVM Instruction No. 202/93.

The alteration of their clauses, their extinction due to a term or resolutory condition, or the conclusion of a new shareholder agreement implies their update with the CVM.

5.3. GROUP OF COMPANIES CONVENTION

According to item V, of Article 17 of CVM Instruction No. 202/93, the controlling company and its controlled companies that constitute groups of companies, obligating themselves to combine resources or efforts to carry out their respective objects, or to participate in common activities or ventures, are obliged to send a copy of the convention to the CVM, when approved by the companies that compose it (Article 265 of Law No. 6,404/76).

5.4. ACT AND RELEVANT EVENT

In accordance with Article 157, §4, of Law No. 6,404/76 and Article 3 of CVM Instruction No. 358/02, it is the duty of the Investor Relations Director to disclose and communicate to the CVM and, if applicable, to the stock exchange and organized over-the-counter market entity where the securities issued by the company are admitted to trading, any relevant act or event occurred or related to its business (defined in Article 2 of the aforementioned Instruction), as well as to guarantee its broad and immediate dissemination, simultaneously in all markets where such securities are admitted to trading.

The decision regarding the disclosure of relevant acts or events is the competence of the company's administration itself, with the CVM being responsible for ensuring the quality of information brought to the market, prioritizing transparency (full disclosure) and combating information asymmetry.

The information subject to disclosure must be expressed in clear and objective language, exempting the company from expressing a value judgment, especially regarding the progress of judicial disputes and decisions rendered therein, which must reflect the exact wording of such decisions.

Corporate legislation does not prevent relevant information from being disseminated and discussed in meetings of professional associations, investors, analysts, or selected audiences, in the country or abroad. However, ensuring equitable treatment of all market participants, and in order to prevent, among other things, the possibility of using insider information, it requires that the relevant event in question be disclosed, prior to or simultaneously with the meeting, to the entire market, as determined in §3 of Article 3, of CVM Instruction No. 358/02.

Following the guidance set forth in Article 5 of CVM Instruction No. 358/02, the disclosure of the relevant act or event must be made, whenever possible, before the start or after the close of trading on the stock exchanges and organized over-the-counter market entities where the Company's issued securities are admitted to trading.

Supported by Article 3, §6, and Article 4 of CVM Instruction No. 358/02, the CVM may determine the disclosure, correction, amendment, or republication of information regarding the relevant act or event, as well as request additional clarifications regarding its disclosure.

In cases where controlling shareholders or administrators believe that the revelation of the relevant act or event may put the Company's legitimate interest at risk, a request for exception to immediate disclosure may be addressed to the President of the CVM in a sealed envelope, in which the word "Confidential" must appear, in accordance with Article 7, §1 of CVM Instruction No. 358/02.

The disclosure will follow the procedure set forth in Article 289 of Law No. 6,404/76, with publication in the official gazette of the Union, State, or Federal District, according to the location of the company's headquarters, and in another major newspaper published in the locality where the company's headquarters is located.

According to Article 17, item VI, of CVM Instruction No. 202/93 and CIRCULAR LETTER/CVM/SGE/No. 01/2003, the sending of the relevant event file will be done through the IPE System, before or on the same day of its publication by the press, informing the respective locations and dates of publication.

It is alerted that, in accordance with Article 18 of CVM Instruction No. 358/2002, transgression of the provisions contained in the aforementioned Instruction constitutes a serious offense, for the purposes provided for in §3 of Article 11 of Law No. 6,385/76.

5.5. BANKRUPTCY AND CONCORDAT JUDGMENT

It is emphasized that, in this subitem, the provisions contained in the new Bankruptcy Law must be considered, especially regarding the substitution of the concordat by extrajudicial or judicial recovery.

In accordance with Article 17, items VIII and X, of CVM Instruction No. 202/93, publicly held companies must submit to the CVM, via the IPE System, the judgments granting the concordat or declaratory of bankruptcy, indicating the trustee of the bankrupt estate, on the same day of the company's knowledge thereof.

Furthermore, according to items IX and VII, information regarding the petition or confession of bankruptcy must be provided, on the same day of the company's knowledge thereof, or upon the filing of the petition in court, as applicable; as well as information regarding the petition for concordat, together with its grounds, financial statements specifically prepared to obtain the legal benefit, and, if applicable, the situation of debentureholders regarding the receipt of invested amounts, on the same day the petition is filed in court. Companies must pay attention to the immediate need to update their registration with the CVM (see item 14 below).

5.6. DOCUMENTS RELATED TO COMPANIES IN JUDICIAL AND EXTRAJUDICIAL RECOVERY

Despite the lack of explicit requirement in CVM Instruction No. 202/93 for the sending of documents related to situations of judicial and extrajudicial recovery, the CVM has been requiring companies to send such information.

For this purpose, the category "Information on Companies in Judicial or Extrajudicial Recovery" was created in the IPE System, containing four types of documents, namely, Initial Petition, Recovery Plan, Judgments, and Other Documents (see item 19.1 below).

It should be noted that, in addition to sending the aforementioned documents, companies must proceed to update their registration in the CVMWEB System, changing their status to "In Judicial Recovery" and "In Extrajudicial Recovery," starting from the date of the judgment that grants the petition.

5.7. SECURITIES OF ADMINISTRATORS AND RELATED PERSONS

As provided for in Article 11, caput and §2, of CVM Instruction No. 358/02, when presenting the documentation for the registration of the company as publicly held or immediately after taking office, directors, members of the board of directors, fiscal council, and any organs with technical and advisory functions, created by statutory provision, are obliged to communicate to the CVM, the company, and, if applicable, to the stock exchange and organized over-the-counter market entity where the company's securities are admitted to trading, the quantity, characteristics, and manner of acquisition of the securities issued by them and by controlled or controlling companies, or referenced thereto, that they hold.

Subsequently, the individual and consolidated information, subject to Article 11, of CVM Instruction No. 358/02, must be sent to the CVM monthly, within 10 (ten) days after the end of each month. In order to have complete and reliable information, it is requested that the sending be done even in the case where no movement or alteration in the positions of administrators and related persons has been verified. In this case, the individual form must be filled out with the information that, during that period, there was no trading by the administrator with securities of the company, its controlled company, its controlling company, or its affiliate, repeating the initial balance values in the final balance.

According to §3 of Article 11, the natural persons mentioned in this article will also indicate securities that are the property of a spouse from whom they are not judicially separated, a partner, any dependent included in their annual income tax return, and companies directly or indirectly controlled.

The information must be sent in only two files, one of which must contain the forms of the individual positions held by administrators and related persons, which will be available only to authorized CVM employees, and the other, the consolidated position of each group (management, board of directors, and technical or advisory organs), which will be available on the CVM website on the world wide web. It is clarified that the sending must be done by the IRD, via the IPE System, which, for this purpose, must receive the information in time to comply with the deadline indicated by the Instruction.

The obligation to inform about the securities traded and held, including the integrity and veracity of the data required by the regulation, falls on the administrators, with the Investor Relations Directors of publicly held companies being responsible solely for sending these forms to the CVM, through the IPE System.

It is alerted that, in accordance with Article 23 of the same Instruction, non-compliance with the provisions contained in Articles 11, §2, 12, and 16 entails the application of a daily coercive fine, which will apply from the first business day following the end of the deadline for delivering the information, regardless of notification, in the amount of R$500.00.

Finally, it is reminded that, in accordance with Article 18 of CVM Instruction No. 358/02,

constitutes a serious offense, for the purposes provided for in §3 of article 11 of Law 6.385/76, the violation of the provisions of CVM Instruction No. 358/02.

5.8. RELEVANT SHAREHOLDING PARTICIPATION

By virtue of article 12 of CVM Instruction No. 358/02, any market participant, whether an individual or legal entity, acting individually or jointly, who acquires or disposes of 5% or more of shares or classes of shares representing the share capital of an open company, is obligated to, immediately after the transaction, communicate it to the CVM and, if applicable, to the stock exchange and organized over-the-counter market entity where the securities are admitted to trading.

It is worth noting that the change in participation is not exclusively tied to a single transaction, but is also assessed cumulatively, referring to the acquisition/disposal/extinction of shares and rights over shares, whether onerous (purchase and sale, swap) or gratuitous (donation).

In the case of acquirers, the immediate publication of the "Declaration of Acquisition of Relevant Shareholding Participation" is mandatory, in accordance with article 3 of CVM Instruction No. 358/02.

Such publication may be waived by the CVM (see CVM Resolution No. 480/05), if requested immediately by the interested party (art. 12, § 5º, of CVM Instruction No. 358/02), based on the degree of share dispersion in the market and the acquirer's declaration that their acquisitions do not aim to alter the composition of control or the administrative structure of the company.

The request referred to must be sent to the Superintendence of Corporate Relations, and any waiver of publication will depend on the prompt availability of the "Declaration of Acquisition of Relevant Shareholding Participation" in the IPE System, on the CVM website.

In the case of sellers, according to article 12, § 4º, of the aforementioned regulation, the disposal or extinction of their shares in the open company must be reported each time the 5% threshold is reached. Such disclosure must be made by making the "Declaration of Disposal of Relevant Shareholding Participation" available in the IPE System, which is not to be confused with publication under the caput of article 12, and therefore, no request for waiver of publication in the press is applicable.

At this point, it should be emphasized that both the acquisition and disposal declarations are not limited to merely informing about the completion of transactions, but also encompass the information required under the items of art. 12, namely:

(I) name and qualification of the acquirer, indicating the registration number in the National Register of Legal Entities or the National Register of Individuals;

(II) the objective of the participation and the quantity sought;

(III) number of shares, subscription bonuses, as well as subscription rights for shares and options to purchase shares, by species and class, already held, directly or indirectly, by the acquirer or a person related to them;

(IV) number of debentures convertible into shares, already held, directly or indirectly, by the acquirer or a person related to them, specifying the quantity of shares subject to possible conversion, by species and class; and

(V) indication of any agreement or contract regulating the exercise of voting rights or the purchase and sale of securities issued by the company.

If applicable, the companies controlled, subsidiaries, and other corporate vehicles through which the transactions were carried out must also be specified.

The duty to inform about shareholdings, to disclose or publish, and the content of these declarations falls on the acquirers and sellers, limiting the responsibility of the Company's Investor Relations Director to the submission of files through the IPE System on the CVM website.

After changes implemented at the end of 2005, the IPE System came to include, within the Category "Market Communication," the type "Acquisition/Disposal of Shareholding Participation (art. 12 of Instr. CVM No. 358)" and two individualized species of Declaration (see item 19.1 below).

Thus, the "Declarations of Acquisition of Relevant Shareholding Participation" and the "Declarations of Disposal of Relevant Shareholding Participation" must be sent to the Investor Relations Director of the open company, who will have them inserted into the IPE System, via the CVM website, in the respective species, and in the case of declarations that have been published, by virtue of the caput of art. 12 or voluntarily, the dates and newspapers in which the publication was effected must be informed.

It is alerted that, in accordance with article 23 of the same Instruction, non-compliance with the provisions contained in articles 11, §2º, 12, and 16 entails the application of a daily coercive fine, which will apply from the 1st business day following the end of the deadline for the delivery of information, regardless of notification, in the amount of R$500.00.

Finally, it is recalled that, in accordance with article 18 of CVM Instruction No. 358/02, it constitutes a serious offense, for the purposes provided for in §3 of article 11 of Law 6.385/76, the violation of the provisions of CVM Instruction No. 358/02.

5.9. TRADING POLICY

The securities trading policy, provided for in article 15 of CVM Instruction No. 358/02, is optional. However, such a policy is very useful for companies to establish a code of conduct for transactions involving, primarily, shares issued by the company itself.

In particular, for companies that adopt or will adopt incentive programs for their employees and executives, such as stock option plans, the preparation of a securities trading policy acquires greater relevance. Thus, by establishing internal rules, companies define a general line of guidance, while simultaneously making it clear to their investors that they are attentive to the fairness and transparency of transactions involving the securities issued by them, with emphasis on those of a private nature.

5.10. DISCLOSURE POLICY

The disclosure policy for material acts or events is a mandatory document established in article 16 of CVM Instruction No. 358/02, applicable to all open 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 its corporate organization and the nature of the securities issued, to have the duty to adopt the disclosure policy.

5.11. MEETINGS OF THE BOARD OF DIRECTORS AND EXECUTIVE BOARD

Although there is no requirement to send minutes and summaries of decisions from meetings of the Board of Directors and Executive Board in CVM Instruction No. 202/93, the CVM has been encouraging the forwarding of such information through the IPE System, under the category "Management Meeting."

Furthermore, it should be noted that Law No. 6.404/76 provides in §2 of art. 142 that minutes of Board of Directors meetings containing deliberations intended to produce effects against third parties shall be filed with the commercial registry and published.

CONSEQUENCES OF AN OUTDATED REGISTRATION

As highlighted in the previous items, open companies must pay attention to compliance with legal and regulatory requirements imposed, especially regarding the maintenance of their updated registration.

6.1. COERCIVE FINES

Initially, it should be clarified that coercive fines are imposed, regardless of liability, for non-compliance with the provisions contained in articles 13, 16, and 17 of CVM Instruction No. 202/93 and in articles 11, § 2º, 12, and 16 of CVM Instruction No. 358/02. The penalties provided for in the caput of art. 11 (and respective items I to VIII) of Law 6.385/76, in turn, are only imposed with observance of the procedure provided for in §2 of art. 9º of Law 6.385/76.

Thus, a company that does not maintain its registration updated, in accordance with articles 13, 16, and 17 of CVM Instruction No. 202/93, will be subject to a daily coercive fine, according to the tables contained in art. 18 of the same Instruction.

Similarly, in accordance with article 23 of CVM Instruction No. 358/02, non-compliance with the obligations contained in articles 11, § 2º, 12, and 16 of the aforementioned Instruction entails the application of a daily coercive fine, which will apply from the 1st business day following the end of the deadline for the delivery of information, regardless of notification, in the amount of R$ 500.00.

It should be recalled that, in accordance with CVM Instruction No. 273/98, amended by CVM Instruction No. 410/04, from the communication of the collection act of the coercive fine, an appeal to the CVM Collegiate Body is possible, without suspensive effect, within ten days, counted from the date of its receipt.

In this sense, in accordance with item IX of CVM Resolution No. 463/03, in the case of errors, omissions, obscurity, or material inaccuracies in the decision, contradiction between the decision and its grounds, the Collegiate Body will review requests for reconsideration of its decision regarding the appeal.

Finally, we clarify that CVM Resolution No. 447/02, amended by CVM Resolutions No. 467/04 and No. 483/05, provides, among other things, for the installment payment of applied coercive fines, and CVM Resolution No. 501/06 provides for the incidence of late payment interest on debts arising, among others, from coercive fines.

6.2. PUBLICATION OF THE LIST OF NON-COMPLIANT COMPANIES

The Securities and Exchange Commission, in accordance with CVM Resolution No. 178/95, semi-annually discloses to market participants the list of open companies whose registration as a company – as referred to in article 21 of Law No. 6.385/76, as established in CVM Instruction No. 202/93 – has been outdated for more than 6 (six) months.

6.3. OFFICIAL SUSPENSION OF OPEN COMPANY REGISTRATION

An open company that has been in arrears with the obligation to provide information to the CVM for more than 3 (three) years will have its registration suspended, as established in article 2 of CVM Instruction No. 287/98.

Concurrently with the suspension of registration, the initiation of an administrative inquiry will be proposed to determine the responsibility of the administrators for non-compliance with the provisions contained in arts. 16 and 17 of CVM Instruction No. 202/93, as provided for in the sole paragraph of art. 3º of CVM Instruction No. 287/98.

In this sense, it should be recalled that the determination of the responsibility of administrators is independent of the official suspension of the registration of an open company, being also provided for in article 18 of CVM Instruction No. 202/93, as well as in article 1, item I, letter "b" of CVM Instruction No. 251/96.

Furthermore, in accordance with article 19 of CVM Instruction No. 202/93, it constitutes a hypothesis of objective offense, in which a summary administrative process procedure may be adopted, when administrators of an open company and, if applicable, the receiver, trustee, or liquidator fail to adopt the procedures listed in items I to III of art. 13 of CVM Instruction No. 202/93, noting that, in accordance with item III of the sole paragraph of the same article, recurrence of the said objective offense constitutes a serious offense.

6.4. OFFICIAL CANCELLATION OF OPEN COMPANY REGISTRATION

The official cancellation of the registration of an open company, provided for in article 3 of CVM Instruction No. 287/98, will be carried out in the following situations:

a. Extinction of the company, verified by deregistration in the commercial registry;

b. Cancellation of the commercial registration, due to the company being considered inactive by the competent Commercial Board;

c. Deregistration, by the Federal Revenue Secretariat, of the registration in the General Register of Taxpayers – CGC;

d. Failure to effectively place with the public all securities whose issuance registration is the cause for granting the open company registration;

e. Proof of the suspension of the company's activities for a period exceeding three years, with its registration suspended for more than one fiscal year.

It is emphasized that, in accordance with art. 7º of CVM Instruction No. 287/98, the cancellation and suspension of registration do not exempt the company, its controllers, and administrators from administrative, civil, and criminal liability resulting from the eventual infringement of the legislation applicable to them, while the company was open.

6.5. SANCTIONING ADMINISTRATIVE PROCESS

As provided for in art. 19 of CVM Instruction No. 202/93, it constitutes an objective offense, in which a summary administrative process procedure will be adopted, in accordance with the Regulation Annexed to CMN Resolution No. 1.657/89, to fail to adopt, by the administrator of an open company (and when applicable, the receiver, trustee, or liquidator), the procedures listed in items I to III of art. 13, except for the situation provided for in item VI of art. 17. It also constitutes a serious offense, for the purposes provided for in § 3º of art. 11 of Law No. 6.385, of December 7, 1976: (NR)

I non-compliance with the provisions of item VI of art. 17 of CVM Instruction No. 202/93;

II non-observance of the deadline established in art. 132 of Law No. 6.404, of December 15, 1976, for holding the ordinary general assembly;

III recurrence of the objective offenses defined in the caput of art. 19 of CVM Instruction No. 202/93.

In turn, in accordance with art. 18 of CVM Instruction No. 358/02, it constitutes a serious offense, for the purposes provided for in § 3º of art. 11 of Law No. 6.385/76, the violation of the provisions of that CVM Instruction No. 358/02, and the CVM must communicate to the Public Ministry the occurrence of events provided for in the aforementioned Instruction that constitute a crime.

Thus, and as provided for in art. 9º, item V, of Law No. 6.385/76, the CVM may investigate, through an administrative process, the eventual responsibility of administrators (and when applicable, the receiver, trustee, or liquidator), members of the fiscal council, and shareholders of open companies for non-compliance with the provisions contained in the aforementioned Instructions.

In this sense, and in accordance with art. 11 of Law No. 6.385/76, the penalties provided for in items I to VIII of the same article will only be imposed with observance of the administrative process mentioned in the previous paragraph.

CANCELLATION OF OPEN COMPANY REGISTRATION

The cancellation of registration of an open company must be preceded by a Public Tender Offer for Shares, formulated by the controlling shareholder or by the open company itself and targeting all shares issued by the target company, as provided for in § 4º of art. 4º of Law No. 6.404/76 and in accordance with the procedure regulated by CVM Instruction No. 361/02, except for the situations provided for in articles 17 and 18.

As provided for in article 34 of the aforementioned Instruction, exceptional situations justifying the acquisition of shares without a public offer or with a differentiated procedure will be reviewed by the CVM Collegiate Body, for the purpose of waiving or approving procedures and formalities to be followed, including regarding the disclosure of information to the public, when applicable.

The establishment of a wholly-owned subsidiary does not result in the cancellation of the Company's registration. In such cases, it is necessary to submit a request for cancellation of registration, formalizing the plea; otherwise, the company, although a wholly-owned subsidiary, remains subject to all obligations and penalties provided for in the current regulation, including those regarding the maintenance of the updated registration maintained with the CVM.

Violation of the provisions of CVM Instruction No. 361/02, according to its article 36, is considered a serious offense, for the purposes of article 11, §3º of Law No. 6.385/76.

All documents related to events occurring prior to the date of cancellation of the company's registration, as well as the ITR, DFP, and IAN forms with a delivery deadline prior to that date, are mandatory to submit.

The company is liable for the inspection fee for the quarter in which its cancellation occurs. If the company's registration is cancelled in the 1st quarter, it must inform the CVM of its net equity from the previous fiscal year (which will serve as the basis for calculating the fee) through supporting documentation, such as the publication of financial statements.

DELISTING OF OPEN COMPANIES

As per article 219 of Law No. 6.404/76, a company is extinguished by the closure of liquidation, as well as by merger or consolidation, and by spin-off with the transfer of all assets to other companies.

In cases of merger, consolidation, or spin-off, the cancellation of the company's registration results from its extinction, and the company is delisted from the list of open companies from the date of the General Shareholders' Meeting that deliberated the merger, consolidation, or spin-off, regardless of the date of homologation by a government body. In addition to the mandatory submission of the Minutes of the respective General Shareholders' Meeting via the IPE System, the company is requested to formally communicate its extinction to the Superintendence of Corporate Relations.

All documents related to events occurring prior to the date of the said extinction, as well as the ITR, DFP, and IAN forms with a delivery deadline prior to that date, are mandatory to submit.

The company is liable for the inspection fee for the quarter in which its extinction occurs. If the company is extinguished in the 1st quarter, it must inform the CVM of its net equity from the previous fiscal year (which will serve as the basis for calculating the fee) through supporting documentation, such as the publication of financial statements.

We take this opportunity to recall that, in view of article 223, §3º, of Law No. 6.404/76, if the merger, consolidation, or spin-off involves an open company, the succeeding entity will also be open, and must obtain the respective registration and, if applicable, promote the admission to trading of the new shares in the secondary market, within a maximum period of 120 (one hundred and twenty) days, counted from the date of the meeting that approved the operation, observing the relevant norms issued by the Securities and Exchange Commission.

In the form of §4º, non-compliance with the provisions of article 223, §3º, gives shareholders the right to withdraw from the company, through the reimbursement of the value of their shares (article 45), within 30 (thirty) days following the end of the period referred to therein, observing the provisions of §§ 1º and 4º of article 137.

ARTICLE 203 OF THE CORPORATE LAW (LSA)

Article 203 of Law No. 6.404/76 determines that the provisions of articles 194 to 197 and 202 will not prejudice the right of preferred shareholders to receive fixed or minimum dividends to which they have priority, including arrears, if cumulative.

Consequently, the reserves mentioned in articles 194 to 197 cannot be constituted to the detriment of fixed or minimum dividends, nor can the provisions of article 202, all of Law No. 6.404/76, come to prejudice this distribution. Thus, if there is profit, even if unrealized, the fixed or minimum dividends must be distributed.

ELECTION OF MEMBERS OF THE BOARD OF DIRECTORS

In response to a market participant's inquiry regarding the interpretation of art. 8º, § 4º, of Law No. 10.303/01, the CVM Collegiate Body, in a meeting held on March 3, 2006, expressed itself as follows.

In companies where the term of a board member elected in the form of art. 141, § 4º, II or § 5º, of Law No. 6.404/76 is in progress, whose election was carried out based on a triple list indicated by the controlling shareholder, in the form of § 4º of art. 8º of Law No. 10.303/01, the election of a board member to complete the said term, already elected by free indication of shareholders, must be included in the agenda of the ordinary general assembly to be held in 2006, and carried out (provided that the requirements of the cited paragraphs of art. 141 are met).

In companies where there is no ongoing term of a board member elected in the form of art. 141, § 4º, II or § 5º, of Law No. 6.404/76, and in which, due to the terms of the current mandates, no election of Board of Directors members occurs in the ordinary general assembly to be held in 2006, there is no obligation to hold the election of a board member to be elected in the form of art. 141, § 4º, II or § 5º, of Law No. 6.404/76, and one must wait for the next general assembly in which the election of board members occurs to proceed, observing the legal requirements, with the election of a board member in the form of the cited paragraphs.

do art. 141, already elected by free indication of the shareholders.
From the ordinary general assembly to be held in 2006 onwards, whenever the election of councilors occurs in the manner of art. 141, § 4º, II, or § 5º, of Law No. 6.404/76, such councilors shall be freely indicated by the shareholders, in the manner of § 4º of art. 8º of Law No. 10.303/01, recommending to public companies that they include in the notice of convocation of general assemblies where the election of administration councilors is provided for the possibility of exercising the faculties referred to in the cited paragraphs of art. 141 of Law No. 6.404/76.

ELECTION OF FISCAL COUNCIL
Law No. 6.404/76 established, in article 161, § 4º, letter "a", that holders of preferred shares without voting rights or with restricted voting rights shall have the right to elect, in a separate vote, one member and respective alternate; the same right shall have minority shareholders, provided that they represent, jointly, ten percent or more of the shares with voting rights. In interpreting the aforementioned provision, the CVM expressed its understanding, through Orientation Opinion CVM No. 19/90, in the sense that in order not to become merely nominal the right attributed by law to preferred shareholders, it should be understood that, in the separate vote of these shareholders for the election of their representative on the Fiscal Council, controlling shareholders may not participate, even if they also hold preferred shares. Such participation, if admitted, would result in an effective curtailment of the essential right to monitor and in non-equitable representation of interests, often contrary, which the law sought to protect. In this sense, the understanding of the Superintendence of Corporate Relations, in consonance with the provisions of Orientation Opinion No. 19/90, is that, in the separate election for the fiscal council by preferred shareholders (article 161 of Law No. 6.404/76), no shareholders who do not fall within the concept of minority that the law sought to protect should participate (elect), that is, besides controlling shareholders, persons linked to them should also not participate.
PROJECTIONS
The disclosure of projections is information of a relevant nature, subject to the determinations of CVM Instruction No. 358/02.
CVM Instruction No. 202/93, in its article 8º, allows the presentation of business projections, determining, however, that when disclosed, the company is subject to adopt the following procedures:
I present, clearly, for each of the projected items and periods, the premises and calculation memos used; II present, when providing the quarterly information indicated in article 16, item VIII, a comparison between the projections prepared and the results actually obtained in the quarter, clearly and accurately indicating the reasons that led to deviations from the previously made projections; and III when, in the judgment of the administrators, based on solid reasons, the projections cease to be valid or are modified, disclose the fact to the market, immediately, in the manner provided for by article 157, § 4º, of Law No. 6.404, of December 15, 1976, and CVM Instruction No. 31/84 (revoked by CVM Instruction No. 358/02), together with its reasons.
CAPITAL BUDGET
Article 196 of Law No. 6.404/76 provides for the possibility of retaining a portion of the net profit of the social year for reinvestment in the company, provided that through a proposal by the administration justified by a capital budget, previously approved or in the own OGA that deliberates on the destination of the result, as can be seen in verbis:

Retention of Profits
Art. 196. The general assembly may, by proposal of the administration bodies, deliberate to retain a portion of the net profit of the year provided for in a capital budget previously approved by it.
§ 1º The budget, submitted by the administration bodies with the justification of the proposed profit retention, must comprise all sources of resources and applications of capital, fixed or circulating, and may have a duration of up to five years, except in the case of execution, for a longer period, of an investment project.
§ 2º The budget may be approved in the ordinary general assembly that deliberates on the balance sheet of the year.
From an economic point of view, the retention of profits in the company is always justified whenever the rate of return on reinvestment in the society exceeds the opportunity cost of capital. By imposing, on companies, the presentation of a capital budget to demonstrate the economic advantages to investors deprived of receiving dividends in the present, before more profitable opportunities in the future, the law sought to protect the right of these against the discretion of the controller in deliberations on the destination of the result. Capital investment must be understood as all applications of resources with a view to obtaining compensatory returns for several future periods, distinguishing itself from other modalities whose returns only occur in the current year. Indeed, long-term decisions are those that most affect the profitability of companies, for which reason, full disclosure to the most interested parties, the shareholders of the company, is necessary. Due to the commitment of large sums of resources over a long period of time, such decisions are difficult to retroactively assess, and may even put the continuity of the company at risk. Given the relevance of the reinvestment of profits as a source of financing for companies, the law established as mandatory the provision to investors of adequate information regarding the use of resources by the company, to the detriment of the realization of the investment through the distribution of dividends in the present. Hence the need for the administration to present, in assembly, a financial report, called capital budget, which evidences all applications and sources of resources, for a maximum period of 5 years. Recognizing the existence of numerous opportunities with longer maturations, this five-year limit was excepted, provided that, through the preparation of an investment project, proving the use of resources in applications for longer periods, whose high degree of exposure to risk will imply greater disclosure of information to investors. It is important to record the need to monitor budget data, in order to prove the correctness, or not, of capital needs at the time of investments, as well as the performance achieved. In accordance with article 8º of CVM Instruction No. 202/93, the option to present projections must observe the procedures described therein, and, in addition, it will be necessary, after the approval of the budget here referred to, whether in an extraordinary assembly prior to the OGA, or in the own ordinary assembly that deliberates on the destination of the result, to re-present the electronic form IAN, with the completion of table 14.01 – Business Projections and/or Results. This is due to the fact that, ultimately, profit retentions are also an option of the administration of companies. It is worth remembering, finally, that, in line with the provisions of art. 133 of Law No. 6.404/76, a copy of the capital budget proposed by the administration must be made available
to shareholders prior to the holding of the assembly, as well as sent together with the minutes of the OGA within the period provided for in item 4, retro.

REGISTRATION SYSTEM OF PUBLIC COMPANIES – CVMWEB
Companies are obliged to update, with the CVM, their registration data, within five days after the occurrence of any change, given the provisions of art. 13, item III, of CVM Instruction No. 202/93.
As established in article 18 of CVM Instruction No. 202/93, without prejudice to the responsibility of the administrators under articles 9º, item V, and 11 of Law No. 6.385/76, the public company that does not keep its registration updated, in accordance with articles 13, 16 and 17 of the same Instruction, will be subject to a daily coercive fine. In accordance with article 19 of CVM Instruction No. 202/93, non-observance of the procedures listed in items I to III of article 13 of this Instruction constitutes an offense of an objective nature, in which a summary administrative process procedure will be adopted, in accordance with the Regulation Annexed to Resolution CMN No. 1.657/89. Recidivism of these objective offenses constitutes a serious offense, for the purposes provided for in §3º of article 11 of Law No. 6.385/76. Circular Letter/SEP No. 01/04, of February 16, 2004, communicated to companies the implementation of the new Registration Update System (CVMWEB), with each one responsible for making modifications directly on the CVM page on the worldwide computer network, having been provided to the IR Directors with an access password and guidance on how to proceed with the registration update. Therefore, the registration update of companies ceased to be done automatically through the importation of data inserted in the ITR, DFP and IAN forms. Subject to registration update by this system became: social and commercial name, date of incorporation of the company, address, telephone, fax, email, institution for trading of securities, sector of activity, trading market, situation of the company and information of the current independent auditor. In this sense, it is worth highlighting the creation, during the year 2005, of new activity sectors in substitution for the sector "Emp. Adm. and Part.", as well as the creation of the situations of public company "Judicial Recovery" and "Out-of-court Recovery". Thus, any of these changes must be made by the company and, depending on the case, subsequently to the forwarding by the IPE System of the act of alteration (minutes of the assembly or council meeting), because the system will only accept alterations if the IPE protocol number is indicated. It is emphasized that the update of IR Director, trustee or liquidator data continues to be done through the IPE System. Attention is drawn to the proper maintenance of the company's data in this registration system, in order to avoid discrepancies with the information contained in the ITR, DFP and IAN forms.
INQUIRIES OF PUBLIC COMPANIES
Inquiries regarding the application of norms and regulations issued by the CVM and the understanding of provisions of Laws No. 6.385/76 and 6.404/76 and subsequent amendments, must be forwarded in writing, through protocol, by the Director of Investor Relations to the Superintendence of Corporate Relations, with the identification of the public 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 the generic form and theoretical inquiries, orienting in the sense that all elements and arguments judged important for the conclusive manifestation of the CVM are presented. Inquiries on accounting matters must be accompanied by the statement of the independent auditor on the subject, in accordance with the provisions of item 28.1 of Circular Letter/CVM/SNC/SEP No. 001/06.
COMMUNICATIONS WITH THE SUPERINTENDENCE OF CORPORATE RELATIONS (SEP)
In the case of forwarding of questions, answers, appeals to decisions or understandings of the Superintendence of Corporate Relations or petitions/representations, companies must use direct correspondence, not admitting the sending via IPE System, unless expressly requested by the SEP.
It is emphasized that, as a general rule, the deadlines for attending to the requests contained in the letters sent by the Superintendence of Corporate Relations must be counted from the date of receipt of the correspondence (date of the AR).
REQUESTS FOR AUDIENCES BY PRIVATE INDIVIDUALS
In line with Decree No. 4.334, of August 12, 2002, requests for scheduling meetings with organizational components of the CVM must be forwarded electronically, through the CVM page on the worldwide computer network, selecting, for this purpose, the option AUDIENCE BY PRIVATE INDIVIDUALS.
In this request, the clear specification of the subject to be treated must be contained, with the necessary condition, in the case of company inquiries, their prior forwarding, as described in the previous item.
REQUEST FOR VIEWING OF PROCESS
In accordance with §2º of article 8º of Law No. 6.385/76, all documents and records of administrative processes that are pending or that are archived at the CVM are public, except those whose confidentiality is indispensable for the defense of intimacy or social interest, or whose confidentiality is assured by express legal provision.
One must also keep in mind, article 46 of Law 9.784/99 that regulates the administrative process within the Federal Public Administration that guarantees interested parties the right to view the process and to obtain certificates or reprographic copies of the data and documents that integrate it, except for data and documents of third parties protected by confidentiality or by the right to privacy, honor and image. In the case of an administrative process to investigate illegal acts and unfair practices that is preceded by an investigative stage, the confidentiality necessary for the elucidation of facts or required by public interest will be assured, as provided for in §2º of article 9º of Law No. 6.385/76. In April 2005, the Autarchy regulated, through CVM Deliberation No. 481/05, the granting of viewing of records of administrative processes of any nature instigated within the scope of the CVM. Requests for viewing of processes that are pending in this Autarchy must be forwarded through the presentation of a signed request, specifying that it is the granting of viewing and/or copies, with the qualification of the signatories and, in the case of company representatives, accompanied by their respective powers of attorney. In accordance with §1º of art.3º of CVM Deliberation No. 481/05, the request must specify the interest of the requester in obtaining access to the records, except if it is an accused in an administrative sanctioning process, in which case the granting of viewing will always be assured. The granting depends on the authorization of the holder of the Superintendence responsible for conducting the administrative process or the Relator, in case there is a pending appeal or decision of the Collegiate Body, with the postponement of the granting of viewing being permitted in the interest of the service when such measure prejudices the realization of an act or the adoption of measures necessary for the conduct of the process. In administrative processes instigated due to requests for postponement of general assemblies of public companies or interruption of the flow of the period of their convocation, in accordance with CVM Instruction No. 372/02, the granting of viewing will not be admitted, while the process is pending decision, except for the right of access to the records by the company within the period for its manifestation, as provided in art.4º of CVM Deliberation No. 481/05. Furthermore, processes instigated with the purpose of verifying the possible occurrence of infractions to legal or regulatory norms whose supervision is incumbent upon the CVM will be conducted under confidentiality, except in cases where the requester has been publicly indicted by the CVM as a possible author of the infraction under investigation, in which case the granting of viewing will be considered mandatory. It is worth noting that the confidentiality of the process may be lifted by decision of the Superintendent, when he considers it unnecessary for
the elucidation of facts and there is no data or information in the records protected by the cases of confidentiality assured by express legal provision or for the defense of intimacy or social interest. As stated in §2º of art. 5º of the Deliberation, the provisions of the two preceding paragraphs, regarding processes of investigation of irregularities, apply to complaints formulated by investors and any other market participants, including regarding viewing requests formulated by them. In administrative sanctioning processes, the accused will be admitted to the granting of viewing through a request addressed: (i) to the Process Control Coordination, in processes governed by Resolution CMN No. 454/77; or (ii) to the Superintendence that instigated the process, until the eventual filing of an appeal to the Collegiate Body, in processes governed by Resolution CMN No. 1.657/89, or to the CCP, after the eventual filing of appeals to the Collegiate Body. Viewing requests will be analyzed case by case, with the requesters having, in the event of denial of the request, an appeal to the CVM Collegiate Body, in accordance with CVM Deliberation No. 463/03. According to art. 3º, §3º, of CVM Deliberation No. 481/05, if the denial decision is issued by the Relator, an appeal of his decision to the Collegiate Body will be available, within a period of 5 (five) days, from the date of notification of the interested party. For granted requests, the processes will be made available at the Consultation Center – SOI/GOI of this Autarchy, with the indication of the availability period through a letter in response to the request.
PERIODIC AND EVENTUAL INFORMATION SYSTEM – IPE
Developed in 2003, in partnership with BOVESPA, the Periodic and Eventual Information System – IPE replaced the physical sending of information by electronic means, giving a broad and disseminated character to the securities market and to the interested public.
The documents and information sent are available simultaneously on the pages of the CVM and BOVESPA, in the case of companies registered there, with the exception of the form of the communication provided for in article 11 (individual) of CVM Instruction No. 358/02, not disclosed by the CVM, but which may be subject to special treatment by BOVESPA for those that integrate Level 1, Level 2 and the Novo Mercado. In the case of forwarding of questions, answers, appeals to decisions or understandings of the Superintendence of Corporate Relations or petitions/representations, companies must use direct correspondence, not admitting the sending via IPE System, unless expressly requested by the SEP. In this sense, it is worth highlighting that the sending of these correspondences via the IPE System, when not expressly requested by the Superintendence of Corporate Relations, has been used by some companies, causing, at times, embarrassment to its own administration or difficulty in monitoring responses to requests or manifestations of this Superintendence. Companies may request the CVM to send documents not provided for in the system for disclosure to the market. The information sent will be under the responsibility of the Director of Investor Relations (IR Director) who must, for this purpose, keep his data updated in the IR Director Registration module. One must pay attention to the fact that pdf format files present a legible formatting, which facilitates the reading, manipulation and printing of documents by interested parties.

19.1. NEW CATEGORIES IN IPE
ASSEMBLY
The "Assembly" category, in types "AGE" and "AGO/E", now includes the species "Justification of Incorporation, Spin-off and Merger" and "Protocol of Incorporation, Spin-off and Merger", intended for the sending of documents referred to in arts. 224 and 225 of Law No. 6.404/76, regarding operations of incorporation, merger or spin-off with incorporation in societies. MARKET COMMUNICATION Three types of Market Communication were created, one of which refers specifically to the sending of declarations of acquisition and alienation of relevant shareholding participation, referred to in article 12 of CVM Instruction No. 358/02 (see previous item 5.8); another concerns Communications not considered Relevant Facts; and a third that serves to provide clarifications to inquiries from the CVM and Bovespa. INFORMATION OF COMPANIES IN JUDICIAL OR OUT-OF-COURT RECOVERY Companies must send, via the IPE System, through the category "Information of Companies in Judicial or Out-of-Court Recovery", four types of documents, namely, "Initial Petition", "Recovery Plan", "Sentences" and "Other Documents". It is worth noting that, in addition to sending the above-mentioned documents, companies must proceed with the registration update in the CVMWEB System, changing their situation to "In Judicial Recovery" and "In Out-of-Court Recovery", from the date of the sentence that grants the request (see previous item 5.6).

19.2. IPE MANUAL
It is absolutely indispensable to read the document "IPE Manual", available on the CVM page, which presents a list of the categories, types and species of documents provided for in the system, classified by the obligation or not of sending, by the periodicity of its disclosure and by the need or not of publication by the press, as well as bringing guidance regarding the procedure to access the system (sending and cancellation of data and IR Director registration). Sincerely, ELIZABETH LOPEZ RIOS MACHADO Superintendence of Corporate Relations CLARIFICATION ON CIRCULAR LETTER CVM/SEP No. 02/2006 Contact the CVM

Circular Letter CVM/SEP 02/06

Lineage: In force

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