Circular Letter CVM/SEP 03/2011: General Guidelines for Institutions Authorized by the Central Bank Regarding DFP and ITR Forms and Financial Statements for the Fiscal Year Ended 12/31/2010

CIRCULAR LETTER/CVM/SEP/No. 03/2011
Rio de Janeiro, January 18, 2011
SUBJECT: General guidelines for institutions authorized to operate by the Central Bank of Brazil regarding the submission of DFP and ITR Forms and financial statements for the fiscal year ended 12/31/2010

Dear Investor Relations Director,

1. The objective of this Circular Letter is to, in addition to what was already stated in Circular Letter CVM/SEP No. 02/11, provide guidance to public companies that are institutions authorized to operate by the Central Bank of Brazil, regarding the completion and submission of DFP/10 Forms and ITR Forms for the 2010 fiscal year and subsequent years, as well as regarding the disclosure of financial statements for the fiscal year ended 12/31/2010, all periodic documents provided for in CVM Instruction No. 480/09.

I. Financial Statements for the fiscal year ended 12/31/2010 – article 25 of CVM Instruction No. 480/09 and article 132 of Law No. 6.404/76

2. Article 22, § 2, of Law No. 6.385/76 provides that the regulations issued by the Securities and Exchange Commission (CVM) regarding (i) accounting standards, (ii) reports and opinions of independent auditors, (iii) management report, and (iv) financial statements apply to financial institutions and other entities authorized to operate by the Central Bank of Brazil, insofar as they are not conflicting with the regulations issued by it.

3. Regarding consolidated financial statements for the closing of the fiscal year, the Central Bank of Brazil, through Resolution No. 3786/09, determined that “[financial institutions [...] constituted in the form of a public company [...], must, from the base date of December 31, 2010, prepare and disclose annually consolidated accounting statements adopting the international accounting standard, in accordance with the pronouncements issued by the International Accounting Standards Board (IASB)].” Circular No. 3472/09 provided for a deadline of ninety days after the closing of the fiscal year for the disclosure of these statements.

4. Thus, with the exception of the provisions of article 2 of the aforementioned resolution, the regulations of the Central Bank of Brazil, regarding consolidated financial statements for the closing of the fiscal year, converged with the regulations issued by the CVM.

5. However, the Central Bank of Brazil, through Circular No. 3516/10, extended to up to one hundred and twenty days the deadline provided for in Circular No. 3.472/09, for the disclosure of consolidated financial statements prepared based on the international accounting standard, regarding the base date of December 31, 2010.

6. It should be noted that, by virtue of the provisions contained in articles 132 and 133 of Law No. 6.404/76 and article 25 of CVM Instruction No. 480/09, the administrators of public companies must disclose to the market the individual and consolidated financial statements, within a period of up to three months from the closing of the fiscal year or up to one month before the date scheduled for the holding of the ordinary general assembly, if earlier.

7. Law No. 6.404/76 also establishes, in its article 132, that the Ordinary General Assembly must examine, discuss, and vote on these financial statements, within the 4 (four) first months following the end of the social year.

8. Such financial statements must be prepared in accordance with the rules applicable to the issuer, in force on the date on which the issuance of these statements is authorized, which must be done in observance of the legal deadline.

9. In light of the above, institutions authorized to operate by the Central Bank of Brazil must prepare and make available to their shareholders, within the period mentioned in paragraph 6, the following set of audited financial statements 1:

(i) individual and consolidated financial statements for the closing of the fiscal year prepared based on the same accounting standard, in observance of the regulations issued by the CVM, insofar as they do not conflict with regulations issued by the Central Bank regarding the same matter; or

(ii) individual financial statements for the closing of the fiscal year prepared, in observance of the regulations issued by the CVM, insofar as they do not conflict with regulations issued by the Central Bank regarding the same matter, and consolidated accounting statements prepared based on the international accounting standard.

10. We recommend that the companies in reference disclose within the legal deadline and voluntarily submit to the approval of their ordinary general assembly, consolidated financial statements mentioned in item (ii) of § 9, prepared based on the international accounting standard.

11. In the case of institutions that decide to use the deadline extension provided for in Circular No. 3.516/10 and, consequently, disclose and submit for the consideration of their assembly in this fiscal year, consolidated financial statements prepared in conformity with a different accounting standard (as per item (i) of § 9), we draw attention to the following aspects to be observed:

(i) the administrators of the institutions must ensure that the respective explanatory notes contain information that allows the user of the financial statements to understand the impacts resulting from the adoption of the international accounting standard, taking into consideration that, in accordance with article 14 of CVM Instruction 480/09, the information disclosed by public companies must be complete, consistent, and must not mislead the investor;

(ii) the consolidated financial statements prepared based on the international accounting standard, regarding the base date of December 31, 2010, must be submitted to the CVM, via the IPE System, under the category “Economic-Financial Data”, type “Financial Statements in International Standards - Financial Statements in IFRS”, within a period of up to one hundred and twenty days, from the closing of the fiscal year.

12. It is also recalled, in observance of the provisions of articles 14 to 17 and 26 of CVM Instruction 480/09, that the explanatory notes contain information that allows the user of the financial statements to understand the impacts resulting from the adoption of distinct criteria in the preparation of individual and consolidated statements, if applicable.

II. DFP/10 Form

13. As provided for in article 28 of CVM Instruction No. 480/09, the DFP Form must be disclosed on the same date as the submission of the financial statements, and must be completed with the data from these statements prepared in accordance with the accounting rules applicable to the issuer.

14. Institutions that decide to use the deadline extension provided for in Circular No. 3.516/10 must submit, on the same date as the submission of the financial statements that will be submitted for the consideration of the shareholders' general assembly, the DFP/10 Form with the completion of only the information related to the individual statements.

15. Subsequently, upon the disclosure of consolidated accounting statements prepared based on the international accounting standard, the tables referring to the consolidated data must be completed, and the DFP/10 Form must be resubmitted with the complete information.

16. Institutions that decide to voluntarily prepare, within the legal deadline, consolidated statements based on the international accounting standard must submit the DFP/10 Form completed with the data from these statements, as per item (ii) of § 9 above.

III. ITR Form

17. Regarding quarterly information, the Central Bank of Brazil, through CMN Resolution No. 3853/10, determined that “[financial institutions [...] constituted in the form of a public company [...] that disclose intermediate consolidated accounting statements, must observe the pronouncements issued by the International Accounting Standards Board (IASB), translated into Portuguese by a Brazilian entity accredited by the International Accounting Standards Committee Foundation (IASC Foundation)].”

18. However, through Circular Letter 3447/10, the Central Bank of Brazil clarified that “article 1 of CMN Resolution No. 3.853, of April 29, 2010, when applying exclusively to institutions that disclose intermediate consolidated accounting statements prepared in the international accounting standard, in conformity with the pronouncements issued by the International Accounting Standards Board (IASB), did not establish the obligation to disclose intermediate consolidated accounting statements in this standard, nor did it prohibit the disclosure of intermediate consolidated accounting statements prepared in a different accounting standard.”

19. Item I of article 29 of CVM Instruction No. 480/09 establishes that the ITR Form must be completed with the data from the quarterly accounting information prepared in accordance with the accounting rules applicable to the issuer.

20. In light of this, if the Company chooses to prepare intermediate consolidated financial statements in observance of the pronouncements issued by the IASB, these statements must serve as the basis for completing the ITR Forms.

21. Otherwise, the ITR Forms must be completed with the data from the consolidated financial statements prepared in accordance with the regulations issued by the CVM, insofar as they do not conflict with regulations issued by the Central Bank of Brazil regarding the same matter. These same criteria apply to individual financial statements. In these cases, it will not be necessary to resubmit the 2010 ITR Form in IFRS.

22. It is also recalled, with regard to these quarterly information, in observance of the provisions of articles 14 to 17 of CVM Instruction 480/09, that the explanatory notes contain information that allows the user of the financial statements to understand the eventual relevant impacts resulting from the adoption of criteria distinct from those provided in the Pronouncements, Interpretations, and Guidelines of the CPC, approved by the CVM, fully convergent with international standards.

23. Attention is drawn to the fact that the quarterly information form - ITR must be completed, in accordance with articles 25 to 27 and 29 of CVM Instruction No. 480/09, with the data from the quarterly information prepared in conformity with the rules applicable to the complete set of individual and consolidated financial statements, as described in Technical Pronouncement CPC 26.

24. It is finally emphasized that the guidelines contained in items 1, 3, 4, 5, 6, and 7 of the aforementioned Circular Letter CVM/SEP No. 02/11 apply to financial institutions and other institutions authorized to operate by the Central Bank of Brazil.

Sincerely,

SIGNED ORIGINALLY BY
JORGE LUIS DA ROCHA ANDRADE FERNANDO SOARES VIEIRA Manager of Corporate Monitoring 5 Superintendent of Corporate Relations In Office

1 These financial statements must be submitted to the CVM, via the IPE System, under the category “economic-financial data”, type “Complete Annual Financial Statements”