Circular Letter CVM/SIN No. 03/2011

CIRCULAR LETTER/CVM/SIN/No. 3/2011
Rio de Janeiro, August 22, 2011

To Administrators of Portfolios, Securities Consultants and Analysts, Directors Responsible for Portfolio Administration, Securities and Investment Fund Consulting, and Representatives of Non-Resident Investors.

Subject: Guidelines on procedures related to the operation of investment funds, registration of non-resident investors, and portfolio management, consulting, and securities analysis activities.

Dear Sir,

The publication of this Circular Letter aims primarily to clarify doubts regarding the best way to comply with the regulations governing investment funds, the registration of non-resident investors, and portfolio management, consulting, and securities analysis activities. The document also presents the understanding of regulatory provisions and, consequently, their application, as adopted by the Superintendence of Institutional Investor Relations (SIN).

Observing the recommendations listed below will contribute to minimizing potential deviations and, consequently, reducing the need for the SIN to formulate requirements. In this way, it will allow the registration and supervision process for these participants to proceed swiftly, in favor of investor protection and market integrity.

We emphasize, for the record, that some positions and interpretations of this Superintendence regarding certain aspects of the regulation presented here do not necessarily represent the final interpretation of the Securities and Exchange Commission (CVM) on the subject.

Thus, we set forth below understandings expressed by this Superintendence resulting from consultations and complaints made by market participants.

We emphasize that this circular was prepared based on Circular Letter/CVM/SIN/No. 04, of November 8, 2010. The changes and additions made are in blue and bold.

1. CVM Instruction No. 409/04 – Investment Funds

1.1 Shares of Closed Companies in Portfolio – Art. 2, VII and Art. 64, VI

It is prohibited for an investment fund administrator to voluntarily acquire shares issued by a closed company, as these are assets that do not meet the requirement set forth in Article 2, § 3 of the Instruction, according to a resolution by the CVM Collegiate Body on December 16, 2008.

The above does not prevent, however, the administrator from facing the possibility that these assets arise in the fund's portfolio for reasons outside their discretionary management powers. This may occur, for example, when the fund holds shares issued by an open company that cancels its registration with the CVM, in accordance with Article 2, I of CVM Instruction No. 361/02.

In such cases, the issue must be treated as a passive disqualification, in the manner provided for in Article 89 of the Instruction, and any intention to alienate these assets must, in compliance with Article 64, VI, be submitted for prior CVM approval.

1.2 Investment in Privately Issued Debentures – Art. 2, § 1, VIII

Investment of fund resources in privately issued debentures, i.e., those that have not been subject to public offering registration for distribution with the CVM, is permitted, under the provisions of Article 2, item VIII.

We remind you that such assets must be registered in a registration, custody, or financial settlement system duly authorized by the Central Bank of Brazil (BACEN) or the CVM, within their respective areas of competence, as established in § 3 of the cited Article.

It is also necessary for the administrator to verify, at the time of investment and also during the maintenance of these debentures in the fund's portfolio, compliance with the limits established in Articles 86 and 87, relating respectively to concentration by issuer and by asset category.

However, we alert that if the issuers of the debentures are not open companies registered with the CVM, the administrator must have procedures for accessing the information and documents necessary for pricing and evaluating the debentures, prior to their acquisition, and also during their maintenance in the fund's portfolio, employing in the analysis and evaluation of this information the care and diligence that any active and honest person usually dispenses in the administration of their own business.

1.3 Credit Assets – Art. 2, § 1, VIII

We recall that, in the understanding of this technical area, the assets provided for in Article 2, § 1, VIII, referred to as "any other credits, titles, contracts, and operational modalities," should not be confused with the credit rights specifically conceptualized by Article 2, I of CVM Instruction No. 356/01.

In this sense, we understand that Article 2, § 1, VIII does not cover non-performing credit rights (those where "the debtor's obligation is linked to a counter-performance by the originator, [such as, for example, in the case of service provision and/or delivery of future goods] at the time of the credit assignment to the fund" – Collegiate Body decision in CVM Process No. RJ20046913, of October 4, 2005), nor expectant credit rights (whose constitution depends on the occurrence of a future and uncertain event), which have specific provision in their own regulation for Credit Rights Investment Funds (FIDCs, CVM Instruction No. 356/01) and Non-Standardized Credit Rights Investment Funds (FIDCNPs, CVM Instruction No. 444/06), as applicable.

1.4 Hiring Third Parties to Provide Asset Custody Services Abroad for Investment Funds – Art. 2, §5

Article 2, § 5, II, provides that, for the acquisition of assets traded abroad, the fund's custodian must ensure their existence, specifically hiring third parties duly authorized to exercise the custody activity in other jurisdictions and supervised by a recognized local authority.

However, if the institution responsible for the fund's custody can perform the custody of the assets acquired abroad, it will not be necessary to hire a third party to perform this activity, as the purposes of the rule would be met.

In the event of hiring third parties to ensure the existence of assets abroad, the criteria adopted by the contracted institution must be verified by the fund's custodian, to certify that it meets its own control criteria and those established in the legislation in force in Brazil.

Although it is the duty of the custodian hired abroad to ensure the existence of the fund's portfolio assets, the fund administrator, by virtue of due diligence, as provided in Article 65A, must, in the case of investments in shares of other funds (not admitted to trading on markets supervised by a recognized authority), employ all the effort required by the circumstances to verify if this guarantee also extends to the underlying assets held by the invested fund.

Finally, regarding Article 2, § 5, I, we judge that the obligation to have a cooperation agreement with the CVM, which is imposed on the jurisdiction where the registration, custody, and financial settlement system used is located, does not extend to the jurisdiction where the institution responsible for registering the assets in those systems is headquartered.

1.5 Extension of Distribution Period for Closed Funds – Art. 9

In accordance with the sole paragraph of Article 9, the CVM may, due to a reasoned request, extend once, for a period of up to 180 days, the initial 180-day period provided for the distribution of shares of closed investment funds.

On the other hand, reading item II of Article 9 of the Instruction could lead to the understanding that extension requests would only be reviewed by the CVM if the minimum number of shares representing the initial net asset value of the closed fund is not subscribed within the 180-day period from the registration of the offering.

However, in reality, the device for the compulsory cancellation of closed funds that do not reach the minimum number of subscribed shares aims not to burden shareholders with the operating costs of a fund that does not have the minimum scale for such.

Thus, it should not be generally prevented from funds seeking to reach the number of shares provided for by their structurers in the offering, by obtaining a longer period for the public distribution of shares, as otherwise, there is a risk of acting against the interests of investors in this type of financial asset.

In this way, this technical area considers broad the prerogative to request the CVM to extend the distribution period for closed fund shares, even in cases where the minimum number of shares has already been subscribed.

Such understanding is supported by the content of § 4 of Article 28, which requires the return to subscribers of the amounts paid, "...if the number of shares provided for is not subscribed within 180 (one hundred and eighty) days, extendable by an equal period...".

The request must be made with some advance notice before the end of the placement period, so that the CVM has sufficient time to adopt a careful decision by that date, and must be justified in a reasoned manner, ensuring the absence of prejudice to the share subscribers up to the moment of the request.

To this end, it is necessary for the request to include the agreement of all these subscribers, given the mandatory application of the paid amounts, during the distribution process, in federal public bonds or in shares of investment funds classified as Short Term.

1.6 Fiduciary Assignment of Investment Fund Shares – Art. 12

The Collegiate Body expressed the understanding, in a meeting on July 3, 2008, that the constitution of guarantees on open fund shares through fiduciary assignment operations is regular, in accordance with Article 66B of Law No. 4,728, of July 14, 1965.

This decision was based on the possibility that such a guarantee could enable the granting of credit on more favorable conditions to the assigning shareholders, which would stimulate greater wealth circulation. It was also taken into consideration that this practice, already adopted in the market – based on a legitimate interpretation of the norm – means that a new CVM orientation would shake the legal security of the market and impose restrictions, without an apparent benefit justifying it.

Without prejudice to the above, the Commission will prepare studies aimed at creating rules that address the relevant aspects related to the use of this mechanism, such as, for example, the information flow between the fund administrator, assigning debtors, and assigning creditors, and the definition of the duties of administrators and shareholders regarding redemption, voting, and other events related to the encumbered shares.

1.7 Restrictions on Shareholders' Redemption Rights – Articles 15 and 16

In accordance with the Collegiate Body decision in CVM Process No. RJ20084449, of February 9, 2010, it is irregular for the administrator to establish in the fund's bylaws conditions and restrictions on shareholders' redemption rights that are not provided for or do not respect the limits of Articles 15 and 16 of the Instruction.

On the other hand, that Collegiate Body decision also reiterated that the Adhesion Term has a specific purpose, namely, to record the delivery of certain information to shareholders (as, indeed, had also been highlighted in the Collegiate Body decision regarding CVM Process No. RJ20087977), and thus, it is not an adequate means for other purposes not inherent to it, such as, for example, the granting of powers or the concession of rights by the signing shareholder to the fund administrator.

When using the faculties provided in Article 16, the administrator must also respect the guidelines established by the Collegiate Body decision in CVM Process No. RJ20090247, of January 16, 2009, where it was recalled that it is possible for the administrator, based on that provision, to suspend both the possibility of requesting new redemptions and the procedures related to redemptions already requested (regardless of whether pricing has been done or not), given the purpose of the relevant provision of the norm, which aims to protect, directly, the integrity of the fund (i.e., all shareholders) much more than that of the investor who requested the redemption.

In this same sense, regarding redemptions already priced but not yet paid, Article 15, V of the Instruction would not apply, as its application would certainly make impossible the very possibility of suspending redemptions already requested but not yet paid.

Also regarding this, as determined in that decision, investors in the fund maintain the condition of shareholders until their respective redemption requests have been priced. After pricing, investors are considered creditors of the fund, with the rights and duties inherent to that condition.

Regarding the application of Article 16 of the Instruction, it is worth mentioning the Collegiate Body decision regarding CVM Process No. RJ20065768, of January 30, 2007, in which the mandatory nature of the norm regarding the possibilities of deliberation in assemblies convened based on that provision was recorded, namely: (1) the substitution of the administrator, the manager, or both; (2) the reopening or maintenance of the fund's closure; (3) payment in securities and financial assets; (4) the spin-off; or (5) the liquidation of the fund.

1.8 Establishment of Fixed Dates for Share Conversion – Art. 15, I

It is regular to establish fixed and determined dates for share conversion, as provided in Article 15, I, provided that the fund's bylaws address the matter clearly and objectively, and the prospectus alerts to the special liquidity condition of the shares of this fund, in attention to the requirement of Article 39.

We emphasize that this freedom to stipulate deadlines for share conversion is not confused with the maximum deadline, also applicable, of five business days for the payment of redemption requests, as provided in Article 15, III, since this is a deadline that must be counted only from the realization of said share conversion.

1.9 Redemption Payment After Banking Business Hours – Art. 15, III

It is common market practice to adopt the closing share price methodology as a parameter for the daily calculation of amounts due for redemption requests.

However, in specific cases where the redemption payment occurs on the same day as the request, it is certain that this calculation can only be performed after the closure of the markets in which the fund operates, so that the payment of this redemption is made at a time when it may no longer be possible for the shareholder to perform, for example, various banking transactions with the paid resources, in the case of payment with credit to a checking account.

Thus, for a fund that trades its assets on the São Paulo Stock Exchange, the redemption payment can only occur after 5:00 PM, i.e., at a time when Electronic Available Transfers (TED) can no longer be performed.

Therefore, in cases where the fund provides for redemption payment on the same day as the request, and also adopts calculation based on the closing share price, it is important that investors and shareholders be specifically alerted, through a specific mention in the prospectus, about the particular liquidity restrictions to which they may be subject due to the redemption payment being made at a time that no longer allows for various banking transactions with their resources.

1.10 Distinct Limits for Investment, Movement, and Holding – Art. 40

There is no irregularity in adopting distinct limits for minimum initial investment in the same investment fund, varying according to different segments of the target audience to which it is directed. As an example, we cite the use of lower initial investment limits for investors who already have other investments with the same administrator.

In this sense, as the fund's minimum investment rules are made public in the prospectus, we do not identify any information asymmetry or breach of fiduciary duty by the administrator in adopting differentiated limits. Thus, this differentiation – provided it is in accordance with reasonable and non-arbitrary criteria – does not offend the Principle of Equality among Shareholders, or any other provision of the Instruction.

This principle aims to prevent differentiations that cause harm to the investor, which does not apply to this case, as no negative effects are foreseen for those who invested a larger or smaller amount to enter the fund.

On the other hand, in accordance with the decision in Collegiate Body Meeting No. 47, of December 9, 2008, it is also worth emphasizing that this possibility is not restricted only to minimum initial investment limits, but also to movement limits, as well as to the minimum holding period of the fund.

We emphasize, however, that these criteria must always be stated clearly and objectively in the fund's prospectus, in compliance with the requirements of Article 40, I and VI.

1.11 Means of Document Availability – Art. 48

As is well known, it is the administrator's duty to ensure that the disclosure of any information related to the fund is given on equal conditions to all its shareholders, in attention, especially, to what Article 40, XIII determines.

In this context, considering the wide reach of the distribution of shares of certain funds in the Brazilian market, we understand that the availability of documents related to proposals submitted to general assemblies, as provided in Article 48, § 4, must be done in a manner compatible with the dispersion of the fund's investors and with the means used by the investor to access fund information and make their investment decision. Thus, for example, it is recommended that availability be provided through the maintenance of specific access to these documents on the administrator's website on the World Wide Web.

1.12 Use of Online Services by Investment Funds – Arts. 47 to 55

In accordance with a Collegiate Body decision within the scope of CVM Process No. RJ201012738, the CVM considered regular the adoption of electronic systems that allow remote participation of investors in general assemblies of funds of which they are shareholders.

To enable such a mechanism, the Collegiate Body understood that it is possible to access the information of the involved shareholders that is necessary for structuring the electronic platform and the participation of shareholders in the meeting. For this purpose, prior approval of each shareholder is not necessary, but the adoption of this mechanism and the sharing of information must be communicated to the involved investors.

Still with the same objective, there is no legal impediment for, in this system: (1) the adoption of digitally signed powers of attorney with private digital certificate, (2) the availability of chat, blog, or forum on the Internet for the exchange of information or comments among shareholders, (3) the sharing of information obtained by this service provider with the fund administrator for the purpose of updating shareholder registration, or (4) the live transmission of general assemblies via the World Wide Web.

1.13 Shared Management in Investment Funds – Art. 56

In a decision taken at a meeting on 6.5.2008, the CVM Board considered the constitution of an investment fund that employs more than one manager to be regular, as it does not contravene any regulatory norms, being a natural consequence of the growing specialization of third-party resource management markets.

In that same decision, the Board also verified that the hiring of two managers for the fund was the subject of deliberation at a general meeting of unitholders convened for that purpose, in accordance with Art. 47, II, of the aforementioned Instruction, and that the responsibility for management acts was fully assumed, under a regime of contractual solidarity, by both service providers.

Thus, while recognizing the regularity of shared management in an investment fund, that decision required that the following conditions be respected:

(i) execution of a contract in accordance with Art. 56, § 1º, which (1) ensures the joint liability of managers for shared management acts; (2) grants authorization for orders, to the fund's custodian, limited to the specific market of activity of each manager, in attention to Art. 59, Sole Paragraph, I; and (3) authorizes the administrator to intervene as an arbitrator in case of eventual conflicts in investment decisions.

(ii) alert to investors, through the regulations and the prospectus, that management will be exercised by more than one service provider, in order to inform, with emphasis, the specific attribution of each; and

(iii) information, in the prospectus, on (a) the benefits and risks arising from the shared management structure; (b) the condition of joint action by managers in conducting the fund's investment policy, including with regard to the joint liability provided for in Art. 57, § 2º; and (c) the role of the administrator as an arbitrator for the resolution of conflicting investment decisions.

At the time of the dissemination of this circular letter, the CVM is striving to adapt its electronic information reception system, in order to allow the inclusion of more than one manager in an investment fund. However, while the submission of information regarding more than one manager is not yet available on CVMWeb, the administrator must highlight the fund's condition to the market and its investors, by sending a material fact regarding it, as provided for in Art. 72 of the Instruction.

1.14 Advisory Committee in Investment Funds – Art. 63, caput

In a decision on a consultation formulated regarding the possibility of constituting an investment fund with an advisory committee remunerated by the fund itself (RJ20093936), it was emphasized that, based on the principles provided in Art. 37 of the Constitution of the Republic and Art. 2 of Law No. 9,784/99, the granting of exceptions to the compliance with CVM regulatory provisions must always be given with extreme care, and only in cases where the existence of a public interest in the authorization that justifies it in the concrete case is evident.

Furthermore, the Board recalled, in appreciating a consultation from this Superintendency in this sense, that investment funds registered with the CVM, even if they do not provide for application in securities or are not intended for public distribution, are subject to all burdens inherent to the condition of registered funds.

Thus, in such cases, the registration must be examined and granted as if the effort of public sale of quotas were carried out, and the fund is subject to all norms imposed by CVM regulation, in terms, furthermore, of the Board decision taken within the scope of Process CVM RJ20052345, of 21/2/2006.

1.15 Promise of Minimum Profitability – Art. 64, V

The Board, in a meeting on 14.2.2008, within the scope of process CVM RJ200710500, emphasized that the promise of predetermined profitability, referred to in Art. 64, item V, of the Instruction, is that considered frivolous and illusory, i.e., that may induce the investor to judge that the investment is exempt from the risk of not remunerating it as promised.

Thus, a perspective of profitability ascertainable by strictly objective and previously known parameters, when accompanied by the necessary alerts that this profitability may not be obtained, does not characterize a "promise of predetermined yield," which would remove the prohibition under analysis.

It is important to say that objective and previously known parameters do not confuse with the mere expectation, opinion, or desire of the administrator, even if theoretically founded. In this sense, mechanisms are required, such as put options, insurance contracts, etc., that allow ensuring the achievement of the desired profitability, despite typical market fluctuations.

In this way, whatever the guarantee adopted, its nature and extent must always be clarified, with the inclusion of a warning that its adoption does not completely exclude the risk that the desired profitability may not be reached. This same logic also applies to the disclosure of information in the sale or distribution of fund quotas, as regulated by Art. 74 of the Instruction.

1.16 Restructuring of Investment Fund Families – Art. 64, VI

In decisions taken at the Meeting of 17.06.08, the CVM Board established the guidelines and parameters that must be observed in requests for approval or exemption from compliance with requirements provided in the Instruction for restructuring of investment fund families, with requests for trading of shares, quotas of open funds, and other assets outside the stock market or over-the-counter market, and thus, in exemption from the prohibitions contained in Articles 12, 64, VI, and 110, I of the Instruction.

With the objective of making the procedure of such operations more expedited, the CVM delegated competence to this Superintendency to authorize the transfer of assets from investment funds privately, through the issuance of CVM Deliberation No. 546, of August 4, 2008.

As a rule, these operations involve the constitution of a fund that begins to concentrate an investment policy already adopted in a dispersed manner by several existing investment funds. On the other hand, these funds are transformed into quota funds that begin to have as their objective to invest, exclusively, in that fund.

The need for consultation will exist when these operations involve funds that are not intended exclusively for qualified investors, because, otherwise, the operation between the funds may occur based on Article 110, I, of the Instruction.

Preliminarily, it is worth observing that the examination of these consultations is limited to the verification, by the technical area, of the feasibility, convenience, and opportunity of exemption from the requirement contained in the cited norm, which is why we reiterate that, in these cases, no judgment of value is issued regarding the operations presented.

We emphasize that, if the aforementioned funds have quotas of other open investment funds in their portfolio, the treatment that the administrator intends to give to these assets must also be detailed in the request, considering the prohibition for transfer of ownership imposed by Art. 12 of the Instruction.

Furthermore, we observe that the prohibition treated by Art. 64, VI is limited to the specific trading of shares outside the stock exchange or over-the-counter market, which is why operations involving funds that do not have shares or quotas of open funds in the portfolio are exempt from prior evaluation by this Autarchy.

We remind you that, in the aforementioned operations, the administrator must demonstrate that there will be no prejudice to unitholders as a result of the operation, such as alteration of the investment policy to which investors will be exposed; modification of tax treatment; changes in total administration and performance fees charged; or alterations in redemption conditions.

On the other hand, as these processes involve the alteration of regulations, a requirement for their approval is that the restructuring, with all the appropriate detailing of advantages and risks to unitholders, be submitted for appreciation by the involved unitholders at a general meeting convened for this purpose.

Furthermore, sufficient homogeneity between the portfolios must be demonstrated, which may evidence a similarity between the funds that justifies the consolidation of the portfolios into a single Master fund, and also to prove that there is no mixing, in the operation, of funds with investors of distinct risk profiles.

Also in this aspect, it is up to the administrator to demonstrate that the portfolio contains only assets of reliable pricing, so as to ensure that some funds are not prejudiced in relation to others in the verification of assets, which must always be carried out at market value.

It is worth observing that this structure allows some funds of the same family to present differences in relevant aspects, such as the term for redemption subscription, which implies a risk that, in scenarios of significant redemption demands, the fund with a longer term to meet them may be prejudiced in relation to the others.

In these cases, we emphasize the need for the aforementioned risk to be highlighted in the summons to the general meeting that will deliberate on the restructuring of the fund with a longer redemption term, and also, that a specific alert be included in the prospectus of this fund, for this particular risk.

Finally, it is a condition for the regularity of the operation that the funds that will be transformed into quota funds respect the provisions of Article 102 of the Instruction. The accounting statements and the independent audit report related to the operation must be archived by the administrator and kept available to the CVM.

1.17 Exercise of Put Options on Shares in Public Offers – Art. 64, VI

In deliberating on a consultation formulated by a market participant in Process CVM No. RJ2115965, the Board emphasized that the exercise of put options by remaining shareholders in a public offer for the acquisition of shares regulated by CVM Instruction No. 361/02 should not be considered as a private operation prohibited by Art. 64, VI, of the Instruction, since they represent mere "continuation of the offer previously carried out in a stock exchange environment."

For this reason, we inform that in line with the aforementioned Board decision, the prohibitions provided for in Article 64, VI, of the Instruction do not apply to investment funds that fall within the conditions provided for by Article 10, §§ 2º and 3º, of CVM Instruction No. 361/02.

1.18 Investment Objectives – Arts. 65, XIII and 65A

This Superintendency understands as positive the establishment of objective references to evidence profitability goals (provided they do not constitute a guarantee of future results, in terms of Art. 74) that the fund intends to achieve, such as percentages on known market indices (CDI, Ibovespa, IbrX100, etc.) or fixed percentages above a certain price index (IPCA, IGPM, etc.), since they serve as further information regarding the management goals and objectives of the fund, according to Art. 40, I, of the Instruction.

However, we alert that such goals must always be based on reasonable and objectively calculated expectations of the results that the fund expects to obtain based on the investment policy and cost structure it adopts.

Thus, any objective reference must take into account, in addition to the fund's own investment policy, also the expenses that will be incurred by the fund, such as those resulting, for example, from the charging of fees (administration and performance, if any), as well as the charges provided for in Article 99 of the Instruction.

1.19 Investment Limits in Shares of the Administrator, Manager, or Affiliated Companies – Art. 86, § 2º, and 95B

In responding to a consultation presented by the Superintendency of Market and Intermediary Relations, the CVM Board, in deciding on Process CVM No. RJ200712876,

consignated the possibility of constituting investment funds of the Stocks or Multimarket classes that provide for the investment of more than 95% of their net asset value in a specific share issued by the administrator, the manager, or an affiliated company, given the permissions contained in Art. 95B, § 2º and Art. 97, § 3º, of the Instruction, and provided that the conditions provided for in those devices are respected.

It is worth remembering that the basis for the concession was the fact that the prohibition contained in Art. 86, §2º is not precisely a risk diversification rule, but, rather, a conflict of interest rule whose objective is to prevent fund resources from being used to provide liquidity or sustain quotations of papers issued by companies from the same group as the administrator or the manager.

Thus, the Board concluded that the provisions of Art. 86, §2º should not be applied in the case where the declared objective of the fund, known to the investor, consists of applying exclusively the fund's resources in securities issued by the administrator, the manager, or any company affiliated with them.

1.20 Investment in FIP Quotas by Qualified FIs 110B and 110A – Article 86, § 10, II

As is known, investment funds are prohibited from investing in quotas of other investment funds that are not provided for in Article 87, I, as provided in Article 86, § 10, II, of the Instruction.

However, the Board, in a decision regarding Process CVM No. RJ200912749, taken at the Meeting of 10/8/2010, deliberated in the sense that the aforementioned prohibition would not extend to exclusive funds (Article 111A) or those with an initial minimum application of R$ 1 million (Article 110B), since they are expressly exempt from observing the concentration limits by asset modality provided for in Article 86 of the Instruction.

Thus, it is possible for these funds to apply in quotas of other investment funds not listed in Article 87, I, of the Instruction, such as, but not limited to, Investment Participation Funds (FIPs), Investment Funds in Quotas of Investment Participation Funds (FICFIPs), and Investment Funds in Non-Standardized Credit Rights (FIDCNPs).

However, it is worth remembering that the exemption from compliance with these limits does not exempt any fund (neither exclusive nor with an initial minimum application of R$ 1 million) from observing the provisions of item I of § 10, given the specific and distinct objective of this device, which intends to preserve the integrity of the fund's patrimony.

1.21 Investment in FIDC and FICFIDC Quotas – Article 87, I, and 112, § 5º

In line with the decision regarding Process CVM No. RJ20097903, of 3/16/2010, the Board reiterated the possibility of application, by investment funds and investment funds in quotas of investment funds, in quotas of Credit Rights Investment Funds ("FIDCs") and Investment Funds in Quotas of Credit Rights Investment Funds ("FICFIDCs").

Thus, the Board, in examining the issue, emphasized the applicability of the provisions contained in Article 87, I, of CVM Instruction No. 409/04, for investment funds; and of Article 112, § 5º, for investment funds in quotas of investment funds, provided that the limits provided for in that Instruction are observed.

Also with regard to the application and incidence of Article 87, I, of the Instruction, it is also worth remembering the content of the Board decision of Process CVM No. RJ20097219, judged on 6/1/2010, in which, in response to a consultation, it was decided that any committed operations that are not specifically backed by public titles, in conformity with the exemption contained in Art. 87, II, "a", of the Instruction, must be computed in the general limit provided for in Article 87, I, of that norm.

At this point, the CVM Board understood that exempting compliance with the limit of Art. 87, I, of the Instruction for committed operations of other nature would depend on a change in the norm, which would not be appropriate to do within the scope of a consultation, but rather, within the scope of a regular and conventional normative alteration process that counts, moreover, with the participation of the market in a public hearing process.

1.22 Application in Quotas of Stock Index Funds (Art. 87, I, f)

CVM Instruction No. 359/02 regulated the constitution and functioning of Index Funds with quotas traded on a stock exchange or organized over-the-counter market.

Quotas of Index Funds representative of a stock portfolio are securities with characteristics similar to those of stock investment fund quotas, and may be acquired by investment funds and investment funds in quotas.

Due to these peculiar characteristics, doubts arose among market participants regarding the classification of these securities under the provisions of the Instruction, which is why we understand it necessary to make the following clarifications:

a) Index Fund quotas may be subject to lending operations in the manner of current legislation, in terms of CVM Deliberation No. 471/04;

b) Regardless of the titles and securities held in the portfolio, the Index Fund must be considered as an issuer for purposes of compliance with the limit established in Article 86, as well as the quotas of its issuance must be considered as financial assets, for purposes of the limit provided for in Article 87;

c) Stock Index Fund quotas must be considered, together with the other securities listed in § 1º, item I, of Art. 95B, for purposes of classifying the investment fund as a stock fund;

d) Provided that it is provided for in its regulations, an Investment Fund in Quotas of Stock Investment Funds or an Investment Fund in Quotas of Multimarket Investment Funds may apply up to 100% of its net asset value in Stock Index Fund quotas, in view of the provisions of Art. 112, § 4º.

1.23 Minimum net asset value – Art. 105

Article 105 of the Instruction specifies that, after 90 days from the start of activities, an open fund that maintains, at any time, a daily average net asset value lower than R$ 300,000.00 for a period of 90 consecutive days must be immediately liquidated or incorporated into another fund.

Thus, for the purposes of such a rule, the calculation of daily average net asset values must be carried out only after the expiration of the 90-day period from the start of the fund's activities, which occurs upon the first subscription of fund quotas.

For this reason, it is consigned that the obligation of liquidation or incorporation into another fund, required by Article 105, can only occur, in the most unfavorable of hypotheses, after 180 days from the first subscription of fund quotas.

1.24 Cancellation of Investment Fund Registration – Art. 107

The cancellation of an investment fund's registration requires the sending of documents to the CVM that prove the closure of the fund and the request for deregistration of the fund in the National Registry of Legal Entities – CNPJ.

Under certain circumstances, an investment fund that has already had its closure deliberated by a general meeting of unitholders or determined by the total redemption of its quotas is unable to effectuate it, for exogenous reasons and unrelated to the will of its administrator and unitholders.

Examples of reasons that prevent the regular closure of the funds in these cases are: (1) judicial decisions that determine the maintenance of the fund in operation; (2) assets in the portfolio with no liquidity; and (3) dividends and other benefits declared in favor of the fund, but which have not yet been paid.

These funds, given the particular situation they are in, also commonly present net asset values lower than R$ 300,000.00, which would subject them, in principle, to immediate

liquidation or incorporation into another fund, in accordance with Article 105.

Thus, pursuant to CVM Resolution No. 571 of March 31, 2009, it was established that, in these exceptional cases, the fund administrator may request a waiver of the obligation to liquidate or incorporate the fund into another fund, with or without the cancellation of its registration with the CVM, provided the following requirements are met:
a. The waiver and cancellation requests must be detailed; b. The waiver and cancellation must be approved by all unitholders of the fund assembled in a general meeting;
c. Proof of exceptional circumstances preventing the liquidation of all remaining assets in the fund's portfolio; and
d. Declaration by the administrator that they remain responsible for the fund's administration and that the units will no longer be offered publicly. The contracted distributors must attest that they will no longer offer such units.

1.25 Qualified Investors – Art. 109

As a result of inquiries from market participants regarding the subject, we wish to remind you that Art. 109, § 2nd, of the Instruction is a transitional provision, which only aimed to regulate the situation of unitholders who, at the time the Instruction entered into force, met the qualification requirements then in effect, but did not fall under those provided by the new regulation.

Thus, we recall the understanding of the Collegiate Body on the matter, manifested on April 19, 2005, through a Market Communication, that investment funds already adapted to Instruction 409/04 that subsequently become funds for qualified investors may not retain unitholders who, at the time of the alteration, did not meet the qualification requirements of the Instruction.

Furthermore, pursuant to that communication, we recall that the transitional permission contained in the provision only extends to unitholders who are retail funds (not intended exclusively for qualified investors) if, alternatively, these funds (a) are transformed into funds for qualified investors, in which case their former unitholders, even if not qualified investors, may remain in them; or (b) do not admit new unitholders, which, in practical terms, will mean their closure for applications, in accordance with Art. 17 of the Instruction.

1.26 Initial Application of R$ 1,000,000.00 – Art. 110B

As is known, funds intended for qualified investors, whose regulations require a minimum investment per investor of one million reais, do not need to comply with the concentration limits by issuer and by financial asset modality established in Articles 86 and 87.

Thus, based on Article 110B, their regulations may provide, with greater freedom, their investment policies. Their concentration limits by issuer and by financial asset modality are generally more flexible than those applicable to other investment funds.

In this sense, it is important to note that the minimum investment required by the regulation is a limiter to be considered when verifying the suitability of the product offered to the investment objective, risk profile, and financial capacity to tolerate losses of the investor (suitability rule).

Thus, the verification of the minimum application requirement must occur when the investor enters the fund. For this reason, there is no legal requirement for the investor to maintain any minimum value in the fund, nor predetermined minimum values for additional applications. Nevertheless, rules establishing minimum values for the maintenance of resources applied in units may be established in the regulations.

However, situations of partial redemptions in a short period after the initial application, such that unitholders may remain in the fund with values lower than the initial investment, may constitute, for the technical area, the hypothesis of an attempt to circumvent the objective of the regulation.

1.27 Investment in Units of FICFIPs – Article 112, §§ 5th and 6th

Pursuant to a Collegiate Body decision regarding Process CVM No. RJ20098053, dated September 1, 2009, it is possible for funds qualified under Article 112, § 6th, to invest in units of Funds for Investment in Units of Investment Funds in Participations ("FICFIPs").

In this sense, we recall that, also according to that decision, the absence of provision in § 6th of Art. 112 regarding the possibility of investment in FICFIP units constitutes a material error that finds no reasonable justification.

For this reason, a merely literal interpretation of the provision should be set aside, in favor of the purposes of the regulation, thereby recognizing, in this direction, the possibility for FICFIs provided for in Article 112, § 6th, to invest in units of FICFIPs.

2. CVM Instruction No. 306/99 – Portfolio Administration

2.1 Affiliated Companies – Art. 7th, §§ 5th and 6th

The exception rule of the aforementioned provision allows the director, delegated manager, or partner responsible for the administration of securities portfolios in the company to exercise the same activity in other companies, provided they are affiliated, "as defined by law" (Article 7th, § 6th, final part of the Instruction).

In the absence of a law (in the strict sense) defining the concept of affiliated companies, this technical area has based its understanding on other norms issued by the CVM that also share the same foundation, namely, the prevention of conflict of interest scenarios.

Thus, we cite the concepts brought by Article 3rd of CVM Instruction No. 149/91 and Article 86, § 2nd, of CVM Instruction No. 302/99, which consider two companies as affiliated when (1) one of them or its administrators, and their respective spouses, partners, or relatives up to the 2nd degree, hold a participation greater than 10% of the social capital of the other, or when (2) they share administrators or partners with participation greater than 10% of both social capitals.

In the same sense, we refer to Article 29, Sole Paragraph, of CVM Instruction No. 359/02, which considers two companies as affiliated when (1) one of them – or its controllers and administrators – holds an administrative position, or individually or jointly, holds participation greater than 10% of the social capital of the other; or when (2) one is controlled by the other.

Finally, it is worth noting that – despite being expressly revoked – we consider CVM Instructions No. 149/91 and 302/99 as reliable and adequate sources for the conclusions exposed, as they serve only as support for the better interpretation of the concept of affiliated companies.

2.2 Annual Report of Portfolio Administrators (ICAC) – Art. 12

Article 12 of the Instruction provides that a portfolio administrator accredited with the CVM must submit, by May 31 of each year, information regarding the portfolios they administer, based on positions as of March 31 of the same year, in addition to updated registration information.

It is important to observe that this obligation must be fulfilled even if the administrator has no resources under their administration, and that no alteration is necessary in the records of this Agency.

The submission of the ICAC is also mandatory for an accredited administrator, a natural person, who is responsible for the administration of securities portfolios in a legal entity authorized by the CVM to exercise such activity.

The aforementioned annual update must be submitted through the restricted access environment of the administrator available on CVMWeb, under the item "Submission of Documents Via Form," option "Registration Report," type of report "Annual (Mandatory)," function "Submit Documents."

After the report entry is made, it is possible and recommended to consult the system to verify if the information was accepted by the system. For this purpose, similarly, the item "Submission of Documents Via Form," option "Registration Report," function "Search Document" must be accessed. To consult, for example, the report submitted by May 31, 2009, the research year "2009" must also be specified.

Finally, we recall that the failure or delay in submitting the aforementioned report may result in the application of a coercive fine, in accordance with Article 20 of the Instruction, and in conformity with the requirements of Articles 3rd and 11 of CVM Instruction No. 452/07.

2.3 Eventual Report for Portfolio Administrator Registration Update (ICACE) – Art. 12

Without prejudice to the obligation described in item 2.1, whenever there is a need to update the registered data of the accredited entity, this must be done directly in the restricted access area available on CVMWeb, under the item "Submission of Documents Via Form," option "Registration Report," type of report "Eventual," function "Submit Documents."

The update must be provided within 15 days of the occurrence of the registration change, as provided by Article 12, Sole Paragraph.

We alert, however, that if the update refers to a change in the name or responsible party of the portfolio administrator – Legal Entity, another procedure must be adopted.

In the case of a change in name, the update must be reported to the CVM through correspondence signed by the Responsible Director, accompanied by a copy of the corporate instrument proving the name change of the legal entity, and, if it is a financial institution, registration and homologation by the Central Bank of Brazil.

In the case of a change in the responsible party of the administrator, the update must be reported to the CVM through correspondence signed by the new Responsible Director, accompanied by a copy of the corporate instrument proving their appointment, and, if it is a financial institution, homologation by the Central Bank of Brazil.

There is also a third hypothesis requiring a petition by correspondence: when there is a simultaneous forgetting of the CVMWeb access password by the user and a change in their email, without such fact having been updated in the Registration Report.

We finally recall the importance of the accredited entity keeping their registration with the CVM always updated, as the data contained therein is used for any notifications to the interested party, including those alerting to the incidence of coercive fines provided for in the regulation of this Commission.

2.4 Segregation of Activities – Article 15

One of the most relevant aspects in the conduct of activities of a company accredited as a securities portfolio administrator concerns the procedures for segregation of activities adopted, with the objective of ensuring an efficient policy for managing conflicts of interest inherent to their own activity.

Thus, in the understanding of this Superintendence, the establishment of adequate policies for the segregation of activities, without prejudice to other initiatives, may contribute to ensuring investment decision-making that respects the best interest of the institution's clients.

In this context, the existence of written manuals is recommended, which detail the rules and procedures adopted by the administrator to comply with Article 15 of the Instruction, as well as documents formalizing the mentioned policies, covering at least the content described below:
a. Segregation of Activities Policies (Article 15, item I) – presented only when the company develops more than one activity. It aims to demonstrate the total separation of areas or present the adopted segregation rules, with discrimination, at minimum, of those related to facilities and equipment, with detail, at minimum, of the computers used, networks, facsimiles, telephones, and files; b. Confidentiality Policies (Article 15, item II) – define the adopted confidentiality and conduct policies, with detail of the applicable requirements, at minimum for its partners, administrators, collaborators, and employees. Furthermore, these rules must identify holders of privileged information based on their position or assignment, in order to establish an Information Barrier with other employees;
c. Training Policies (Article 15, item III) – present the education policies for, at minimum, its partners, administrators, collaborators, and employees. Its purpose is to give everyone knowledge of the company's segregation policies, to ensure their effectiveness. In addition to the specific Adhesion Term of this Policy, there may also be a declaration by the involved party stating that they have been trained in accordance with the presented Training Policy, and their perfect understanding of the adopted Segregation Policies;
d. Security Policies (Article 15, item IV) – detail the policies for controlling access to confidential information, at minimum by its partners, administrators, collaborators, and employees who possess it. Furthermore, it must always be possible to identify the possessors of this information for accountability in case of leakage; e. Personal Trading Policies (Article 15, item V) – express the restriction policies for trading securities, at minimum, by partners, administrators, collaborators, and employees, and especially those possessing privileged information. They must specifically appear in the Individual Adhesion Term.

The aforementioned Manuals, thus, must provide, at minimum, provisions related to (1) policies adopted by the company, with a clear, objective, and detailed description of the corporate criteria adopted, and containing a model of the Adhesion Term to be signed by the interested party; (2) compliance, containing a description of how the monitoring of the policies will be done, and the designation of the person responsible for this activity; and (3) enforcement, with provision of the applicable sanctions in case of non-compliance with the policies, and also the person designated for this activity.

3. CMN Resolution No. 2.689/00 – Registration of Non-Resident Investors

3.1 Representation Contract – Art. 5th

As is known, it is the obligation of the non-resident investor's representative to keep, and provide whenever requested, in accordance with Article 5th of CVM Instruction No. 325/00, the respective signed custody and representation contracts with the client, as well as the forms provided for in that Resolution.

In this sense, we remind you that, within 15 days after the constitution of these investors' portfolios, the number of the Electronic Declaratory Registration (RDE) of the constituted portfolios must be sent to the CVM, and it must contain a declaration by the representative in the following terms:

"I declare that I am in possession of the documentation proving the representation and custody contracts and the Form Annexed to CMN Resolution No. 2.689/00, for which I take responsibility."

Furthermore, regarding this, we note that any registration changes of non-resident investors, in accordance with Art. 5th, II, of the Resolution, do not need to be accompanied by documentation proving the changes occurred, but only by a declaration from the representative that they are in possession of this documentation, and that they take responsibility for its custody and presentation to the CVM, when requested.

Finally, we recall that registration maintenance with the CVM does not imply automatic update in records of other government agencies, such as the Central Bank of Brazil and the Brazilian Federal Revenue Service. Thus, these updates, when necessary, must be promoted, through their own means, by the representative of the non-resident investor.

3.2 Exercise of Stock Sale Options in Public Offerings – Art. 8th

In deliberating on a consultation formulated by a market participant in Process CVM No. RJ20115965, the Collegiate Body emphasized that the exercise of a stockholder's sale option in a public acquisition offer of shares regulated by CVM Instruction No. 361/02 should not be considered a private operation prohibited by Art. 8th of the Resolution, as they represent a mere "continuation of the previously realized offer in a stock exchange environment."

For this reason, we inform that, in line with the cited Collegiate Body decision, the prohibitions provided for in Article 8th of the Resolution do not apply to non-resident investors who meet the conditions provided by Article 10, §§ 2nd and 3rd, of CVM Instruction No. 361/02.

3.3 Free Transfer of Subscription Receipts – Art. 8th, and Sole Paragraph

Pursuant to the Collegiate Body decision of October 13, 2009, taken within the scope of Process CVM No. RJ20095699, we inform that the free transfer of subscription receipts by a non-resident investor registered under CMN Resolution No. 2.689/00 is regular, as it does not characterize, both in the capacity of transferor and transferee of these free rights, "the entry of new resources into the Country or the use of resources already entered through Resolution 2.689/00."

Also according to that decision, although the subsequent subscription of shares issued by the company subject to such rights is carried out with resources entered through CMN Resolution No. 2.689/00, such operations are also not considered irregular, as the hypothesis of subscription is explicitly cited in Article 8th, § 1st, as one of the exceptions to the prohibition of carrying out operations outside organized stock or over-the-counter markets.

4. CVM Instruction No. 388/03 – Securities Analysts

4.1. Graphical Analyses Disseminated via the Internet – Art. 2nd

CVM Instruction No. 388/03 brings in its Art. 2nd the definition of the activity of a securities analyst. This definition encompasses all those who, on a professional basis, prepare recommendations, monitoring reports, and studies for dissemination to the public, which assist in investment decision-making, regardless of the methodology used for such.

Thus, both the graphical analyst and the fundamentalist analyst are included in the normative definition of a securities analyst. Both must prove their technical qualification through accreditation with the accrediting entity, and subsequently obtain registration with the CVM, to be able to exercise this activity.

In this sense, it is worth clarifying that graphical analyses and recommendations resulting from these analyses, disseminated on websites, chats, or specialized blogs on the Internet, if performed on a professional basis, must be prepared and disseminated only by professionals accredited by the accrediting entity and registered with the CVM.

5. CVM Instruction No. 43/85 – Securities Consultants

5.1. Accreditation

The CVM Collegiate Body, in a meeting on August 19, 2008, established the requirements to be demanded for the purpose of granting accreditation of a securities consultant for natural and legal persons, embodied in the documents that must accompany accreditation requests.

The demanded documents are as follows:

1. Natural Persons:
   (i) application signed by the interested party containing the reasons why they believe they are qualified to exercise the activity; (ii) copy of the curriculum vitae and proof of the main courses mentioned therein; (iii) proof of registration with the CPF (Individual Taxpayer Registry) and copy of the identity card; (iv) documentation proving their experience and detailing the nature of the activities performed by the interested party, whose professional experience in an activity revealing aptitude for investment analysis must amount to a minimum period of 3 years (this requirement is waived for those accredited as securities analysts, who must only prove this condition, as provided in the current regulation on the activity of an analyst); (v) registration form containing their full name, CPF, address, telephone, facsimile, email; (vi) declaration signed by the applicant, informing:
   (a) if they are disqualified from exercising a position in financial institutions and other entities authorized to operate by the CVM or BACEN, insurance companies, private pension entities, and public companies; (b) if they have been convicted of bankruptcy crime, prevarication, active or passive corruption, extortion, market manipulation, improper use of privileged information, irregular exercise of position, profession, activity, or function within the securities market, embezzlement, against the popular economy, public faith, property, the National Financial System, or criminal penalty that bars, even temporarily, access to public positions; (c) if they are included in the Registry of Issuers of Bounced Checks; (d) if they have titles protested against them; (e) if, in the last five years, they have suffered any punishment resulting from acting in the administration or supervisory board of an entity subject to the control and supervision of the CVM, BACEN, SPC, or SUSEP; and (f) if their assets, by judicial decision or administrative authority, are unavailable.

2. Legal Entities:
   (i) application signed by the legal representative of the legal entity; (ii) copy of the constitutive acts duly consolidated; (iii) proof of registration with the CNPJ (Corporate Taxpayer Registry); (iv) information on the investor profile with which they intend to operate; (v) document indicating the person responsible for the activity; and (vi) registration form containing, at minimum, the social and commercial name of the society, CNPJ, correspondence address, telephone, facsimile, email, and the person responsible for the activity.

The accreditation of the legal entity is conditioned on the designation of a responsible director, who must be accredited as a securities consultant – natural person – with the CVM.

6 Structured Funds

6.1 Art. 23A of Instruction CVM No. 356/01 – FIDC, FICFIDC and FIDCNP

Art. 23A of Instruction CVM No. 356/01 establishes the requirements that must be met for a fund to be automatically exempted from presenting a classification by a credit rating agency operating in the country. Initially, it is important to highlight that all requirements provided for in said provision, which are divided among three subsections, must be observed; that is, the automatic exemption requires the cumulative satisfaction of the three subsections of Art. 23A, not the satisfaction of only one subsection.

Furthermore, we alert that the fact that the public offering of distribution of shares constituting the initial patrimony of the fund occurs under the auspices of Instruction CVM No. 476/09 does not, by itself, result in the applicability of Art. 23A in question. Thus, even if the constitution of the fund relies on said Instruction, the automatic exemption from risk classification depends on compliance with all subsections of Art. 23A of Instruction CVM No. 356/01.

Finally, we inform that the automatic exemption from risk classification is only valid while the characteristics that frame the operation under the provision of subsection I of Art. 23A of Instruction CVM No. 356/01 are maintained. That is, if the fund ceases to be invested exclusively by a single shareholder or by a group of shareholders linked by a unique and inseparable interest, risk classification becomes due.

6.2 Art. 34, subsection VIII, of Instruction CVM No. 356/01 – FIDC, FICFIDC and FIDCNP

Art. 34, VIII, of Instruction CVM No. 356/01 provides that it is included among the administrator's obligations to provide, at least quarterly, the update of the fund's risk classification or of the credit rights and other assets comprising the fund's portfolio.

We alert that the period provided for in the provision – quarterly – does not refer to the civil quarter, nor is the risk classification part of the quarterly statement provided for in Art. 8, §3, of the Instruction, which is due based on the civil quarter.

That is, a new risk classification must be forwarded at least as soon as the previous classification reaches three months, regardless of the civil calendar.

6.3 Art. 5, subsection I, of Instruction CVM No. 472/08

The functioning of the fund requires prior registration, which will be automatically granted, among other requirements, through proof, before this CVM, of the subscription of all shares subject to the distribution registration or of partial subscription of shares, in the case provided for in Art. 13 of the Instruction, provided that the minimum value provided for in §1 of the provision is reached.

We alert that the forwarding of investment commitments (Art. 11, §5) signed does not satisfy said provision, given that they do not have the capacity to prove that the shares were subscribed. The provision in question can be satisfied alternatively by forwarding copies of subscription bulletins or of the manifestation of the fund's share registrar agent, in which the volume, in Reais, of subscribed shares is clear.

As a last option, if the share distribution includes a Closing Announcement and it objectively informs the total number of subscribed shares, it may serve as proof of share subscription, satisfying the referenced provision.

6.4 Art. 39, IV, of Instruction CVM No. 472/08

The mentioned provision states that the administrator of real estate investment funds must forward, "within 60 days after the closing of the first half-year", documents such as the semiannual balance sheet and the administrator's report.

In the understanding of this technical area, the referenced provision, by referring to the term "first half-year", established a periodic obligation that always refers to the fund's social exercise, and not to the civil year.

Thus, for funds that begin their social exercise in June, the semiannual reports will be due for the month of December. In the case where the social exercise ends in December, the "first half-year" will end in June.

6.5 Art. 16, §2, of Instruction CVM No. 391/03, and Art. 19, §1, of Instruction CVM No. 472/08.

Art. 16, §2, of Instruction CVM No. 391/03 states that general assemblies may be convened by the administering institution or "by shareholders who hold, at least, 5% (five percent) of the total shares issued by the fund". Similarly, Art. 19, §1, of Instruction CVM No. 472/08 opens this possibility for "shareholders who hold, at least, 5% (five percent) of the issued shares".

For the purposes of counting the minimum percentage necessary to convene general assemblies in these funds, it is the understanding of this Superintendence that only shares that have already been subscribed should be admitted in this count. Thus, if there are issued shares that have not yet been subscribed, they must be disregarded for the purposes of counting the minimum percentage of 5%.

In the interpretation of the technical area, this understanding is consistent with the provisions of Art. 20 and its §1, of Instruction CVM No. 391/03, and Arts. 6 and 7 of Instruction CVM No. 472/08, where it states that fund shares correspond to ideal fractions of their net asset value and possess a nominal form, and whose ownership is verified by the registration of the shareholder's name in the 'Register of Nominal Shares' or in the share deposit account, records that are made only after the subscription of the shares.

Finally, it is worth highlighting that the same understanding applies to other provisions of the referenced Instructions where the problem arises, such as §1 of Art. 23 of Instruction CVM No. 472/08, which establishes that "it is permitted for any shareholder who holds 0.5% (half a percent) or more of the total issued shares to request a list of names and addresses, physical and electronic, of the other shareholders of the REIT to send a power of attorney request, provided that the requirements of subsection I are met".

7. Parameters for Formulating Consultations

This Superintendence frequently receives consultations from market participants with doubts regarding the correct application of the regulatory norm applicable to the investment fund industry.

Below, we highlight some requirements that must be observed in these consultations to ensure that the technical area has sufficient elements for the analysis of the issue presented.

A first point concerns the need for the consultation to describe the concrete case with the greatest possible detail. However, if the doubt is not specifically based on any concrete case, the reasons that generated the raised doubt must be circumscribed.

On the other hand, the consultant must expose what he understands as the best interpretation of the norm regarding the proposed issue, without failing to rely on all the legal foundation that supports this understanding.

We request that, as a rule, the consultation be formulated by the director responsible for the administering institution.

If the consultation refers to the application of norms and accounting procedures provided for in Instruction CVM No. 438, it must also be signed by the qualified professional responsible for accounting, in accordance with item 1.1.2.9 of the Investment Funds Accounting Plan – COFI.

Finally, as required by the aforementioned Instruction 438, the consultation must be accompanied by the manifestation of the independent auditor, when it deals with changes or adoption of new accounting practices or procedures.

Sincerely,

Francisco José Bastos Santos
Superintendent of Institutional Investor Relations