Circular Letter CVM/SIN No. 04/2012: Guidelines on Investment Fund Operations, Non-Resident Investor Registration, and Portfolio Management Activities

CIRCULAR LETTER/CVM/SIN/NO. 4/2012
Rio de Janeiro, September 12, 2012

To Administrators of Portfolios, Securities Consultants and Analysts, Directors Responsible for the Management of Portfolios, Securities and Investment Fund Consulting, Regulated by CVM Instruction No. 409/04, 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 the activities of portfolio management, consulting, and securities analysis.

The document also presents the understanding of regulatory provisions and, consequently, the manner of their application, which has been adopted by the Superintendence of Relations with Institutional Investors - SIN.

Observance of the recommendations listed below will contribute to minimizing eventual deviations and, consequently, reducing the need for the formulation of requirements by the SIN. And, in this way, allowing the registration and supervision process of these participants to take place in an agile manner, in favor of investor protection and market integrity.

We emphasize, opportunistically, 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 manifested by this Superintendence as a result of consultations and complaints made by market participants.

We emphasize that this circular was prepared taking as a basis Circular Letter/CVM/SIN/No. 3, of August 22, 2011. The changes and additions made are in bold and blue characters. We also alert that the addition of new items causes eventual renumbering in relation to the previous edition of the Circular Letter.

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 respect the requirement set forth in Article 2, § 3 of the Instruction, according to the decision of the CVM Collegiate Body of 16/12/2008.

The above does not prevent, however, that the administrator faces the possibility that these assets arise in the fund's portfolio for reasons beyond their discretionary management powers, which may occur, for example, when the fund holds shares issued by an open company that proceeds to cancel 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 by Article 89 of the Instruction, and any intention to alienate these assets must, in conformity with Article 64, VI, be submitted to 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 the subject of a public distribution offering registration with the CVM, is permitted, under the provisions of art. 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 by the CVM, within their respective areas of competence, as established by § 3 of the cited Article.

It is also necessary for the administrator to verify, at the time of investment and also throughout 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 the pricing and evaluation of 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 every active and honest person usually dispenses to the administration of their own business.

1.3 CREDIT ASSETS – Art. 2, § 1, VIII

We remind you that, in the understanding of this technical area, the assets provided for in article 2, § 1, VIII, denominated as “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” – decision of the Collegiate Body of Process CVM No. RJ-2004-6913, of 4/10/2005), nor expectant credit rights (whose constitution depends on the occurrence of a future and uncertain event), which have specific provision in own regulation of Credit Rights Investment Funds (FIDCs, CVM Instruction No. 356/01) and Non-Standardized Credit Rights Investment Funds (FIDC-NPs, CVM Instruction No. 444/06), as applicable.

1.4 CONTRACTING OF THIRD PARTIES FOR PROVISION OF ASSET CUSTODY SERVICES ABROAD FOR INVESTMENT FUNDS – ART. 2, §5

Art. 2, § 5, II, provides that, for the acquisition of assets traded abroad, the fund’s custodian must ensure their existence, contracting, specifically for this purpose, 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 acquired foreign assets, 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 ensure 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 duty of diligence, as provided in art. 65-A, must, in the case of investments in shares of other funds (not admitted to trading in 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 art. 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 NECESSITY AND POSSIBILITY OF REGISTRATION OF FUND WITH PRIVATE PLACEMENT OF SHARES – ART. 7

In accordance with the decision of the Collegiate Body of Process CVM No. RJ-2005-2345, taken on 21/2/2006, we remind you that “there is neither necessity nor possibility of registration with the CVM of investment funds in general whose shares are intended for private placement.”

However, as also alerted in that Collegiate Body decision, this does not prevent that, “in search of legal certainty resulting from the existence of regulation, or for any other lawful reason, administrators obtain the registration of funds with the CVM”, in which case, however, such funds will be subject to all burdens inherent to this condition.

Among the burdens worth mentioning, we highlight (1) the need to pay supervision fees provided for in Law No. 7.940/89 (as reiterated in the decision of Process CVM No. RJ-2006-7654, of 19/12/2006), (2) the sending of all periodic and eventual mandatory information provided for in the participant’s regulation, including under penalty of applying a coercive fine in case of non-sending within the deadline, as per CVM Instruction No. 425/07; and (3) compliance with all limits and prohibitions provided for in the regulation applicable to the fund.

1.6 EXTENSION OF DISTRIBUTION PERIOD FOR CLOSED FUNDS – ART. 9

In accordance with the sole paragraph of art. 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, the reading of item II of Article 9 of the Instruction could lead to the understanding that extension requests would only be appreciated by the CVM if the minimum number of shares representing the initial fund assets is not subscribed within the 180-day period of the offering registration.

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 a minimum scale for such.

Thus, it should not be generally prevented that funds seek to reach the number of shares provided by their structurers in the offering, by obtaining a more extended 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.

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

Such understanding is supported by the content of § 4 of art. 28, which requires the return to subscribers of the amounts paid, “...if the number of shares provided 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 subscribers of the shares up to the moment of the request.

For this, it is necessary that the request contains the expression of agreement by all these subscribers, given the mandatory application of the paid resources, during the distribution process, in federal public bonds or in shares of investment funds classified as Short Term.

1.7 FIDUCIARY ASSIGNMENT OF INVESTMENT FUND SHARES – ART. 12

The Collegiate Body expressed the understanding, in a meeting of 03.07.08, that the constitution of guarantees on open fund shares through fiduciary assignment operations is regular, in accordance with art. 66-B of Law No. 4.728, of July 14, 1965.

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

Without prejudice to the above, the Commission will prepare studies aimed at creating rules that deal with 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 encumbered shares.

1.8 RESTRICTIONS ON SHAREHOLDERS’ REDEMPTION RIGHTS – ARTICLES 15 AND 16

In accordance with the Collegiate Body decision in Process CVM No. RJ-2008-4449, of 9/2/2010, it is irregular for the administrator to establish conditions and restrictions on shareholders’ redemption rights in the fund’s regulations 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 emphasized in the Collegiate Body decision regarding Process CVM No. RJ-2008-7977), 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 signatory shareholder to the fund administrator.

When using the faculties provided for in article 16, the administrator must also respect the guidelines established by the Collegiate Body decision of Process CVM No. RJ-2009-0247, of 16/1/2009, where it was reminded that it is possible for the administrator, based on that device, to suspend both the possibility of requesting new redemptions and the procedures related to redemptions already requested (independent of whether the share price was determined or not), given the purpose of the relevant regulatory device, which aims to protect, directly, the integrity of the fund (i.e., all shareholders) much more than the investor who requested the redemption.

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

Also regarding this, as determined in that decision, fund investors maintain the status 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 this status.

Regarding the application of article 16 of the Instruction, it is also worth mentioning the Collegiate Body decision regarding Process CVM No. RJ-2006-5768, of 30/1/2007, in which the taxative nature of the regulation regarding the possibilities of deliberation in assemblies convened based on that device 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; (4) the spin-off; or (5) the liquidation of the fund.

1.9 ESTABLISHMENT OF FIXED DATES FOR SHARE CONVERSION – ART. 15, I

It is regular to establish fixed and determined dates for the conversion of shares, as provided for in art. 15, I, provided that the fund’s regulation disposes of the matter clearly and objectively, and the prospectus alerts regarding the special liquidity condition of the shares of this fund, in attention to the requirement of art. 39.

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

1.10 PAYMENT OF REDEMPTION AFTER BANK 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 where it may no longer be possible for the shareholder to perform, for example, various bank movements with the paid resources, in the case of payment with credit into 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, of the particular liquidity restrictions to which they may be subjected due to the redemption payment being made at a time that no longer allows for various bank movements with their resources.

1.11 DISTINCT LIMITS FOR APPLICATION, MOVEMENT, AND STAY – ART. 40

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

In this sense, as the fund’s minimum application 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. Therefore, this differentiation – as long as 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.

The purpose of this principle is to prohibit differentiations that cause harm to the investor, which does not apply to the case, as no negative effects are foreseen for those who invested a greater or lesser amount to enter the fund.

On the other hand, in conformity 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 application limits, but also to movement limits, as well as to the fund’s minimum stay limit.

We emphasize, however, that these criteria must always be stated clearly and objectively in the fund’s prospectus, in conformity with the requirement of art. 40, I and VI.

1.12 MEANS OF MAKING DOCUMENTS AVAILABLE – ART. 48

As is known to everyone, it is the administrator’s duty to ensure that the disclosure of any information related to the fund is given under equal conditions to all its shareholders, in attention, especially, to what art. 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 for in art. 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.

1.13 USE OF ONLINE SERVICES BY INVESTMENT FUNDS – ARTS. 47 TO 55

In accordance with a Collegiate Body decision within Process CVM No. RJ-2010-12738, the CVM considered it regular to adopt 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 access to the information of involved shareholders necessary to structure the electronic platform and the participation of shareholders in the meeting is possible. For this, 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 between shareholders, (3) the sharing of information obtained by this service provider with the fund administrator,

fund for the purpose of updating the holder's registration, or even, (4) the live streaming of general meetings via the worldwide computer network.

1.14 SHARED MANAGEMENT IN INVESTMENT FUNDS – ART. 56

In a decision taken in a meeting on 6.5.2008, the CVM Collegiate Body considered regular the constitution of an investment fund that includes the hiring of more than one manager, since it does not contravene any regulatory norm, being a natural consequence of the increasing specialization of the markets for the administration of third-party resources.

In that same decision, the Collegiate Body also verified that the hiring of two managers for the fund was the subject of deliberation in a general meeting of holders convened for that purpose, in compliance 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, by 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 the managers for the acts of shared management; (2) grants authorization for orders, before 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, prominently, the specific attribution of each; and

(iii) information, in the prospectus, on (a) the benefits and risks resulting from the shared management structure; (b) the condition of joint action of the managers in conducting the fund's investment policy, including with respect 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.

We emphasize that, in the interpretation of this technical area, the possibility of co-management also extends to Investment Participation Funds (FIPs), in accordance with the position adopted when granting the registration of operation of FIP Brasil Petróleo 2, granted within the scope of Process CVM nº RJ-2011-13406.

However, given the peculiar characteristics of FIPs, we understand that co-management in these investment vehicles does not require authorizations from the custodian limited to the specific area of activity of each of the managers, nor the need to act in specific and distinct markets, since in FIPs co-management may involve only the joint work on one or several projects, as a reflection of the sum of specific skills and expertise.

1.15 ADVISORY COMMITTEE IN INVESTMENT FUNDS – ART. 63, CAPUT

In a decision regarding a consultation formulated concerning the possibility of constituting an investment fund with a paid advisory committee by the fund itself (RJ-2009-3936), it was emphasized that, based on the principles provided in art. 37 of the Constitution of the Republic and art. 2º of Law nº 9.784/99, the granting of exceptions to the compliance with CVM normative provisions must always be done with extreme care, and only in cases where the existence of a public interest in the authorization justifying it in the concrete case is evident.

Furthermore, the Collegiate Body recalled, when reviewing a consultation from this Superintendence 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 accordance, furthermore, with the Collegiate Body decision taken within the scope of Process CVM RJ-2005-2345, of 21/2/2006.

1.16 PROMISE OF MINIMUM YIELD – ART. 64, V

The Collegiate Body, in a meeting on 14.2.2008, within the scope of process CVM RJ-2007-10500, emphasized that the promise of predetermined yield, referred to in art. 64, item V, of the Instruction, is that considered levity 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 yield measurable by strictly objective and previously known parameters, when accompanied by the necessary warnings that this yield 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 yield, despite typical market fluctuations.

Thus, whatever guarantee is 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 targeted yield 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.

1.17 RESTRUCTURING OF INVESTMENT FUND FAMILIES – ART. 64, VI

In decisions taken in the Meeting of 17.06.08, the CVM Collegiate Body 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 exchange 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 for such operations more expedited, the CVM delegated competence to this Superintendence 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 comes 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 come 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 destined exclusively to 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, hence why we reiterate that, in these cases, no judgment of value is issued regarding the presented operations.

We emphasize that, if the aforementioned funds hold quotas of other open investment funds in their portfolio, it must also be detailed, in the request, what treatment the administrator intends to give to these assets, 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, hence 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 recall that, in the aforementioned operations, it must be demonstrated by the administrator that there will be no prejudice to the holders resulting from the operation, such as alteration of the investment policy to which the 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, since these processes involve the alteration of regulations, a requirement for their approval is that the restructuring, with all appropriate detailing of the advantages and risks to the holders, be submitted to the appreciation of the involved holders in 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 guarantee that some funds are not prejudiced relative to others in the conferment 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 quotation, which implies a risk that, in scenarios of significant redemption demands, the fund with the longer term to meet them will be prejudiced relative to the others.

In these cases, we emphasize the need for said risk to be highlighted in the call to the general meeting that will deliberate on the restructuring of the fund with the 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 opinion related to the operation must be archived by the administrator and kept available to the CVM.

1.18 EXERCISE OF PUT OPTIONS ON SHARES IN PUBLIC OFFERINGS – ART. 64, VI

By deliberating on a consultation formulated by a market participant in Process CVM nº RJ-2011-5965, the Collegiate Body emphasized that the exercise of put option by remaining shareholders in a public offering of share acquisition 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 offering previously carried out in a stock exchange environment”.

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

1.19 INVESTMENT OBJECTIVES – ARTS. 65, XIII AND 65-A

This Superintendence understands as positive the establishment of objective references to evidence the yield goals (provided they do not constitute a guarantee of future results, in accordance with art. 74) that the fund intends to achieve, such as percentages on known market indices (CDI, Ibovespa, IbrX-100, etc.) or fixed percentages above a certain price index (IPCA, IGP-M, etc.) 1, since they serve as additional information regarding the goals and objectives of fund management, in accordance with 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, when applicable), in addition to the charges provided for in article 99 of the Instruction.

1.20 INVESTMENT LIMITS IN SHARES OF THE ADMINISTRATOR, MANAGER, OR AFFILIATED COMPANIES – ART. 86, § 2º, AND 95-B

By responding to a consultation presented by the Superintendence of Market and Intermediary Relations, the CVM Collegiate Body, when deciding on Process CVM nº RJ-2007-12876, consigned the possibility of constituting investment funds of the Equity or Multi-market 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. 95-B, § 2º and art. 97, § 3º, of the Instruction, and provided that the conditions provided in those devices are respected.

It is worth remembering that the basis for the granting 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 that aims to prevent fund resources from being used to provide liquidity or sustain quotes of papers issued by companies of the same group as the administrator or the manager.

Thus, the Collegiate Body concluded that the provisions of art. 86, §2º should not be applied to the case where the declared objective of the fund, known to the investor, consists of applying exclusively the

1 Applicable, for example, for passive funds or those seeking to partially, fully, or exceed a benchmark. There will be cases, however, where the determination of an objective parameter as the fund's goal may not be advisable, such as for investment policies that imply variable exposures to various risk factors, or in cases where the fund does not assume the commitment to exposure to any defined risk factor.

fund resources in securities issued by the administrator, the manager, or any company affiliated with them.

1.21 INVESTMENT IN FIP QUOTAS BY QUALIFIED FIS 110-B AND 110-A – 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 by article 86, § 10, II, of the Instruction.

However, the Collegiate Body, in a decision regarding Process CVM nº RJ-2009-12749, taken in the Meeting of 10/8/2010, deliberated that said prohibition would not extend to exclusive funds (article 111-A) or those with an initial minimum application of R$ 1 million (article 110-B), since they are expressly exempt from observing the concentration limits by asset type provided in article 86 of the Instruction.

Thus, to these funds, application in quotas of other investment funds not listed in article 87, I, of the Instruction is possible, 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 (FIDC-NPs).

However, it is worth remembering that the exemption from compliance with these limits does not exempt any fund (not even the exclusive ones or those 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.

1.22 INVESTMENT IN QUOTAS OF FIDCS AND FICFIDCS – ARTICLE 87, I, AND 112, § 5º

In line with the decision regarding Process CVM nº RJ-2009-7903, of 16/3/2010, the Collegiate Body 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 Collegiate Body, when 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.

Furthermore, regarding the application and incidence of article 87, I, of the Instruction, it is also worth recalling the content of the Collegiate Body decision of Process CVM nº RJ-2009-7219, judged on 1º/6/2010, in which, in response to a consultation, it was decided that any repurchase operations that are not specifically backed by public securities, in compliance with the exemption contained in art. 87, II, “a”, of the Instruction, must be computed in the general limit provided in article 87, I, of the norm.

At this point, the CVM Collegiate Body understood that exempting compliance with the limit of art. 87, I, of the Instruction for repurchase operations of other nature would depend on an alteration of 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 includes, furthermore, the participation of the market in a public hearing process.

1.23 APPLICATION IN QUOTAS OF INDEX FUNDS ON SHARES (ART. 87, I, “F”)

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

Quotas of Index Funds representing a portfolio of shares are securities with characteristics similar to quotas of equity investment funds, 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, hence why we understand it necessary to make the following clarifications:

a) Index Fund quotas may be subject to lending operations in accordance with current legislation, in accordance with 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 the purpose of meeting the limit established in Article 86, as well as the quotas of its issuance must be considered as financial assets, for the purpose of the limit provided in Article 87;

c) Index Fund quotas on shares must be considered, together with the other securities listed in § 1º, inc. I, of art. 95-B, for the purpose of classifying the investment fund as an equity fund;

d) Provided that it is provided for in its regulations, an Investment Fund in Quotas of Equity Investment Fund or an Investment Fund in Quotas of Multi-market Investment Fund may apply up to 100% of its net asset value in Index Fund quotas on shares, in view of the provisions of art. 112, § 4º.

1.24 MINIMUM NET ASSETS – 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 below 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 assets must be carried out only after the 90-day period from the start of the fund's activities has elapsed, which occurs upon the first subscription of fund quotas.

For this reason, it is stipulated 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.

1.25 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 holders or determined by the total redemption of its quotas cannot effectuate it, due to exogenous reasons unrelated to the will of its administrator and holders.

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 proceeds declared in favor of the fund, but which have not yet been paid.

These funds, given the particular situation they face, often present net assets 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, in accordance with CVM Resolution No. 571, of 3/31/2009, it was defined that, in these exceptional cases, the fund administrator may request this Superintendence to waive the obligation of liquidation or its incorporation into another fund, together or not with 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 fund cotistas gathered in a general assembly; c) Proof of exceptional situation 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 shares will no longer be offered publicly. The contracted distributors must attest that they will no longer offer such shares.

1.26 QUALIFIED INVESTORS – ART. 109

By virtue of inquiries from market participants regarding the subject, we wish to remind that art. 109, § 2nd, of the Instruction is a provision of a transitional nature, which only had the objective of regulating the situation of cotistas who, at the time of the Instruction's entry into force, met the qualification requirements then in force, but who did not fit into those provided by the new regulation.

Thus, we remind the understanding of the Collegiate on the matter, manifested on 4/19/05 through a Market Communication, that investment funds already adapted to Instruction 409/04 that come to become funds for qualified investors may not maintain their cotistas who, at the time of the alteration, did not meet the qualification requirements of the Instruction.

Still in accordance with that communication, we remind that the transitional permission contained in the device only extends to cotistas that 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 cotistas, even if not qualified investors, may remain in them; or (b) do not admit new cotistas, which, in practical terms, will mean their closure to applications, in accordance with art. 17 of the Instruction.

1.27 INITIAL APPLICATION OF R$ 1,000,000.00 – ART. 110-B

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 110-B, their regulations may provide, with greater freedom, their investment policies. Their concentration limits by issuer and by financial asset modality, in general, are more flexible than those applicable to other investment funds.

In this sense, it is important to emphasize that the minimum investment required by the regulation is a limiter to be considered when verifying the adequacy 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, or even predetermined minimum values for additional applications. Nevertheless, rules establishing minimum values for maintaining resources applied in shares may be established in the regulation.

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

1.28 INVESTMENT IN SHARES OF FICFIPS – ARTICLE 112, §§ 5th AND 6th

In accordance with a Collegiate decision regarding Process CVM No. RJ-2009-8053, of 9/1/2009, it is possible for investment funds qualified under article 112, § 6th, to invest in shares of Funds of Investment in Shares of Investment Funds ("FICFIPs").

In this sense, we remind that, still according to that decision, the absence of provision in § 6th of article 112 regarding the possibility of investment in FICFIP shares constitutes a material error that finds no reasonable justification.

For this reason, a merely literal interpretation of the device should be set aside, in favor of the purposes of the regulation, in order to recognize, in this direction, the possibility for FICFIs provided for in article 112, § 6th, to invest in shares of FICFIPs.

2. CVM INSTRUCTIONS NO. 306/99 AND 510/11 – PORTFOLIO ADMINISTRATION AND DATA UPDATES

2.1 AFFILIATED COMPANIES – ART. 7th, §§ 5th AND 6th

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

Given the absence of law – in the strict sense – that defines the concept of affiliated companies, this technical area has supported its understanding based on other norms issued by the CVM that also share the same foundation, namely, the prevention of conflict of interest hypotheses.

Thus, we cite the concepts brought by the provision of 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 respective spouses, partners, or relatives up to the 2nd degree, hold participation greater than 10% of the other's social capital, or, when (2) they have in common administrators or partners with participation greater than 10% of both social capitals.

In the same sense, we mention the provision of 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, since they are limited to serving 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 the portfolio administrator accredited with the CVM must send, 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, in accordance with article 1st, II, of CVM Instruction No. 510/2011.

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 in the records of this Autarchy is necessary.

The sending 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 sent through the restricted access environment of the administrator available on CVMWeb, under the item "Sending Documents Via Form," option "Registration Report," type of report "Annual (Mandatory)," function "Send Documents."

After the report entry is made, it is possible and recommended to perform a query to verify if the information was accepted by the system. For this purpose, similarly, the item "Sending Documents Via Form," option "Registration Report," function "Search Document" must be accessed. To query, for example, the report sent by 5/31/2009, the year of research "2009" must also be specified.

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

2.3 EVENTUAL DATA UPDATE OF PORTFOLIO ADMINISTRATORS (ICACE) – ART. 1st, I, OF CVM INSTRUCTION NO. 510/11

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 "Sending Documents Via Form," option "Registration Report," type of report "Eventual," function "Send Documents."

The update must be provided within 7 business days of the occurrence of the registration change, in accordance with the aforementioned Article 1st, I.

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

In the case of name change, 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, furthermore, if it is a financial institution, registration and homologation of this change with the Central Bank of Brazil.

In the case of responsible party change, 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, furthermore, if it is a financial institution, homologation by the Central Bank of Brazil.

There is, furthermore, a third hypothesis that requires a petition by correspondence: when there is a simultaneous forgetting of the CVMWeb access password by the user and the change of their email, without such fact having been the subject of an update in the Registration Report.

We remind, finally, the importance of the accredited entity always keeping their registration updated with the CVM, as the data contained therein is used for any notifications to the interested party, including those that alert 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 that formalize 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. 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 due to 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. There may exist, in addition to the specific Adhesion Term of this Policy, also 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 holders 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 who possess 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 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 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 - 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 custody and representation contracts signed with the client, as well as the forms provided for in that Resolution.

In this sense, we remind 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 to be 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."

Still regarding this, we note that eventual registration changes of non-resident investors, in accordance with 5th, II, of the Resolution, do not need to be accompanied by documentation proving the changes occurred, but only by a declaration by 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 PUT OPTIONS ON SHARES IN PUBLIC OFFERINGS – ART. 8th

In deliberating on a consultation formulated by a market participant in Process CVM No. RJ-2011-5965, the Collegiate emphasized that the exercise of put option by remaining shareholders in a public offering of share acquisition regulated by CVM Instruction No. 361/02 should not be considered as a private operation prohibited by Art. 8th of the Resolution, as it represents a mere "continuation of the previously carried out offering in a stock exchange environment."

For this reason, we inform that in line with the cited Collegiate decision, the prohibitions provided for in Article 8th of the Resolution do not apply to non-resident investors who fall under 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

In accordance with the Collegiate decision of 10/13/2009, taken within the scope of Process CVM No. RJ2009-5699, 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 condition 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."

Still 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 of organized stock or over-the-counter markets.

4. CVM INSTRUCTION NO. 483/10 – SECURITIES ANALYSTS

4.1. GRAPHICAL ANALYSES DISCLOSED THROUGH THE INTERNET - ART. 2nd

CVM Instruction No. 483/10 brings in its Article 1st the definition of the activity of securities analyst. This definition encompasses all those who, on a professional basis, prepare recommendations, monitoring reports, and studies for disclosure 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 securities analyst. Both must prove their technical qualification through accreditation with the accrediting entity to be able to exercise this activity.

In this sense, it is worth clarifying that graphical analyses and recommendations resulting from these analyses, disclosed on websites, chats, or specialized blogs on the Internet, if carried out on a professional basis, must also be prepared and disclosed 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, in a meeting on 8/19/2008, established the requirements to be demanded for the purpose of granting accreditation of securities consultant for natural and legal persons, embodied in the documents that must accompany accreditation requests.

The demanded documents are the following:

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 and proofs of the main courses mentioned therein; (iii) proof of registration with the CPF and copy of the identity card; (iv) documentation proving their experience and detailing the nature of the activities exercised by the interested party, their professional experience in 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, in the manner provided in the current regulation on the activity of 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 open companies; (b) if they have been convicted of bankruptcy crime, prevarication, active or passive corruption, extortion, market manipulation, misuse 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 prohibits, even temporarily, access to public positions; (c) if they are included in the Register of Issuers of Bounced Checks; (d) if they have titles protested against them; (e) if, in the last five years, they suffered any punishment due to 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; (iv) information on the investor profile with which one intends to act; (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 to 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. 23-A OF CVM INSTRUCTION NO. 356/01 – FIDC, FICFIDC AND FIDC-NP

Art. 23-A of CVM Instruction No. 356/01 establishes the requirements that must be met for the fund to remain automatically exempt from presenting classification of classes or series of shares by a risk rating agency operating in the Country.

Initially, it is worth highlighting that all requirements provided for in the referenced device, which is divided into three items, must be observed, namely: the automatic waiver requires the cumulative satisfaction of the three items of art. 23-A, not the satisfaction of only one item.

Furthermore, we alert that the fact that the public distribution offering of shares constituting the fund's initial assets occurs under the aegis of CVM Instruction No. 476/09 does not result, by itself, in the applicability of art. 23-A in question. Thus, even if the fund's constitution uses the aforementioned Instruction, the automatic waiver of risk classification depends on the observance of all items of art. 23-A of CVM Instruction No. 356/01.

Finally, we inform that the automatic waiver of risk classification is only valid while the characteristics that frame the operation under the provision of item I of art. 23-A of CVM Instruction No. 356/01 are maintained. That is, if the fund ceases to be invested exclusively by one

single shareholder or by a group of shareholders linked by a single and inseparable interest, the risk classification becomes due.

6.2 ART. 34, ITEM VIII, OF INSTRUCTION CVM NO. 356/01 – FIDC, FICFIDC AND FIDC-NP

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

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

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

6.3 ART. 38, IV, INSTRUCTION CVM NO. 356/01

The Collegiate, in a meeting on 2/5/2012, within the scope of Process CVM No. RJ-2011-12712 (Driver Brasil One Banco Volkswagen FIDC Vehicle Financing), approved the outsourcing by the fund's custodians of some of the services provided for in art. 38, IV, namely, the custody of supporting documents and the collection of credit rights, provided that the custodian does not exempt itself from any liability.

For such decision, the Collegiate considered that (i) the custody of credit rights will be operationalized by Recall, not by the assignor, observing a detailed pre-defined process, which involves the adoption of control actions by the Custodian; (ii) the collection, as structured, although originating a 3-day transit through the assignor's assets, with collection banks and an account linked under the Custodian's control, does not represent fungibility risk; (iii) the assignments of credit rights will be registered in the Credit Assignment Central – C3, administered by CIP - Interbank Payments Chamber; and (iv) the proposal does not prejudice public interest, adequate information, or the protection of the investing public (in this case, formed exclusively by qualified investors), nor any scenario of weakening the regulation that applies to FIDC operations.

6.4 ART. 5, ITEM I, OF INSTRUCTION CVM NO. 472/08

The fund's operation requires prior registration, which will be automatically granted, among other requirements, upon proof, to this CVM, of the subscription of all shares subject to the distribution registration or of the 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 the aforementioned provision, given that they do not have the capacity to prove that the shares were subscribed. The provision in question can be satisfied by the alternative forwarding of copies of the 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 shares subscribed, it can serve as proof of share subscription, satisfying the referenced provision.

6.5 ART. 5, ITEMS I AND II, AND ART. 13, CAPUT AND § 1, OF INSTRUCTION CVM NO. 472/08

In the interpretation of the SIN, the systematic reading of the provisions regarding the registration of operation of real estate investment funds results in the fund being able to receive its operation registration after only the minimum value established in the Bylaws is subscribed.

However, as the registration also depends on the presentation of the publication of the Closing Announcement or the presentation of the final data of share placement constituting its initial assets, it will only be granted after the closure of the initial share distribution, which implies the cancellation of the unplaced balance.

In other words, we understand that the understanding does not prevail that, within the scope of a public distribution offer of FII shares with restricted efforts (Instruction CVM No. 476/09), even after the fund's operation registration, new subscriptions of the 1st issuance of shares, constituting the fund's initial assets, up to the total amount provided for in the Bylaws, would be possible.

6.6 ART. 36 OF INSTRUCTION CVM NO. 472/08, C/C ART. 62 OF INSTRUCTION CVM NO. 409/04

Considering that Instruction CVM 472 is dated 31/10/2008, and therefore subsequent to the issuance of art. 119-A of Instruction CVM 409/04, occurring on 22/6/2007, and that art. 36 of Instruction CVM 472/08 establishes a parameter for the performance fee in FII – calculated based on the fund's performance or a relevant indicator for the real estate market – this Superintendence does not consider the application of item I of §1 of art. 62 of Instruction CVM 409/04 to real estate investment funds appropriate.

However, regarding the application of the other commands contained in art. 62 of Instruction CVM No. 409/04 to FII, it is the interpretation of the technical area:

1. item II of §1, a provision that aims to prevent the calculation of the performance fee from being performed based on a benchmark percentage lower than 100% - a healthy command for the regulation of products destined for retail and does not conflict with art. 36 of Instruction CVM 472/08;
2. item III of §1, which establishes a minimum semi-annual periodicity for the charging of the fee - a healthy command for the regulation of products destined for retail and does not conflict with art. 36 of Instruction CVM 472/08;
3. item IV of §1, which provides that the fund's expenses must be deducted from the base for calculating the performance fee - it seems to be the best practice in terms of accounting and economics and, by not confronting art. 36 of Instruction CVM No. 472/08, should also be applicable to retail FII;
4. §2, which establishes the "waterline" rule, i.e., the impossibility of the manager being remunerated without the performance achieved being superior to that when the last performance payment was made (and therefore, already remunerated) - a healthy command for the regulation of products destined for retail and does not conflict with art. 36 of Instruction CVM 472/08;
5. §3, a provision that establishes the possibility of individualized performance charging (from the shareholder and not the fund) only for cases where the investor entered the fund at a share value lower than the "waterline" criterion – without conflicting with art. 36 of Instruction CVM 472/08, such possibility makes sense in economic terms and protects other investors in the retail fund from the undue transfer of wealth among shareholders, since in these cases the performance charge is made individually and directly from the shareholder; and
6. the area understands that, for the purpose of this analysis, §4 should be interpreted as a rule establishing that the above commands must be applied, compulsorily, only to funds not destined exclusively to qualified investors, i.e., those that admit the entry of retail investors. With this interpretation, the provision is not contrary to the dictates of Instruction CVM 472/08, and should be applied subsidiarily to FII, by virtue of the provision in art. 119-A of Instruction CVM 409/04.

In summary, the SIN understands that (1) items II, III, and IV of §1 and §§ 2, 3, and 4, all of art. 62 of Instruction CVM 409/04, are also applicable to the calculation and charging of performance fees for FII (also) destined to the retail investing public; and (2) art. 62, § 1, item I, of Instruction CVM 409/04 is not applicable to FII.

As for the CVM Collegiate regarding the matter, within the scope of decision Reg. No. 8145/12, of 20/3/2012, it understood that the interpretation proposed by the technical area is reasonable, deciding, however, that the best legislative technique recommends that the matter be regulated in a norm, so that it is a rule clearly enforceable by the entire market.

6.7 ART. 39, IV, OF INSTRUCTION CVM NO. 472/08 AND ART. 32, II, OF INSTRUCTION CVM NO. 391/03

Art. 39, IV, of ICVM 472, provides that the administrator of real estate funds must forward, "within 60 days after the closure of the first semester," documents such as the semi-annual balance sheet and the administrator's report.

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

Thus, for funds that begin their social exercise in March, for example, the semi-annual reports will be due for the month of September, in which case it must be sent to the CVM by November 29 of that year (60 days).

Regarding art. 32, II, of ICVM 391, it is provided that the administrator of participation funds must forward, "semi-annually, within 60 (sixty) days after the closure of this period," documents such as the portfolio composition, accounting statements, charges debited to the fund, and the list of institutions responsible for the provision of custody services for securities.

In the understanding of this technical area, the aforementioned provision, by referring to the term "of this period," established a distinct periodic obligation, according to the nature of the information provided, with this, some information is due according to the fund's social exercise and others must follow the civil calendar.

Thus, the document referred to in art. 32, II, "a" (Portfolio Composition), must be forwarded according to the civil semester, i.e., the portfolio composition of the FIP must be forwarded on the base dates June and December of each year, in which case it must be sent to the CVM by August 29 and March 01 of each year. The other documents referred to in items "b", "c", and "d" of the same provision, must be reported according to the fund's social exercise (see example above for FII).

6.8 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 minimum, 5% (five percent) of the total shares issued by the fund." In the same way, Art. 19, § 1, of Instruction CVM No. 472/08 opens such possibility for "shareholders who hold, at minimum, 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, such 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 the fund's shares correspond to ideal fractions of its net assets and have 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.

6.9 ART. 9 OF INSTRUCTION CVM NO. 398/03

The Collegiate, in a meeting on 31/1/2012, within the scope of Process CVM RJ-2010-10966 (FUNCINE Lacan Downtown Films), understood as the best interpretation for the provision that the "resources directed to the projects provided for in item I of art. 2" encompass both those effectively disbursed, as well as those that are already contractually committed to cinematic projects, although still applied in public bonds, provided that (i) such investments have already been approved by the investment committee; and (ii) an investment commitment, or equivalent contractual instrument, has already been celebrated between the fund and the producer of the project that will benefit from the resources.

The Collegiate's decision, as well as the technical area's manifestation, recognized that, to harmonize the long-term characteristics of the cinematic industry and the need for resource injection each social exercise by investors, the best interpretation of art. 9 of Instruction CVM 398/03 is that which considers that the "resources directed to the projects provided for in item I of art. 2" encompass both those resources effectively disbursed, as well as those that are already contractually committed to cinematic projects, but continue to be applied in Public Bonds, provided that: (i) such investments have already been approved by the investment committee; and (ii) an investment commitment, or equivalent contractual instrument, has already been celebrated between the fund and the producer of the project that will benefit from the resources.

7. INSTRUCTION CVM NO. 209/94

7.1 ARTICLE 1

§1 of art. 1 of Instruction CVM 209/94 defines an emerging company – eligible for investment by an Emerging Company Investment Fund (FMIEE) – as a company that presents annual net revenue, or consolidated annual net revenue, lower than R$ 150 million, calculated in the balance sheet closing the exercise prior to the acquisition of the securities of its issuance.

As for § 3 of the same article, it provides that it is forbidden for FMIEE to invest in a society whose shareholding control is held by a group of societies, de facto or de jure, whose consolidated net assets are higher than R$ 300 million.

In the understanding of this Superintendence, the most appropriate interpretation of art. 1, §§ 1 and 3, of Instruction CVM 209/94, is that the investment should only be concretized by the FMIEE in the event that the diligence carried out by the manager indicates that at the end of the current exercise the quantitative parameters provided for in the provisions will remain observed.

Such understanding arises from a systematic interpretation of the regulation in force on the matter, given that it encompasses not only the literalness present in the aforementioned provisions, but also the duties of diligence that must be adopted in the management of the asset portfolio of an FMIEE.

8. INSTRUCTION CVM NO. 476/09

8.1 ART. 9 OF INSTRUCTION CVM NO. 476/09, C/C ART. 3, § 1, OF INSTRUCTION CVM NO. 400/03

As provided for in item IV of art. 1 of the Instruction, investment funds constituted in the form of closed condominiums can carry out public distribution offers of shares with restricted efforts under the auspices of that Instruction, provided they respect the temporal restriction of 4 months provided for in its article 9.

The Superintendence of Institutional Investor Relations – SIN, based on the provision in art. 3, § 1, of Instruction CVM No. 400/03, understands that the aforementioned art. 9 is inapplicable to operations in which the new distribution of shares is destined exclusively to the fund's shareholders, with the cancellation of the balance of shares possibly unplaced (without the possibility of the entry of third parties who are not shareholders), provided that such shares are not admitted to trading in the secondary market.

A similar understanding was reached by the CVM Collegiate on 27/3/2012, within the scope of Process RJ2011-14594, in which, taking into account that the fund's shares will not be admitted to trading, as well as the small number of shareholders, and following the technical area's manifestation, it deliberated that art. 9 of Instruction CVM 476/09 is inapplicable to the specific case.

9. Instruction CVM No. 514/11

As is known, the Securities and Exchange Commission (CVM) issued on 28/12/2011 Instruction CVM No. 514/11, which provides for the alteration of the Accounting Plan of Investment Funds – COFI annexed to Instruction CVM No. 438, of July 12, 2006.

The Instruction, resulting from Public Hearing SNC Funds No. 02/11, includes in the COFI the requirement to disclose, in explanatory notes, transactions carried out by the fund with the administering institution, manager, or with parties related to them. The purpose is to increase transparency and the quality of the information provided, so that users of the financial statements, especially investors, can evaluate the extent of the effects of these transactions on the net assets, financial position, and results of investment funds.

The concept of related party used in the Instruction has a meaning adapted from that used in Technical Pronouncement CPC 05(R1), approved by CVM Deliberation No. 642, of October 7, 2010.

It is worth noting that the adaptation refers to the application of the concept of related party to the administering or managing institution and not to the entity reporting the information (Investment Fund).

10. LAW NO. 6.385/76

10.1. ARTICLE 9, I

Article 9, item I, of Law No. 6.385, of 7/12/1976 determines that the CVM can "examine and extract copies of accounting records, books, or documents, including electronic programs and magnetic, optical, or any nature files, as well as independent auditors' working papers, such documents being maintained in perfect order and state of conservation for a period of at least five years..."

This Superintendence understands that electronic correspondence relating to business activities developed in the securities market or that, in some way, are related to facts that may figure as the object of investigation by the CVM fall under documents subject to custody for the period provided for in item I of art. 9 of Law 6.385/76.

11. PARAMETERS FOR THE FORMULATION OF QUERIES

This Superintendence frequently receives queries 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 queries to ensure that the technical area has sufficient elements for the analysis of the question presented.

A first point concerns the need for the query to describe the specific case with the greatest possible detail. If, however, the doubt is not based specifically on any specific case, the reasons that generated the raised doubt must be circumscribed.

On the other hand, the querent must expose what he understands as the best interpretation of the norm regarding the proposed question, without leaving out all the legal foundation that supports this understanding.

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

If the query 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 Accounting Plan of Investment Funds – COFI.

Finally, as required by the aforementioned Instruction 438, the query must be accompanied by the manifestation of the independent auditor, when it concerns the change or adoption of new accounting practices or procedures.

Sincerely,

FRANCISCO JOSÉ BASTOS SANTOS
Superintendent of Institutional Investor Relations