Circular Letter CVM/SIN No. 05/2014

CIRCULAR LETTER/CVM/SIN/No. 5/2014

INDEX
Introduction 4

CVM Instruction No. 409/04 – Investment Funds 5
1.1 Art. 2, VII and Art. 64, VI - Shares of Closed Companies in Portfolio 5
1.2 Art. 2, § 1, VIII - Investment in Privately Issued Debentures 5
1.3 Art. 2, § 1, VIII - Credit Assets 5
1.4 Art. 2, § 5 - Hiring Third Parties for Custody of Assets Abroad 6
1.5 Art. 7 - Registration of Fund with Private Placement of Quotas 6
1.6 Art. 9 - Extension of Distribution Period for Closed Fund 7
1.7 Art. 12 - Fiduciary Assignment of Investment Fund Quotas 7
1.8 Articles 15 and 16 - Restrictions on Redeemer Rights 8
1.9 Art. 15, I - Establishment of Fixed Dates for Quota Conversion 8
1.10 Art. 15, III - Redemption Payment After Banking Hours 9
1.11 Art. 40 - Distinct Limits for Investment, Movement, and Holding 9
1.12 Art. 48 - Convocation of Assembly 9
1.13 Art. 48 - Means of Document Availability 10
1.14 Arts. 47 to 55 - Use of Online Services by Investment Funds 10
1.15 Art. 56 - Shared Management in Investment Funds 10
1.16 Art. 63, caput - Advisory Committee in Investment Funds 11
1.17 Art. 64, V - Promise of Minimum Yield 11
1.18 Art. 64, VI - Restructuring of Investment Fund Families 12
1.19 Art. 64, VI - Exercise of Stock Put Options in Public Offers 13
1.20 Art. 64, VI - Authorization for Private Trading in EFPC Funds 13
1.21 Arts. 65, XIII and 65-A - Investment Objectives 14
1.22 Art. 65, XV, c/c Art. 65-A - Supervision, by the Administrator, of Services Provided 14
1.23 Art. 65-A, I – Use of Preliminary Ratings by Investment Funds 15
1.24 Art. 86, § 2, and 95-B - Investment Limits in Shares of Its Own Administrator 15
1.25 Arts. 99 and 100 - Fund Charges 16
1.26 Article 86, § 10, II - Investment in FIPs by Qualified FIs 110-B and 110-A 16
1.27 Art. 87 - Limits of Exposure to Assets Abroad 16
1.28 Article 87, I, and 112, § 5 - Investment in FIDC and FICFIDC Quotas 17
1.29 Art. 87, I, “f” - Investment in Stock Index Fund Quotas 17
1.30 Art. 105 - Minimum Net Equity 18
1.31 Art. 107 - Cancellation of Investment Fund Registration 18
1.32 Art. 109 - Qualified Investors 19
1.33 Art. 110-B - Initial Application of R$ 1,000,000.00 19
1.34 Article 112, §§ 5 and 6 - Investment in FICFIP Quotas 20
1.35 Essential Information Sheet Information (Annex III) 20
1.36 Art. 4 of CVM Instruction No. 512/11 - Daily Report 20
CVM Instructions No. 306/99 and 510/11 – Portfolio Management 21
2.1 Art. 3 - Need for Accreditation for Self-Management 21
2.2 Art. 7, §§ 5 and 6 - Affiliated Companies 21
2.3 Art. 7, §§ 5 and 6 - Incompatible Activities by Managing Company Officer 22
2.4 Art. 7, § 7, of CVM Instruction No. 306/99 22
2.5 Art. 12 - Annual Report of Portfolio Administrators 23

CIRCULAR LETTER/CVM/SIN/No. 5/2014
2.6 Art. 1, I, of CVM Instruction No. 510/11 - Occasional Registration Update 23
2.7 Article 15 - Segregation of Activities 24
2.8 Art. 15, V - Application of Employee Resources in Manager's Products 25
3. CMN Resolution No. 2.689/00 - Non-Resident Investors 25
3.1 Art. 5 - Representation Contract 25
3.2 Art. 8 - Exercise of Stock Put Options in Public Offers 26
3.3 Art. 8 and Sole Paragraph - Gratuitous Assignment of Subscription Receipts 26
4. CVM Instruction No. 483/10 – Securities Analysts 26
4.1. Art. 2 - Graphical Analyses Disseminated via Internet 26
5. CVM Instruction No. 43/85 – Securities Consultants 26
5.1. Accreditation 26
5.2 Electronic Declaration of Conformity – CVM Instruction No. 510/2011 28
5.3 Conditions for the Exercise of Consulting Activity 28
6. Structured Funds 29
6.1. General Guidelines 29
6.1.1. Requests for Registration of Structured Investment Funds 29
6.1.2. Changes in Regulations and Registration of Structured Investment Funds 29
6.1.3. Closure, Spin-off, Merger, and Transfer of Structured Investment Funds 30
6.1.4. Art. 7, § 1 and 9, of ICVM 444, and LC No. 101 – Characterization of credit operation 32
6.2. Credit Rights Investment Funds – FIDC 32
6.2.1. Art. 23-A of CVM Instruction No. 356/01 – FIDC, FICFIDC and FIDC-NP 32
6.2.2. Art. 34, Item VIII, of CVM Instruction No. 356/01 – FIDC, FICFIDC and FIDC-NP 33
6.2.3. Art. 38, Item V, c/c § 11 of ICVM No. 356/01 – Collateral of Credit Rights 33
6.2.4. Art. 38, Item V, of ICVM 356 – Custody of judicial collection action credits 34
6.2.5. Art. 38, Item V, c/c § 7 of ICVM 356 – Waiver for document custody 34
6.2.6. Art. 38, V, of ICVM 356 – Custody of credit rights by assignor and consultant 35
6.2.7. Art. 38, Item VII, of ICVM 356 – Receipt of payments related to titles 36
6.2.8. Art. 38, §§ 12, 13 and 14, of ICVM 356 – Verification of collateral in specified cases 37
6.2.9. Art. 38, § 13, Item II (ICVM 356) – Verification of collateral of defaulted credits 37
6.2.10. Art. 39, § 2, of ICVM 356 – Prohibitions on assignment to administrator 38
6.2.11. Art. 39, §2 – Assignment of receivables by FIDC to its service providers 39
6.2.12. Art. 39, §2 – Indirect origination of FIDC debtors/debtors 40
6.2.13. Art. 39, § 2; and Art. 36, Item I of ICVM 356 – Co-obligation in the name of FIDC 40
6.2.14. Art. 7, § 1 and § 9, of ICVM 444 40
6.3. Real Estate Investment Fund – FII 41
6.3.1. Art. 5, Item I, of CVM Instruction No. 472/08 41
6.3.2. Art. 16, § 2, of ICVM No. 391/03, and Art. 19, § 1, of CVM Instruction No. 472/08 41
6.3.3. Art. 19, § 1 of ICVM 472 - Convocation of assembly by relevant quota holders 42
6.3.4. Art. 20 of ICVM 472 – Quota holders' assembly (Circular Letter SIN No. 5/2013) 42
6.3.5. Art. 21 of ICVM 472 and Art. 48, § 3 of ICVM 409 – Deliberation in assembly 43
6.3.6. Art. 21 c/c Art. 20 of ICVM 472 – Vote counting within a consultation 43
6.3.7. Art. 24, Sole Paragraph, II, of ICVM 472 – Votes of FII quota holders in assembly 44
6.3.8. Art. 31-A of ICVM 472 – Hiring of Market Maker 44
6.3.9. Art. 34 of ICVM 472 – Conflict of Interest in FII (Circular Letter SIN No. 05/2013) 45
6.3.10. Art. 35, Item IV of ICVM 472 – Co-obligation in FII (Circular Letter SIN No. 05/2013) 46

CIRCULAR LETTER/CVM/SIN/No. 5/2014
6.3.11. Art. 35, Item XII of ICVM 472 – Execution of operations with CEPAC 46
6.3.12 Art. 36 of CVM Instruction No. 472/08, C/C Art. 62 of CVM Instruction No. 409/04 48
6.3.13 Art. 39, IV of ICVM 472 – Sending of Semi-Annual Reports of FII 49
6.3.14. Art. 41, § 1 of ICVM 472 – Disclosure of Relevant Facts by FII 49
6.3.15. Art. 45, Item VII of ICVM 472 – Acquisition of CRIs offered via ICVM No. 476/09 50
6.3.16. Circular Letter SIN No. 05/2013 – Adhesion Term 51
6.3.17. Circular Letter SIN No. 05/2013 – Resp. of Administrator and Intermediary 51
6.4. Investment Participation Funds – FIP 52
6.4.1. Art. 16, §2 of ICVM 391 – Convocation of assembly by relevant quota holders 52
6.4.2. Art. 15, §2 of ICVM 391 – Deliberation rules in Quota Holders' Assembly 52
6.4.3 Art. 32, II and III, of CVM Instruction No. 391/03 52
6.5. Mutual Investment Funds in Emerging Companies - FMIEE 53
6.5.1. Art. 1 of ICVM 209 53
6.6. Cinematographic Industry Financing Funds – FUNCINE 53
6.6.1. Art. 9 of ICVM No. 398/03 53
6.6.2. Art. 78 of ICVM No. 398/03 – classification of FUNCINE portfolio 54
7. CVM Instruction No. 476/09 54
7.1 Art. 9 of ICVM No. 476/09, c/c Art. 3, § 1, of ICVM No. 400/03 54
8. CVM Instruction No. 514/11 55
9. CVM Instruction No. 359/02 – International Index Funds 55
10. CVM Instructions No. 505 and 506/2011 – Applicability to Investment Funds 55
11. CVM Instruction No. 494/2011 - Co-management in Investment Clubs 56
12. Compatibility of CVM Instruction No. 459/2007 with CVM Deliberation No. 244/98 57
13. Law No. 6.385/76 58
13.1. Article 9, I 58
14. Parameters for Formulating Consultations 58

CIRCULAR LETTER/CVM/SIN/No. 5/2014
Rio de Janeiro, November 21, 2014

To Portfolio Administrators, Consultants and Securities Analysts, Directors Responsible for Portfolio Administration, Securities Consulting and Investment Funds 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 investor and to the activities of portfolio administration, consulting and analysis of securities.

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 administration, consulting and analysis of securities.
The document also presents the understanding of regulatory provisions and, consequently, the manner of their application, which has been adopted by the Department of Relations with Institutional Investors - SIN.
Observance of the recommendations listed below will contribute to minimizing any deviations and, consequently, reducing the need for demands by SIN. And, in this way, allow 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, at this time, that some positions and interpretations of this Department 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.
We highlight that this circular was prepared based on Circular Letter/CVM/SIN/No. 10, of October 18, 2013. The changes and additions made are in bold and blue characters. We also alert that the addition of new items causes eventual renumbering compared to the previous edition of the Circular Letter.
We highlight the inclusion of a significant number of interpretations related to structured investment funds, which is located in a specific item, covering, separately, each of the funds that make up the industry, FIDC (including FIDC-NP), FII, FIP, FMIEE and FUNCINE. In addition to the specific issues related to the funds, we clarify some procedures that must be followed by the administrators of these funds, when interacting with the Structured Funds Monitoring Management – GIE, notably regarding requests for registration of operation and authorization of constitution, closures and other events that substantially modify the fund (spin-off, merger, and transformation, as well as the sending of physical documents or via CVMWeb. The item dealing with structured funds clarifies the main doubts of the FIDC industry regarding the improvements introduced by CVM Instruction No. 531/13, in addition to answering the consultations forwarded by the various participants since the issuance of said Instruction, formal or not. Furthermore, within the scope of FIIs, we consolidated the interpretations of Circular Letter/CVM/SIN/No. 05, of March 07, 2013, and added others, highlighting the disclosure of relevant facts within these funds and the counting of votes within the scope of formal consultations.

Finally, the other points added or altered in this Circular Letter were 1.25 (about investment fund charges regulated by CVM Instruction No. 409/04), 1.35 (about Essential Information Sheet), 1.36 (about the Daily Report document), 2.3 (additional clarifications on the performance of directors responsible for managers in other activities), 2.4 (application of article 7, § 7, of CVM Instruction No. 306/99), and 12 (compatibility between CVM Instruction No. 459/07 and CVM Deliberation No. 244/98).

CVM INSTRUCTION NO. 409/04 – INVESTMENT FUNDS
1.1 CLOSED COMPANY SHARES IN PORTFOLIO – ART. 2, VII AND ART. 64, VI
It is prohibited for the administrator of an investment fund 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 the CVM Board's deliberation of 12/16/2008.
The above does not prevent, however, that the administrator faces the possibility that these assets arise in the fund's portfolio for reasons unrelated to its discretionary management powers, which may occur, for example, when the fund holds shares issued by an open company that proceeds with the cancellation of its registration with the CVM, in accordance with Article 2, I, of CVM Instruction No. 361/02. In these 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 accordance with Article 64, VI, be submitted to prior CVM approval.

1.2 INVESTMENT IN PRIVATELY ISSUED DEBENTURES – ART. 2, § 1, VIII
It is permitted to invest investment fund resources in privately issued debentures, that is, those that have not been subject to public distribution offering registration with the CVM, 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 BACEN or by the CVM, in their respective areas of competence, as established by § 3 of the cited Article.
It is also necessary that the administrator 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 class.
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 funds' portfolio, employing in the analysis and evaluation of this information, the care and diligence that any 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 credit rights that are 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” – Board decision of CVM Process No. RJ-2004-6913, of 10/4/2005), nor expectant credit rights (whose constitution depends on the occurrence of a future and uncertain event), which have specific provision in their own regulation of Credit Rights Investment Funds (FIDCs, CVM Instruction No. 356/01) and Non-Standard Credit Rights Investment Funds (FIDC-NPs, CVM Instruction No. 444/06), as applicable.

1.4 HIRING 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, and must specifically hire, for this purpose, third parties duly authorized to exercise the custody activity in other jurisdictions and that are 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 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 virtue of due diligence, as set forth in art. 65-A, must, in the case of investments in quotas of other funds (not admitted to trading on public 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 believe 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 NEED AND POSSIBILITY OF REGISTRATION OF FUND WITH PRIVATE PLACEMENT OF QUOTAS – ART. 7
In accordance with the Board's decision of CVM Process No. RJ-2005-2345, taken on 2/21/2006, we remind you that “there is neither need nor possibility of registration with the CVM of investment funds in general whose quotas are intended for private placement”.
However, as also alerted in that Board decision, this does not prevent that “in search of legal security 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 the supervision fees provided for in Law No. 7.940/89 (as reiterated in the decision of CVM Process No. RJ2006-7654, of 12/19/2006), (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, also in accordance with CVM Instruction No. 425/07; and (3) compliance with all limits and prohibitions provided for in the norm that are applicable to the fund.

1.6 EXTENSION OF DISTRIBUTION PERIOD FOR CLOSED FUND – 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 quotas 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 quotas representative of the initial net equity of the closed fund is not subscribed within the 180-day period of the offering registration.
However, in reality, the device for compulsory cancellation of closed funds that do not reach the minimum number of subscribed quotas has the objective of not burdening quota holders 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 quotas provided for by their structurers in the offering, by obtaining a more extended period for public distribution of quotas, 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 of quotas of closed funds, even in cases where the minimum number of quotas 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 quotas provided for is not subscribed within 180 (one hundred and eighty) days, extendable for 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 quota subscribers up to the moment of the request.
To this end, it is necessary for the request to contain the agreement of all these subscribers, given the mandatory application of the amounts paid, during the distribution process, in federal public bonds or in quotas of investment funds classified as Short Term.

1.7 FIDUCIARY ASSIGNMENT OF INVESTMENT FUND QUOTAS – ART. 12
The Board expressed the understanding, in a meeting on 03.07.08, that the constitution of guarantees on open fund quotas 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 such guarantee enables the granting of credits under more favorable conditions to the assigning quota holders, which would stimulate greater circulation of wealth. It was also taken into consideration that this practice has already been adopted in the market – based on a legitimate interpretation of the norm – so 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 flow of information appropriate between the fund administrator, debtor assignors, and creditor assignees, and the definition of the duties of administrators and unitholders regarding redemption, voting, and other events related to encumbered shares.

1.8 RESTRICTIONS ON UNITHOLDERS' REDEMPTION RIGHTS - ARTICLES 15 AND 16

In accordance with the Collegiate Board's decision in Process CVM No. RJ-2008-4449, of 9/2/2010, it is irregular for the administrator to establish in the fund's bylaws conditions and restrictions on unitholders' 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 Board decision also reiterated that the Adhesion Term has a specific purpose, namely, to record the delivery of certain information to unitholders (as was also highlighted in the Collegiate Board 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 signing unitholder to the fund administrator.

When using the faculties provided for in Article 16, the administrator must also respect the guidelines established by the Collegiate Board decision in Process CVM No. RJ-2009-0247, of 16/1/2009, 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 the pricing has been done or not), given the objective of the relevant provision of the regulation, which aims to protect, in a direct manner, much more the integrity of the fund (that is, the totality of unitholders) than that of the investor who requested the redemption.

In this 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 make impossible the very possibility of suspending redemptions already requested but not yet paid.

Still regarding this matter, as determined in that decision, investors in the fund maintain the status of unitholders 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 status.

Regarding the application of Article 16 of the Instruction, it is worth mentioning the Collegiate Board decision regarding Process CVM No. RJ-2006-5768, of 30/1/2007, in which the mandatory nature of the rule was recorded regarding the possibilities of deliberation in assemblies convened based on that provision, namely: (1) the replacement 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 bylaws address the matter with clarity and objectivity, and the prospectus alerts regarding the special liquidity condition of the shares of this fund, in accordance with the requirement of Art. 39.

We emphasize that this freedom to stipulate deadlines for share conversion is not confused with the maximum deadline, also permissible, 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 said share conversion.

1.10 PAYMENT OF REDEMPTION AFTER BANKING 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 closing 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 unitholder to carry out, for example, various banking movements 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, that is, at a time when Electronic Available Transfers – TED – can no longer be carried out.

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 unitholders are 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 banking movements with their resources.

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

There is no irregularity in adopting distinct initial minimum application limits in the same investment fund, which vary 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 in the adoption of differentiated limits any information asymmetry or breach of fiduciary duty by the administrator. Thus, this differentiation – provided it is in accordance with reasonable and non-arbitrary criteria – does not offend the Principle of Equality among Unitholders, or any other provision of the Instruction.

This principle aims to prevent differentiations that cause damage to the investor, which does not apply to the 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 made in Collegiate Board Meeting No. 47, of December 9, 2008, it is worth emphasizing that this possibility is not restricted only to initial minimum application limits, but also to movement limits, as well as to the minimum stay limit of the fund.

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

1.12 CONVENING OF ASSEMBLY – ART. 48

§ 1 of Art. 48 of CVM Instruction No. 409 establishes that the convening for a general unitholders' assembly must enumerate, expressly, in the agenda, all matters to be deliberated, not admitting that under the rubric of general matters, there are subjects that require assembly deliberation.

The CVM Collegiate Board, when deciding on an appeal subject to Process CVM No. SP-2011-56, understood that the reading of this provision leaves no room for doubt that the CVM did not intend, when regulating the functioning of fund assemblies, to require that the agenda contain the new wording to be given to the bylaws, when its alteration is the subject of deliberation.

This technical area understands, however, in accordance with the provisions of Art. 48, § 4 of the Instruction, as good practice for investment fund administrators to make available on their website the proposed new wording of the bylaws to be eventually deliberated in a general assembly, as well as other documents pertinent to the proposals to be submitted for the assembly's consideration.

1.13 MEANS OF MAKING DOCUMENTS AVAILABLE – ART. 48

As is known to all, 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 unitholders, in attention, especially, to what is determined in Art. 40, XIII.

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 the availability be done through the maintenance of specific access to these documents on the administrator's website on the worldwide web.

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

In accordance with a Collegiate Board decision within Process CVM No. RJ-2010-12738, the CVM considered regular the adoption of electronic systems that allow remote participation of investors in general assemblies of funds in which they are unitholders.

To enable such a mechanism, the Collegiate Board understood that access to the information of the involved unitholders that are necessary for the structuring of the electronic platform and the participation of unitholders in the conclave is possible. For this purpose, prior approval of each unitholder 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 unitholders, (3) the sharing of information obtained by this service provider with the fund administrator for the purpose of updating the unitholder's registration, or even (4) the live transmission of general assemblies via the worldwide web.

1.15 SHARED MANAGEMENT IN INVESTMENT FUNDS – ART. 56

In a decision taken in a meeting on 6.5.2008, the CVM Collegiate Board considered regular the constitution of an investment fund that involves the hiring of more than one manager, as it does not contradict any regulatory norm, being a natural consequence of the growing specialization of the markets for administering third-party resources.

In that same decision, the Collegiate Board also verified that the hiring of two managers for the fund was the subject of deliberation in a general unitholders' assembly convened for this purpose, in accordance with Art. 47, II, of the cited Instruction, and that the responsibility for management acts was fully assumed, under a contractual solidarity regime, 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, however:

(i) execution of a contract in accordance with Art. 56, § 1, 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 operation 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 bylaws and prospectus, that management will be exercised by more than one service provider, in order to inform, with emphasis, the specific attribution of each one; and

(iii) information, in the prospectus, on (a) the benefits and risks resulting from the shared management structure; (b) the condition of joint operation of the managers in conducting the fund's investment policy, including with regard to the joint liability provided for in Art. 57, § 2; 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 Equity Investment Funds (FIPs), in accordance with the position adopted when granting the operating registration 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 operation of each of the managers, nor the need to act in specific and distinct markets, since in FIPs co-management can involve only the joint work on one or several projects, as a reflection of the sum of specific skills and expertise.

1.16 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 (RJ-2009-3936), it was emphasized that, based on the principles provided for in Art. 37 of the Federal Constitution and Art. 2 of Law No. 9.784/99, the concession of exceptions to the compliance with CVM normative 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 Collegiate Board recalled, when appreciating a consultation from this Superintendence in this sense, that investment funds registered with the CVM, even if they do not provide for investment in securities or are not destined for public distribution, are subject to all burdens inherent to the status of registered funds.

Thus, in such cases, the registration must be examined and granted as if the effort of public sale of shares were carried out, and the fund is subject to all norms imposed by CVM regulation, in accordance, still, with the Collegiate Board decision taken within the scope of Process CVM RJ-2005-2345, of 21/2/2006.

1.17 PROMISE OF MINIMUM YIELD – ART. 64, V

The Collegiate Board, 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 frivolous and illusory, that is, 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 alerts 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 are not confused 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 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 yield may not be reached. This same logic also applies to the disclosure of information in the sale or distribution of fund shares, as regulated by Art. 74 of the Instruction.

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

In decisions taken in the Meeting of 17.06.08, the CVM Collegiate Board established the guidelines and parameters that must be observed in requests for approval or dispensation of compliance with requirements provided for in the Instruction for restructuring of investment fund families, with requests for trading of shares, shares of open-ended funds, and other assets outside the stock or over-the-counter market, and thus, in dispensation 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 of 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 share funds that now 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 can 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 dispensation of the requirement contained in the cited norm, which is 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 shares of other open-ended 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 or over-the-counter market, which is why operations involving funds that do not have shares or shares of open-ended funds in the portfolio are exempt from prior evaluation by this Autarchy.

We recall that, in the aforementioned operations, the administrator must demonstrate that there will be no harm 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 bylaws, a requirement for their approval is that the restructuring, with all appropriate detailing of the advantages and risks to unitholders, be submitted for the consideration of the involved unitholders in a general assembly convened for this purpose.

Furthermore, sufficient homogeneity between the portfolios must be demonstrated, which can 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 that some funds of the same family may present differences in relevant aspects, such as the deadline for pricing the redemption, which implies a risk that, in scenarios of significant demands for redemptions, the fund with the longer deadline to meet them may be prejudiced in relation to the others.

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

Finally, it is a condition for the regularity of the operation that the funds that will be transformed into share 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.

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

When deliberating on a consultation formulated by a market participant in Process CVM No. RJ-2011-5965, the Collegiate 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, as it represents a mere "continuation of the offer previously carried out in a stock exchange environment."

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

1.20 AUTHORIZATION FOR PRIVATE TRADING IN FUNDS OF CLOSED-END COMPLEMENTARY PENSION ENTITIES – ART. 64, VI

As is known, it is forbidden for the regulated investment fund, pursuant to Instruction, to carry out operations with shares outside of a stock exchange or an organized over-the-counter market by an entity authorized by the CVM, in accordance with its Article 64, VI.

Thus, in line with the Collegiate Board's decisions in Process CVM No. RJ-2013-0869, taken in the meetings of 3/12/2013 and 3/22/2013, this Superintendence understands that the granting of authorization that exempts this prohibition, in cases where the cotistas are subject to the supervision of the National Superintendence of Complementary Pension – PREVIC, must be preceded by prior authorization from that autarchy, or, as the case may be, an express manifestation issued by that Autarchy stating that such authorization is not necessary.

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

This Superintendence considers it positive the establishment of objective references to highlight the profitability 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 fund's management goals and objectives, 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 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.

1.22 SUPERVISION, BY THE ADMINISTRATOR, OF SERVICES PROVIDED BY THE MANAGER – ART. 65, XV, C/C ART. 65-A

Article 65, item XV, determines that the administrator must supervise the services provided by third parties contracted by the fund. Regarding the duties and responsibilities of the portfolio manager of investment funds, we highlight the relevant role of the administrator as responsible for supervising the manager's acts, including through post-trade control of the portfolio composition and its alignment with the fund's investment policy and applicable rules.

Thus, in cases of investment funds with outsourced management, it is the manager's responsibility, before concluding operations on behalf of the fund, to carry out all due diligence, in accordance with Art. 65-A of the Instruction, to verify the adequacy of these operations to the fund's policy, its bylaws, as well as to the limits imposed by CVM Instruction No. 409/04, and for the administrator to supervise the diligent performance of the manager, albeit post-facto, in accordance with Arts. 65, XV and 65-A of the norm.

In this sense, and also given the reading of Art. 65-A of the Instruction, it is expected of a diligent administrator that he is able to verify, through his supervision systems, the misalignment of the portfolio of the funds he manages as soon as their operations are settled.

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 a fund 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.

A recent Collegiate Board decision within the scope of Administrative Sanctioning Process CVM No. RJ2012-6987 highlighted that transactions involving illiquid assets, especially when carried out with a significant portion of the fund's assets, must be subject to special attention, a circumstance that gained even more relevance with the recent inclusion of Art. 65-B into the Instruction, a current evidence of how the CVM envisions the role of the administrator in the investment fund industry in controlling liquidity risk.

It is also the understanding of the SIN that such requirements do not imply the obligation, for the administrator, to previously supervise the acquisition of a specific title or security by the manager, much less to exercise a prior judgment of value of the titles and/or securities selected by the manager.

Thus, upon identifying that the manager invested in a prohibited asset, or that he exceeded the limits established by the fund's bylaws, it is the administrator's responsibility, in the exercise of his supervisory power, to notify him for timely correction and, also, to the CVM, in accordance with § 1º of Art. 88 of CVM Instruction No. 409/04. At the limit, the administrator has powers even to effect the compulsory sale of fund assets to align with applicable limits, as well as to make any communication to cotistas, if applicable, in accordance with Art. 72 of the Instruction and to take other appropriate measures compatible with the fiduciary duty referred to in Art. 65-A of CVM Instruction No. 409/04.

1.23 USE OF PRELIMINARY RATINGS BY INVESTMENT FUNDS IN THE ACQUISITION OF PRIVATE CREDIT ASSETS – ART. 65-A, I

Art. 65-A, item I, of the Instruction provides for the code of conduct that must be adopted by the administrator and the manager, including regarding the duty of diligence when acquiring assets for the investment fund's portfolio.

Specifically regarding private credit assets, it is usual for the bylaws to establish the need for a minimum rating granted by a credit rating agency for the title to integrate the fund's portfolio.

On the other hand, risk rating agencies usually publish evaluations on a preliminary or conditional basis, which do not represent a final opinion regarding the risk of the issuance, which only occurs when the risk rating agency accesses and analyzes all documents related to the issuance, such as the contracts themselves, guarantees, financial statements, among many others.

In this sense, in line with the Collegiate Board's decision within the scope of Administrative Sanctioning Process CVM No. RJ-2012-869, in the opinion of this technical area, when the investment fund's bylaws establish the need for the assignment of a minimum rating for the acquisition of an asset, the manager should only base his decision on definitive reports on the issuance published by the contracted rating agency.

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

In response to a consultation presented by the Superintendence of Market Relations and Intermediaries, the CVM Collegiate Board, when deciding on Process CVM No. RJ-2007-12876, noted the possibility of constituting investment funds of the Stocks or Multimarket classes that provide for the investment of more than 95% of their net assets 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 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 in the same group as the administrator or the manager.

Thus, the Collegiate Board concluded that the provision in 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.

1.25 FUND CHARGES (ARTS. 99 AND 100)

Art. 99 of CVM Instruction No. 409/04 must be interpreted restrictively, such that the listing of charges provided for in the device is an exhaustive list, which does not admit any kind of addition.

Thus, although item VI of the rule provides that attorney's fees, costs and related procedural expenses, incurred due to the defense of the fund's interests, in court or out of court, including the value of the condemnation imputed to the fund, if applicable, we alert that such charges can only be enforceable against the fund when they refer exclusively to expenses incurred in defense of the fund's interests, that is, of the condominium of cotistas as a whole.

1.26 INVESTMENT IN QUOTAS OF FIPS BY QUALIFIED FIS 110-B AND 110-A – ARTICLE 86, § 10, II

As is known, it is forbidden for investment funds to invest 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 Collegiate Board, in a decision regarding Process CVM No. RJ-2009-12749, taken in the Meeting of 8/10/2010, deliberated that this prohibition would not extend to exclusive funds (Article 111-A) or those with a minimum initial application of R$ 1 million (Article 110-B), since they are expressly exempt from observing the concentration limits by asset class provided for in Article 86 of the Instruction.

Thus, to these funds it is possible to apply in quotas of other investment funds not listed in Article 87, I, of the Instruction, such as, but not limited to, Investment Funds in Participations (FIPs), Investment Funds in Quotas of Investment Funds in Participations (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 a minimum initial application of R$ 1 million) from observing the provision in item I of § 10, given the specific and distinct objective of this device, which intends to preserve the integrity of the fund's assets.

1.27 EXPOSURE LIMITS TO FOREIGN ASSETS – ART. 87

In accordance with the Collegiate Board's decision taken on 10/2/2013, the CVM Collegiate Board established its understanding that the application limits for investment abroad, as provided for in Article 85 of the Instruction, are not confused with those established in Arts. 86 and 87 of the Instruction, which are applicable to domestic assets.

Thus, the best interpretation for the provision in Article 85, § 2º, of the Instruction, especially regarding the term "cumulatively" exposed there, is in the sense that the application limits abroad are independent of those provided for domestic assets, and that both limits must be permanently observed by investment funds.

Under this interpretation, the material objective of regulation is respected by permitting effective application abroad of the limits provided for in the norm, so that resource applications abroad are not computed in the calculation of limits by issuer and by asset, established, respectively, in Articles 86 and 87 of the Instruction.

1.28 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 3/16/2010, the Collegiate Board reiterated the possibility of application, by investment funds and investment funds in quotas of investment funds, in quotas of Investment Funds in Credit Rights (“FIDCs”) and Investment Funds in Quotas of Investment Funds in Credit Rights (“FICFIDCs”).

Thus, the Collegiate Board, when examining the issue, highlighted 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 they observe the limits provided for in that Instruction.

It is also worth mentioning the decision in that process that, for all other effects, including regarding the rules for resource allocation of investment funds, the definition of qualified investor established in Art. 109 of the Instruction still prevails. Thus, when acquiring assets within the scope of offers with restricted efforts by investment funds that are not exclusively aimed at qualified investors, all concentration and diversification limits provided for in Articles 86 and 87 of the Instruction continue to apply, for example.

Still regarding the application and incidence of Article 87, I, of the Instruction, it is also worth recalling the content of the Collegiate Board's decision in Process CVM No. RJ-2009-7219, judged on 6/1/2010, in which, in response to a consultation, it was decided that any repurchase operations that are not specifically backed by public titles, in accordance 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 the norm.

At this point, the CVM Collegiate Board understood that exempting compliance with the limit of Art. 87, I, of the Instruction for repurchase 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 norm-changing process that counts, including, with the participation of the market in a public hearing process.

1.29 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 negotiated on a stock exchange or organized over-the-counter market.

Index Fund quotas representing a stock portfolio are securities with characteristics similar to investment fund stock quotas, and can 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 is necessary to make the following clarifications:

a) Index Fund quotas can be subject to loan operations in the form of 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 its issued quotas must be considered as financial assets, for the purpose 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. 95-B, for the purpose of classifying the investment fund as a stock fund; d) Provided it is provided for in its bylaws, an Investment Fund in Quotas of Investment Funds in Stocks or an Investment Fund in Quotas of Multimarket Investment Funds can apply up to 100% of its net assets in Stock Index Fund quotas, given the provision in Art. 112, § 4º.

1.30 MINIMUM NET ASSETS – ART. 105

Article 105 of the Instruction explicitly states 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 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 the fund's quotas.

For this reason, it is noted 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 the fund's quotas.

1.31 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 cotistas or determined by the total redemption of its quotas cannot effect it, for exogenous reasons and unrelated to the will of its administrator and cotistas.

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 tend to 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 Deliberation No. 571, of 3/31/2009, it was defined that, in these exceptional cases, the administrator of the investment fund may request this Superintendence for exemption from the obligation of liquidation or its incorporation into another fund, together or not with the cancellation of its registration at the CVM, provided the following requirements are met:

a) The requests for exemption and cancellation must be detailed; b) The exemption and cancellation must be approved by all cotistas of the fund gathered in a general meeting; c) Proof of exceptional situation that prevents the liquidation of all remaining assets in the fund's portfolio; and d) Declaration by the administrator that he remains responsible for the administration of the fund and that the quotas will no longer be offered publicly. The contracted distributors must attest that they will no longer offer such quotas.

1.32 QUALIFIED INVESTORS – ART. 109

By virtue of consultations from market participants regarding the subject, we come to remind that Art. 109, § 2º, of the Instruction is a device of a transitory nature, which only had the objective of regulating the situation of cotistas who, at the time of the entry into force of the Instruction, met the qualification requirements then in force, but who did not fit into those provided by the new norm.

Thus, we remind the Collegiate Board's understanding 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, will not be able to maintain their cotistas who, at the time of the alteration, do not meet the qualification requirements of the Instruction.

Still in accordance with that communication, we remind that the transitory permission contained in the device only extends to cotistas that are retail funds (not exclusively aimed at 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 for applications, in accordance with Art. 17 of the Instruction.

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

As is known, funds intended for qualified investors, whose bylaws 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 class established in Articles 86 and 87.

Thus, based on Article 110-B, their bylaws can provide, with greater freedom, their investment policies. Their concentration limits by issuer and by asset class, 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 norm 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, nor, still, predetermined minimum values for additional applications. Notwithstanding, rules establishing minimum values for maintaining resources applied in quotas can be established in the bylaws.

However, situations of partial redemptions in a short period after the initial investment, 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 rule.

1.34 INVESTMENT IN FICFIP SHARES – ARTICLE 112, §§ 5 AND 6

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

In this regard, we remind you that, according to that same decision, the absence of provision in § 6 of Article 112 regarding the possibility of investing in FICFIP shares constitutes a material error that finds no reasonable justification.

For this reason, a merely literal interpretation of the provision must be set aside, in favor of the purposes of the rule, to recognize, in this direction, the possibility for FICFIs provided for in Article 112, § 6, to invest in FICFIP shares.

1.35 INFORMATION FROM THE ESSENTIAL INFORMATION SHEET (ANNEX III)

The administrator of an open-end fund that is not intended exclusively for qualified investors must send monthly to the CVM an essential information sheet of the fund, prepared in the form of Annex III of CVM Instruction No. 409/04, a document which, among other data, must inform the total expense ratio incurred by the fund in the period:

Total expense ratio: are the total expenses incurred by the fund, representing a percentage of its average daily net asset value in the period under consideration. The expense ratio may vary from period to period and reduces the fund's profitability.

Regarding this, we clarify that the fund's total expense ratio must consider all, and only, the charges incurred by the fund, as defined in Article 99 of CVM Instruction No. 409/04, given that other expenses must be borne by the administrator, in accordance with Article 100 of the rule.

Since the administration fee is a charge of the fund – item XII of Article 99 – we alert that the percentage reported as the total expense ratio must include it and can never be lower than the percentage reported as the administration fee.

1.36 DAILY REPORT (ARTICLE 4 OF CVM INSTRUCTION NO. 512/11)

As provided in item I of Article 71 of CVM Instruction No. 409/04, the administrator must send a daily report to the CVM, a document which, among other information, must contain the total value of cash outflows expected to occur within the period established in regulation for the payment of redemptions, including the stock of requested and yet unpaid redemptions.

In the filling instructions contained in CVM Instruction No. 512/11, the guidance is to fill out the daily report with the total value of redemptions requested and yet not accounted for by the fund (value in stock up to the reference date of the document).

Regarding this, this technical area communicates that the aforementioned guidance must be interpreted expansively, so that the total value of cash outflows must contemplate not only the total value of requested and yet unpaid redemptions, but also the other charges of the fund – Article 99 of CVM Instruction No. 409/04 – as well as all anticipated cash outflows for the period.

CVM INSTRUCTIONS NO. 306/99 AND 510/11 – PORTFOLIO MANAGEMENT AND REGISTRATION UPDATES

2.1 NECESSITY OF ACCREDITATION FOR SELF-MANAGEMENT – ARTICLE 3

In the evaluation of the Superintendence, Article 23 of Law No. 6.385/76 establishes as the legal competence of the CVM the supervision of the provision of professional services for the management of third-party resources. Thus, for anyone intending to exercise exclusively the activity of managing own resources, there is no need for accreditation with the CVM under CVM Instruction No. 306/99, nor would the CVM have the competence to grant it.

Thus, and still in accordance with the Collegiate decision taken within the scope of CVM Process No. RJ-2011-14560, we understand that any applicant who nonetheless insists on obtaining accreditation as a securities portfolio administrator with the CVM must assume all burdens resulting from the accreditation they seek to obtain, which means proving that they possess all the structure and necessary requirements for the adequate provision of this service, or in other words, demonstrating compliance with all requirements required by CVM Instruction No. 306/99 for accreditation.

2.2 AFFILIATED COMPANIES – ARTICLE 7, §§ 5 AND 6

The exception rule of the aforementioned 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” (last part of Article 7, § 6 of the Instruction).

In the absence of a law – in the strict sense – that defines 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 the provision of Article 3 of CVM Instruction No. 149/91 and Article 86, § 2 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 share capital of the other, or when (2) they share administrators or partners with participation greater than 10% of both share capitals.

In the same sense, we refer to 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 still, individually or jointly, holds participation greater than 10% of the share capital of the other; or when (2) one is controlled by the other.

Finally, it is worth noting that – despite being expressly repealed – 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.

2.3 - SIMULTANEOUS EXERCISE OF INCOMPATIBLE ACTIVITIES WITH THE POSITION OF RESPONSIBLE FOR PORTFOLIO ADMINISTRATION IN A MANAGEMENT COMPANY – ARTICLE 7, §§ 5 AND 6

Article 7, § 5, of the Instruction requires that the director, delegated manager, or managing partner directly responsible for the administration of third-party securities portfolios of a legal entity cannot be responsible for any other activity in the capital market, in the institution, or outside it.

This provision aims to avoid the possibility of conflicts of interest inherent in the accumulation of this function with others in the market, which could, at the limit, facilitate the practice of conduct such as insider trading, front running, or the improper transit of confidential information.

Thus, the director responsible for the portfolio administration activity of any company must avoid assuming any other functions or activities in the institution for which they are responsible, such as, for example, acting in other activities in the capital market.

We remind you, moreover, that this prohibition must be interpreted systematically and jointly with the provision of Article 15 of the Instruction, and thus, it applies to all other activities exercised in the financial and capital markets that may compromise the adequate isolation and segregation of the resource management activity exercised by the company for which the director is responsible.

In the same way, the accumulation with other activities outside the management company must also be avoided, even if they also involve the management of third-party resources, such as, for example, management in the capacity of a natural person of funds, investment clubs, or other investment vehicles.

In this sense, we reinforce, moreover, the understanding of the SIN that the reading of Article 7, § 6, of CVM Instruction No. 306/99 allows concluding that the only hypothesis of accumulation of other activities in the resource management area outside the company for which the director is responsible is the case of assumption of identical responsibility in affiliated companies, as already defined in item 2.1 of this Circular Letter.

The only exception, in this sense, is the acting, as provided and analyzed within the scope of the Collegiate decision of CVM Process No. RJ-2006-8187, of the responsible director as a member of the board of directors of a company, open or closed, since, in this situation, the responsible director acts in the company precisely due to the investment made in it by the management company, i.e., with the purpose of representing the interests of the management company as an investor in that company.

2.4 APPLICATION OF ARTICLE 7, § 7, OF CVM INSTRUCTION NO. 306/99

As provided in Article 7, § 7, legal entity portfolio administrators are permitted the possibility of indicating more than one responsible director for the activity before the CVM, provided that, for each of these indicated directors, a “independent and exclusive” area of operation is dedicated, responsible for the management of “securities portfolios of diverse nature”, as provided in that provision of the rule.

It is worth noting that the concept of “securities portfolios of diverse nature” encompasses both portfolios composed of different types of securities, as well as those that, due to differences between client profiles, may be considered diverse, in accordance with the Collegiate decision of CVM Process No. RJ-1991-1313 (judgment of ).

We also inform that Article 7, § 7 is an adequate normative means for the classification of hypotheses of resource management companies that intend to manage their own resources through investment funds constituted exclusively for this purpose.

Thus, as seen in recent precedents of the CVM Collegiate – for example, CVM Processes No. RJ-2010-9133, RJ-1991-1313 (judgment of 27/3/2012) and RJ-1997-1173 – the approval of the request in this case will be conditioned on the existence of strict segregation between the activities, to be proven in accordance with Article 15 of the rule, since they are distinct activities exercised by the same legal entity.

2.5 ANNUAL REPORT OF PORTFOLIO ADMINISTRATORS (ICAC) – ARTICLE 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 1, 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 also that no alteration in the registries of this Autarchy is necessary.

The sending of the ICAC is also mandatory for an accredited portfolio 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, in 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 31/5/2009, the year of research “2009” must also be informed.

Finally, we recall that the lack 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, also, with the requirements of Articles 3 and 11 of CVM Instruction No. 452/07.

2.6 EVENTUAL REGISTRATION UPDATE OF PORTFOLIO ADMINISTRATORS (ICACE) – ARTICLE 1, 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, in 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 provisions of the aforementioned Article 1, I.

We alert, however, that in the case where the update refers to a change in the social name or the responsible person of the portfolio management company - Legal Entity, another procedure must be adopted.

In the case of name change, the update must be informed 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 of this change with the Central Bank of Brazil.

In the case of change of responsible person, the update must be informed 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, 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 update in the Registration Report.

We finally remind the importance of the accredited entity always keeping their registration updated with the CVM, since the data therein are 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.

2.7 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 guaranteeing an efficient policy for the management of conflicts of interest that are inherent to its own activity.

Thus, in the understanding of this Superintendence, the establishment of adequate policies for the segregation of activities, without prejudice to other initiatives, can 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 encompassing, 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 segregation rules adopted, with discrimination, at minimum, of those related to facilities and equipment, with detail, at least, of the computers used, networks, facsimiles, telephones, and files; b) Confidentiality Policies (Article 15, item II) – define the confidentiality and conduct policies adopted, with detail of the requirements applicable, at minimum, to 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 least, its partners, administrators, collaborators, and employees. Its purpose is to give everyone knowledge of the company's segregation policies, to guarantee 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 consonance with the presented Training Policy, and their perfect understanding of the adopted Segregation Policies; d) Security Policies (Article 15, item IV) – detail the access control policies to confidential information, at least by its partners, administrators, collaborators, and employees who possess them. 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 in 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 least, 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 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 sanctions applicable in case of non-compliance with the policies, and also of the person designated for this activity.

2.8 APPLICATION OF EMPLOYEE RESOURCES IN THE MANAGEMENT COMPANY'S OWN PRODUCTS – ARTICLE 15, V

In the understanding of this Superintendence, we consider as a positive tool for alignment of interests the limitation and/or incentives voluntarily imposed on certain administrators, partners, employees, and directors of resource management companies (“persons subject”), to apply their own resources exclusively in the same products offered by the company to its investors, provided that also under the same conditions given to other investors of the invested vehicle.

However, we remind that such a measure can also subject these persons to specific conflicts of interest, such as those related to the expected exposure, by them, to information of a confidential nature resulting from the exercise of activities in the management company, especially when they integrate the processes of elaboration of strategies and investment decision-making of the management company.

Thus, we understand that a practice with such possibility must be accompanied by tools that mitigate the materialization of risks of this nature, such as, for example, and without prejudice to other measures required by the circumstances, disclosure rules when redemptions occur, either to the company's compliance officer, or to potentially affected investors.

CMN RESOLUTION NO. 2.689/00 - NON-RESIDENT INVESTORS

3.1 REPRESENTATION CONTRACT – ARTICLE 5

As is known, it is the obligation of the non-resident investor's representative to keep the custody, and provide whenever requested, in accordance with Article 5 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 that, within 15 days after the constitution of the portfolios of these investors, 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 documentary evidence of the representation and custody contracts and of the Form Annexed to CMN Resolution No. 2.689/00, for which I take responsibility.

Still regarding this, we state that eventual registration changes of non-resident investors, in accordance with § 5, II, of the Resolution, do not need to be accompanied by documentary evidence of 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 the maintenance of registration with the CVM does not imply automatic update in registries of other bodies of the Public Administration, such as the Central Bank of Brazil and the Revenue Service

Federal of Brazil. Thus, these updates, when necessary, must be promoted, by means of its own, by the representative of the non-resident investor.

3.2 EXERCISE OF PUT OPTIONS ON SHARES IN PUBLIC OFFERS – ART. 8º
When deliberating on a consultation submitted by a market participant in Process CVM nº RJ-2011-5965, the Collegiate emphasized that the exercise of put options by remaining shareholders in a public acquisition offer of shares regulated by CVM Instruction nº 361/02 should not be considered a private operation prohibited by Art. 8 of the Resolution, as they represent a mere “continuation of the offer previously carried out in a stock exchange environment.” For this reason, we inform you that, in line with the cited decision of the Collegiate, the prohibitions provided for in Article 8 of the Resolution do not apply to non-resident investors who meet the conditions provided for in article 10, §§ 2º and 3º, of CVM Instruction nº 361/02.

3.3 FREE TRANSFER OF SUBSCRIPTION RECEIPTS – ART. 8º AND SOLE PARAGRAPH
In accordance with the Collegiate decision of 10/13/2009, taken within the scope of Process CVM nº RJ-2009-5699, 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 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.” Still in accordance with 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 8, § 1º, as one of the exceptions to the prohibition of carrying out operations outside of organized stock or over-the-counter markets.

CVM INSTRUCTION NO. 483/10 – SECURITIES ANALYSTS

4.1. GRAPHICAL ANALYSES DISCLOSED THROUGH THE INTERNET - ART. 2º
CVM Instruction nº 483/10 brings in its Article 1º 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 by the accrediting entity in order to exercise this activity.
In this sense, it is worth clarifying that graphical analyses and recommendations resulting from these analyses, disclosed on sites, 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.

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 consultants for natural and legal persons, embodied in the documents that must accompany accreditation requests.
The demanded documents are the following:

Natural persons:
(i) application signed by the interested party containing the reasons why he believes he is qualified to exercise the activity; (ii) copy of the curriculum vitae and proof of the main courses mentioned therein; (iii) proof of registration in the CPF and copy of the identity card; (iv) documentation proving his experience and detailing the nature of the activities exercised by the interested party, his 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, as provided in the current regulation on the activity of analysts); (v) registration form containing his full name, CPF, address, telephone, facsimile, email; (vi) declaration signed by the applicant, informing:
(a) if he is 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 he has 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 prevents, even temporarily, access to public offices; (c) if he is included in the Register of Issuers of Bounced Checks; (d) if he has titles protested against him; (e) if, in the last five years, he has 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 his assets, by force of judicial decision or administrative authority, are unavailable.

Legal persons:
(i) application signed by the legal representative of the legal person; (ii) copy of the constitutive acts duly consolidated; (iii) proof of registration in 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 least, the social and commercial name of the society, CNPJ, address for correspondence, telephone, facsimile, email, and the person responsible for the activity. The accreditation of the legal person is conditioned on the designation of a responsible director, who must be accredited as a securities consultant - natural person - with the CVM.

5.2 ELECTRONIC CONFORMITY DECLARATION – CVM INSTRUCTION NO. 510/2011

Article 1º, II, of the Instruction requires that the securities consultant accredited with the CVM must confirm, annually between May 1st and May 31st, the registration information of the participant contained in the CVM systems.
It is important to note that this obligation must be fulfilled even if the consultant does not exercise the activity, or if no changes are necessary in the registrations of this Autarchy at the time of verification.
Confirmation by the accredited consultant, natural person, who is responsible for the securities consulting activity in a legal person authorized by the CVM to exercise such activity, is also mandatory. In this case, it is worth noting the applicability of two confirmations, one by the natural person, and another by the legal person for which she is responsible. The aforementioned annual confirmation must be sent through the restricted access environment of the consultant available on CVMWeb, option “Registration Update”. After accessing the system with your CPF and password, the participant must look for the item “Registration Update of Participants”, and then, “Electronic Conformity Declaration”. Finally, if the registration data is indeed updated, it is necessary to click “Send Form”. If, however, the registration data is not correct, before confirmation, it is necessary to duly update this information in the CVM systems, which must also be done directly by accessing the CVMWeb system, in the same option “Registration Update”. However, after accessing the system with your CPF and password, the participant must click on “Registration Update of Participants”, then “Securities Consultant”, and finally, “Update of Registration Data”. After the confirmation entry has been made, it is possible and recommended to consult to verify if it was accepted by the system. For this purpose, similarly, the same path indicated for sending the Electronic Conformity Declaration must be accessed, and it must be verified if the term “yes” appears in the available option “Form already sent”. Finally, we remind you that the lack or delay in sending the aforementioned report entails the application of a coercive fine, as provided in Article 20 of the Instruction, in conformity, furthermore, with the requirements of Articles 3º and 11 of CVM Instruction nº 452/07.

5.3 CONDITIONS FOR THE EXERCISE OF CONSULTING ACTIVITY
As is known, it is CVM Instruction nº 43/85 that currently regulates the securities consulting activity subject to registration in this Autarchy.
Without prejudice to ongoing studies for the improvement and review of this norm, to confer greater legal security and predictability in the CVM's supervisory action, some Collegiate decisions have delineated with greater precision certain aspects of the exercise of this activity in the market, such as those contained in Processes CVM nº RJ-1999-3663, RJ-2007-4747, RJ-2008-0296, RJ-2008-1839, RJ-2008-4324, and RJ-2012-6198. As important observations from the analysis of these processes, we emphasize the requirement, provided for in the decision of Process CVM nº RJ-1999-3663, that “the corporate portfolio administrator must segregate his consulting activities from his administration activities, and must have a responsible person for each activity”. Two important conclusions must be drawn from this Collegiate decision, namely: (1) when also exercising portfolio administration activities, securities consultants must prove adequate segregation between the two activities; and (2) corporate securities consultants must have a responsible person specially designated to answer for this function before the CVM, to the same extent that portfolio administrators already do (in the latter case, based on article 7º, II, of CVM Instruction nº 306/99). Another observation worthy of mention was provided for in the decision of Process CVM nº RJ-2012-6198, in which it was emphasized that, to exercise the consulting activity, the legal person must always provide, directly or indirectly, this activity as an integral part of its corporate object.

STRUCTURED FUNDS

6.1. GENERAL GUIDELINES

6.1.1. REGISTRATION OF OPERATION AND CONSTITUTION AUTHORIZATION REQUESTS (IN THE CASE OF FII) OF STRUCTURED INVESTMENT FUNDS (FIDC, FII, FIP, FMIEE, AND FUNCINE).
We alert that when submitting requests for registration of operation or authorization of constitution (for the case of FIIs) of structured investment funds, the petition should be addressed directly to the care of the Structured Funds Monitoring Management – GIE.
This measure significantly reduces the analysis and registration time of structured funds, which benefits the regulated entity, given the reduction of internal document flow within the Superintendence.
Furthermore, we stress that the request must contain the type of offer that will be carried out, basically, in accordance with CVM Instruction nº 476 (ICVM 476) or CVM Instruction nº 400 (ICVM 400). In the case of an offer under ICVM 400, it must be indicated in the petition if the same falls within the scope of art. 5º, item II (single and indivisible lot of securities), whose registration of the offer of securities with the CVM is automatically waived. We remind you that the registration of the offer of securities, excluding automatic waiver cases, is appreciated by the Superintendence of Securities Registration – SRE.

6.1.2. COMMUNICATION OF CHANGES IN REGULATIONS OF FII, FIDC, FIP, FMIEE, AND FUNCINE, AND CHANGE OF SERVICE PROVIDERS OF THE RESPECTIVE FUNDS
Each of the Instructions for the aforementioned funds determines that any changes to the regulations must be filed with the CVM. This is the case of Art. 17 of CVM Instruction nº 472/08, for FIIs; Art. 57, I, of CVM Instruction nº 356/01, for FIDCs; Art. 7º, I, of CVM Instruction nº 391/03, for FIPs; Art. 5º, I, of CVM Instruction nº 209/94, for FMIEEs; and Art. 38, of CVM Instruction nº 398/03, in the case of FUNCINEs. In the understanding of this technical area, the filing of regulations via CVMWeb System (upload) is considered sufficient to meet the aforementioned obligation, in which case it is not necessary to send the physical copy of such documents. We reiterate that the forwarding deadlines established in the norms must be respected. Finally, until tools are developed for the registration update of service providers of the aforementioned funds that allow the changes to be made directly by the Administrating Institutions via CVMWeb, any change, whether decided in a shareholders' meeting or not, must be requested by sending an email to caixa gie@cvm.gov.br, without prejudice to the sending of the respective deliberation minutes to the CVMWeb System, when applicable. To effectuate the registration changes, the current Administrating Institution of the fund must inform in the subject of the email the title “Service Provider Registration Change”, to which it must attach the minutes that approved the modification, accompanied by information on (i) the type of service provider to be changed (Administrator, Manager, or Custodian, for example), (ii) the name and CNPJ of the old service provider and the current one, as well as (iii) from what date the change was effective, respecting the provisions of the assembly minutes, if applicable. For changes to the Fund Administrator, such request must be made by the replaced institution.

6.1.3. CLOSURE, SPIN-OFF, INCORPORATION, AND TRANSFORMATION OF STRUCTURED INVESTMENT FUNDS (FIDC, FII, FIP, FMIEE, AND FUNCINE).
We clarify that requests for spin-off, incorporation, and transformation of structured investment funds do not require formal authorization from the CVM; however, all minutes or private instruments that authorized the operation must be forwarded via CVMWeb, as well as communicated to this Autarchy via physical protocol, observing the case of spin-off detailed below, addressed directly to the Structured Funds Monitoring Management – GIE, indicating in the petition the nature of the operation carried out (spin-off, incorporation, or transformation). We alert that all requirements defined in specific norm, as well as arts. 101 to 104, of ICVM 409, applied to structured funds by virtue of art. 119-A of the same Instruction, must be respected. Furthermore, regarding each of the operations listed above, we provide the following clarifications:

(i) Closure of structured fund with the CVM:
Along with the request to close the structured investment fund, there must be (i) proof of cancellation of the CNPJ, (ii) the minutes of the assembly that deliberated the liquidation of the fund, when applicable, or the closure term signed by the administrator upon total redemption of shares or in cases where the fund has not yet operated (pre-operational phase). The fund is closed in our database after the presentation of the statement of net asset movement, covering the period between the date of the last audited financial statements and the date of the actual liquidation of the fund, along with the opinion of an independent auditor, who must comment on the movements that occurred during the period (Closing Financial Statements). Obviously, for cases of funds that never entered operation (pre-operational phase), financial statements are not due. These guidelines are in line with arts. 106 and 107, of ICVM 409, applied to structured funds by virtue of art. 119-A of the same Instruction.

(ii) Spin-off:
Spin-off, when the spun-off part is not incorporated into another fund, i.e., giving rise to a new investment fund, is treated as a new registration of operation.
In these cases, the administrating institution, in addition to physically filing the petition communicating the operation carried out, must present the new regulation of the investment fund constituted from the originally spun-off fund.
In situations where the spun-off part will be incorporated into an existing investment fund, it is sufficient to send the minutes that deliberated and approved the spin-off and the corresponding financial statements, both via CVMWeb, exclusively.
We remind you that in cases of Spin-off, financial statements must also be prepared, and audited within 60 (sixty) days, counted from the date of the event, by an independent auditor registered with the CVM, and explanatory notes must contain the criteria used for the equalization of shares between funds, as per art. 102, of ICVM 409. In addition, the parameter used for the conversion of fund share values, as well as the value of shares of funds resulting from such operations, must be stated in an explanatory note, as per the sole paragraph of art. 102 mentioned above.

(iii) Transformation:
The request to transform an investment fund, structured or not, into a Structured Investment Fund (FIDC, FII, FIP, FMIEE, and FUNCINE) must be sent directly to the Structured Funds Monitoring Management – GIE.
We request that the subject of the petition identify the nature of the operation - “Transformation of (FIA, FIDC, FIM, etc) into (FIDC, FIC-FIDC, FIDC-NP, FII, FIP, FIC-FIP, FMIEE, or FUNCINE)”.
To analyze the transformation request, it is necessary to send the new regulation, in accordance with the specific norm to which the new structured fund will be subject, in this case, ICVM 356 or ICVM 444, ICVM 472, ICVM 391, ICVM 209, or ICVM 398.
We alert that the biggest error committed when transforming a fund is the failure to adjust its new investment policy in the regulation.

(iv) Incorporation:
The incorporation of an investment fund, in practice, is the closure of the registration of the incorporated fund, for this reason, such operations are treated as if they were indeed a fund closure.
In this sense, administrators must follow the procedure established above for fund closure cases; however, we request that the following information comes in the subject of the petition: “Closure by Incorporation”.
We remind you that, as in the cases of Spin-off, in Incorporation operations, financial statements must also be prepared, and audited within 60 (sixty) days, counted from the date of the event, by an independent auditor registered with the CVM, and explanatory notes must contain the criteria used for the equalization of shares between funds, as per art. 102, of ICVM 409. In addition, the parameter used for the conversion of fund share values, as well as the value of shares of funds resulting from such operations, must be stated in an explanatory note, as per the sole paragraph of art. 102 mentioned above.

6.1.4. SUBMISSION TO THE CVM OF THE LAWYER'S OPINION, THE LEGAL ADVISORY BODY'S OPINION, AND STATEMENT REGARDING THE EXISTENCE OF A FINANCIAL COMMITMENT THAT CONSTITUTES A CREDIT OPERATION, FOR THE PURPOSE OF COMPLEMENTARY LAW NO. 101/2000 (ART. 7º, §1º AND 9º, OF ICVM 444; ART. 8º, §8º, OF ICVM 356).
The FIDC administrating institution, when acquiring credit rights originating or derived from public entities, including their controlled dependent companies, must physically file with the CVM, to the care of the Structured Funds Monitoring Management – GIE, the opinion of the legal advisory body of the public entity, along with the statement regarding the existence of a financial commitment that constitutes a credit operation, for the purpose of Complementary Law No. 101/2000 (Fiscal Responsibility Law), provided in art. 7º, §§ 1º and 9º of ICVM 444, and must also, in case of a positive answer, attach the authorization of the Ministry of Finance, as per art. 32 of the aforementioned Complementary Law. Such opinions must also be forwarded via CVMWeb, in the field “occasional information”, rubric “others”, as well as the lawyer's opinion, treated in art. 7º, §1º, of ICVM 444, until a specific field is created to receive such documents. Regarding this latter, physical filing of the document is not necessary.

6.2. INVESTMENT FUNDS IN CREDIT RIGHTS – FIDC

6.2.1. ART. 23-A OF CVM INSTRUCTION NO. 356/01 – FIDC, FICFIDC, AND FIDC-NP

Article 23-A of Instruction CVM No. 356/01 establishes the requirements that must be met for the fund to be automatically exempted from presenting the classification of classes or series of quotas by a credit rating agency operating in the country.

Initially, it is worth noting that all requirements provided for in the aforementioned device, which are divided into three subsections, must be observed, that is: the automatic exemption requires the cumulative satisfaction of the three subsections of Article 23-A, not the satisfaction of only one subsection.

Furthermore, we alert that the fact that the public offering of distribution of quotas constituting the initial patrimony of the fund occurs under the aegis of Instruction CVM No. 476/09 does not result, by itself, in the applicability of Article 23-A in question. Thus, even if the constitution of the fund uses the aforementioned Instruction, the automatic exemption from risk classification depends on the observance of all subsections of Article 23-A 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 Article 23-A of Instruction CVM No. 356/01 are maintained. That is, if the fund ceases to be invested exclusively by a single quota holder or by a group of quota holders linked by a single and inseparable interest, risk classification becomes due.

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

Article 34, VIII, of Instruction CVM No. 356/01 provides that it is included among the obligations of the administrator 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 period provided for in the device – 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 due to the civil quarter.

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

6.2.3. ART. 38, SUBSECTION V, C/C §11 OF THE SAME ARTICLE (INSTRUCTION CVM NO. 356/01) – COLLATERAL OF CREDIT RIGHTS.

The issuance of Instruction CVM No. 531/2013 (ICVM 531) brought to the FIDC industry a series of relevant modifications, among which we highlight (i) new rules for the custody of credit rights, (ii) the financial flow within the fund, (iv) collection of receivables, and (v) restrictions on conflicts of interest.

Regarding the rules related to the custody of collateral assets, in interactions with the market, we have verified some doubts about which document should be considered the basis for custody and storage by custodians, in accordance with art. 38, subsection V, c/c §11 of the same article, all of ICVM 356.

In this sense, it is worth clarifying that it would not be reasonable to define for each of the eligible assets for FIDCs, given the significant number of possibilities, the document suitable for custody purposes. Notwithstanding, we understand that the collateral of credit rights must be that which is necessary and sufficient to effect the collection of the credit in an eventual forced collection, whether judicial or extrajudicial.

Therefore, for the purposes of art. 38, subsection V, c/c §11 of ICVM 356, the custodian, responsible for the collection of receivables, must carry out the custody of credits keeping in mind the concept exposed above.

Additionally, it is important to emphasize that the custodian and the administrator must be comfortable regarding the sufficiency of the documents to be stored.

6.2.4. ART. 38, SUBSECTION V, (ICVM 356) – CUSTODY OF CREDITS WHOSE COLLATERAL IS FOUND IN THE RECORDS OF A JUDICIAL COLLECTION LAWSUIT.

In the analysis of exemption requests within the scope of Process No. RJ-2013-4911, detailed below, BRL Trust DTVM requested an exemption regarding the custody of credits whose collateral is found in the records of a judicial collection lawsuit.

Following the understanding of the technical area, it was clarified that in such cases, where the documents proving the credit rights are part of the records of the action itself, preventing the custodian from maintaining possession, there is no need for a formal exemption by the Collegiate, given that such documents, obligatorily, must remain in the records of the judicial collection process, which would be the case of inexigibility of diverse conduct and fully in line with current regulation.

6.2.5. ART. 38, SUBSECTION V, C/C §7 OF THE SAME ARTICLE (ICVM 356) – EXEMPTION GRANTED BY THE COLLEGIATE FOR THE CEDENT TO CUSTODY THE DOCUMENTS COLLATERAL OF CREDIT RIGHTS.

Within the scope of the analysis of exemption requests requested by BRL Trust DTVM (FIDC Multisegmentos NPL Ipanema – NP and FIDC Multisegmentos NPL Ipanema II – NP) Gradual CCTVM (Itapeva II Multicarteira FIDC NP) – Process CVM RJ-2013-4911, the Collegiate manifested itself regarding the request for exemption from art. 38, subsection V, c/c §7º.

In the case at hand, the administrators requested permission for the cedents of the credit rights acquired by the fund to carry out the custody of the receivables, given (i) the excessive number of credits, all delinquent at the time of assignment to the fund, as well as (ii) the very low average ticket, and (iii) considering that the funds were all FIDC-NP.

The Collegiate, following the understanding of this technical area, approved the requested exemption, provided that the following conditions were met:

(i) Prior approval by the unanimity of the quota holders, gathered in a general assembly; and commitment by the administrator to adopt procedures that ensure, in the event of quota transfer, that the acquirer will be previously informed about the exemption from compliance with art. 38, §7º, II, of Instruction CVM No. 356/01;

(ii) All credit assignment contracts must contain clauses that provide for repurchase/indemnification by the cedent, at least for the acquisition value paid by the fund, corrected, when applicable, in the event that the cedent fails to present the documents proving the existence of the credit, or errors in the documentation that make the collection of the assigned credit impossible;

(iii) The regulations of these funds cannot provide for the exemption referred to in art. 38, §3º, of Instruction CVM No. 356/01, so that the collateral of the credit rights is verified by the custodian, in accordance with art. 38, §1º, of the same Instruction; and

(iv) The Quarterly Reports of the FIDCs, established in art. 8º, §3º, of Instruction CVM No. 356/01, which deals with the analysis and disclosure of information on the quality of the portfolio, as well as extraordinary events occurring in the quarter, must disclose the exposure of the FIDCs to each of the cedents, similar to what currently occurs in the Monthly Report of these funds regarding credit rights acquired without substantial acquisition of risks and benefits, also disclosing the amount of repurchased credits as established in item (ii) above.

Note that the Collegiate did not allow the custodian to cease verifying, at least by sampling, the collateral of the credits acquired by the fund, that is, in all cases, the regulation cannot use the exemption provided for in art. 38, §3º, of ICVM 356 (exempting the custodian from verifying the fund's credits, even in the face of receivables with low average value).

In the aforementioned decision, it was emphasized that the administrator should evaluate the need to disclose a relevant fact, in accordance with art. 46, §§ 2º and 3º, of Instruction CVM No. 356/01, every time the contractual clause of repurchase/indemnification is exercised, given that such information may influence the investment decision of market participants.

Furthermore, it is worth emphasizing that by repurchase of credits is understood the full payment by the cedent, in current currency, for the repurchased credits, at least for the acquisition value paid by the fund, corrected, if applicable, which does not confuse with the substitution of credit rights, where there is a swap of receivables.

By indemnification, is understood the payment, in current currency, of a previously agreed amount in the assignment contract, without the fund losing ownership of the previously acquired credit. This concept differs from a repurchase proper, because in the repurchase there is a change of ownership of the credit, from the FIDC to the cedent.

6.2.6. ART. 38, V, OF ICVM 356 – CARRYING OUT THE CUSTODY OF CREDIT RIGHTS BY THE CEDENT AND THE FUND'S SPECIALIZED CONSULTANT.

Within the scope of the registration request for FIDC Zema (Process CVM No. RJ-2012-1961), the Collegiate pronounced itself regarding the request for exemption from art. 38, V, of ICVM 356, made by BNY Mellon Serviços Financeiros DTVM, in the capacity of administrator of the fund.

The request concerned the custody of credit rights by Eletrozema, specialized consultant of the FIDC and originator of the credit rights. In this case, the fund would have an exclusive quota holder, controller of the cedent of the credits. Initially, this SIN did not agree with the request as it is an exclusive activity of the custodian, in accordance with art. 38, subsection V, of Instruction CVM 356/01 and, although the Collegiate had already authorized in another opportunity (Process No. RJ-2011-12712) the custodian of an FIDC to outsource the physical custody of the documents proving the credit rights acquired by the fund, this technical area understood that the structure presented by the administrator of FIDC Zema did not present the fundamental characteristics of that decision, which are: (i) authorize the outsourcing of custody to a specialized company, and provided that the cedent and originator do not have access to the documents or have it with express authorization from the custodian; and (ii) authorize the outsourcing of collection through the receipt of resources in an escrow account, so as not to have fungibility risk.

In its appeal, the administrator proposed to transform the Fund into a Non-Standardized FIDC if the Collegiate maintained the decision of the SIN, which denied the request for registration of operation of FIDC Zema. Regarding this alternative request, we understood that it would be possible to grant the exemption requested by the administrator, given the decision of the Collegiate within the scope of Process RJ-2011-12448, which exempted the Bertolucci FIDC-NP from certain requirements of Instruction CVM 356/01, considering that, based on art. 9º of Instruction CVM 444/06: (i) there was no affront to public interest; (ii) the investor had knowledge and accepted the conditions, therefore being informed and protected; and (iii) there was a prohibition on secondary trading of the fund's quotas.

The Collegiate, given the manifestation of this technical area, in accordance with the exposed in MEMO/CVM/SIN/GIE/Nº 184/2012, deliberated the denial of the request for registration of operation of FIDC Zema. However, based on art. 9º of Instruction CVM 444/06, it deliberated to grant the requested exemption, if the fund were transformed into a Non-Standardized FIDC, destined to the same exclusive quota holder and that expressly provided in its Regulation that its quotas could not be subject to negotiation in the secondary market.

6.2.7. ART. 38, SUBSECTION VII (ICVM 356) – RECEIPT, IN THE NAME OF THE FUND, OF PAYMENTS RELATING TO CUSTODIED TITLES.

Within the scope of the analysis of the registration request for FIDC Lojas Renner II – Financeiro e Comercial (Process CVM No. RJ-2014-865), the structure for collection and receipt of payments relating to the titles custodied by the fund in question was analyzed.

In such FIDC, part of the payments of the credit rights is made in cash at Lojas Renner, which is the cedent of the operation. Contractually, it is guaranteed that this financial flow cannot be segregated by the cedent until its full deposit in the escrow account, when the Custodian, primarily, will carry out the separation of the fund's resources from the others not ceded.

Furthermore, with the aim of preserving the resources originating from the assigned credits and, in order to mitigate the risk of fungibility, the transport insurance contract guarantees indemnification to the FIDC of the portion subject to the assignment.

We understand that the structure in question meets the provision of subsection VII, of art. 38 of ICVM 356, and does not constitute a situation of conflict of interest, provided that the Custodian has absolute informational control over this flow, as well as sufficient guarantees to mitigate the risk of fungibility until the deposit in the escrow account, having powers, even, to segregate it primarily from the financial flow of the Cedent after the aforementioned deposit, as occurs in the structure of the mentioned FIDC.

6.2.8. ART. 38, §§ 12, 13 AND 14 (ICVM 356) – VERIFICATION OF COLLATERAL OF DELINQUENT OR SUBSTITUTED CREDITS FOR THE CASES WHERE THE CUSTODIAN RECEIVES AND VERIFIES THE DOCUMENTATION THAT EVIDENCES THE COLLATERAL OF THE CREDITS IN AN INDIVIDUALIZED AND INTEGRAL WAY.

§ 14, of art. 38, of ICVM 356, introduced by ICVM 531, exempts the custodian from the obligation to verify the collateral of the credit rights referred to in subsection I, of §13 of art. 38 of the same Instruction.

Considering that in these cases we are facing an integral verification of the receivables acquired by the FIDC, some custodians exposed doubts about the need to also verify the collateral of delinquent credits and those substituted in the quarter in question.

We emphasize that even in cases where the receivables are verified in their entirety when acquired by the FIDC, it is necessary to evaluate the delinquent or substituted credits, in accordance with art. 38, §13, II, of ICVM 356. Such analysis, (i) regarding delinquent receivables, given the possibility of proceeding with forced collection, guarantees the fund greater comfort regarding the sufficiency of the support documentation, and (ii) regarding substituted credits, the custodian must evaluate if the new credit corresponds to the eligibility criteria defined in the regulation and if they are compatible with the receivable that leaves the fund's portfolio. Such verification also allows evaluating the quality of the fund's portfolio itself, given that constant substitutions may be indications of bad origination of the credits acquired by the manager, reflected in the quarterly statement of the fund, referred to in art. 8º, §3º, of ICVM 356.

Furthermore, with reference to the integral verification of delinquent credit rights in the quarter referred to in art. 38, §13, II, of ICVM 356, we understand that as "delinquent" can be considered those credit rights that matured within the reference quarter and were not paid, credit rights maturing less than 15 days before the end of the quarter can be disregarded, in line with the classification guidelines adopted by BACEN in Resolution No. 2682, in its art. 4º, where it is considered, for reporting purposes, only delinquent credits from 15 days. Thus, the integral verification must occur in the aforementioned quarter, regardless of the moment when the administrator deems it necessary: (i) to initiate extrajudicial or judicial collection actions; (ii) to constitute additional or full provision on delinquent credit rights, if applicable; or (iii) to write off the credit rights for losses.

6.2.9. ART. 38, §13, SUBSECTION II (ICVM 356) – VERIFICATION OF COLLATERAL OF DELINQUENT CREDITS BY FIDC-NP THAT ACQUIRES THEM ORIGINALLY IN THIS CONDITION.

Given some doubts of administrators of FIDC-NP about the applicability of §13º, subsection II, of art. 38, of ICVM 356, within the scope of credits already delinquent, at the time of assignment to such funds, we provide the clarifications below.

Firstly, it is worth noting that, as exposed above, §13º, subsection II, of art. 38, applies fully to credits to mature acquired by FIDCs or FIDC-NP, which, after their assignment to the Fund, pass to the condition of delinquent in the quarter object of the collateral verification services.

Regarding delinquent credits at the time of assignment to the fund, acquisition allowed only to FIDC-NP, in accordance with art. 1º, subsection II, of ICVM 444, obviously, the verification of collateral of delinquent receivables referred to in § 13º, subsection II, of art. 38, does not apply, as such device aims to meet situations occurring during the course of the fund's operations, when the original condition of the credit changes, which is not the case of delinquent credits acquired by FIDC-NP.

Notwithstanding the above, the collateral verification referred to in art. 38, subsection III, as well as the considerations of §§1º and 3º, all of ICVM 356, must be respected within the scope of FIDC-NP, as it is the primary verification carried out by custodians.

Regarding the collateral verification of substituted receivables, it is worth highlighting that such analysis applies, without reservation, to all types of credits, regardless of their condition at the time of acquisition by the fund, whether FIDC or FIDC-NP.

6.2.10. ART. 39, §2 º (ICVM 356) – PROHIBITION TO THE ADMINISTRATOR, MANAGER, CUSTODIAN AND SPECIALIZED CONSULTANT OR PARTIES RELATED TO THEM TO ASSIGN OR ORIGINATE, DIRECTLY OR INDIRECTLY, CREDIT RIGHTS TO THE FUND IN WHICH THEY ACT.

In the same decision applied within the scope of Process CVM RJ-2013-491, it was requested that the custodian could also assign receivables to the FIDC, exempting the fund from compliance with art. 39, §2º, of ICVM 356. Regarding this point, the Collegiate denied such exemption.

Regarding this issue, it is worth discussing some comments.

The exemption requested by the administering institution concerned the device that, without a shadow of a doubt, dealt with a central pillar of the changes introduced by ICVM 531, and it is worth emphasizing that such subject was constantly debated throughout the Public Hearing process.

Furthermore, the maintenance of such prohibition was the main reason that made possible the exclusion of the proposal of art. 39, §1º, of ICVM 356, where it was intended to prohibit the administrator or manager from providing custody services to FIDCs.

We understand, as mentioned in the Public Hearing Report, that conflicts of interest in an FIDC intensify to the point of being prohibited when a participant dominates two ends within a structure: (i) the origination and assignment of credit, for which we could make an analogy with the asset sale side (sell-side); and (ii) when this same participant works in the acquisition of these previously originated credits (buy-side).

Still on this theme, the fund administrator, BRL Trust, argued that the custodian in question (Banco Santander) would be a traditional market participant, in this sense, it would be another point in favor of granting the exemption.

There is no doubt that all custodians, or any other participant, in some way consider themselves and in a certain way are indeed special, whether traditional or innovative, large or specialized in niches, according to their own parameters. Thus, it did not seem reasonable, from our point of view as Regulator, to accept the requested exemption within the scope of the aforementioned Process, running the risk that, by attending a particular interest, to put in question an entire industry.

Lastly, we emphasize that this denial also encompassed an exclusive fund, which reinforces the notion that dividing, indistinctly, the two ends of an FIDC structure, sell-side and buy-side, is not only a requirement for investor protection, but also a requirement for the protection of the entire FIDC industry.

6.2.11. ART. 39, §2 º – ASSIGNMENT OF RECEIVABLES BY THE FIDC TO ITS SERVICE PROVIDERS.

Art. 39, §2º, of ICVM 356 prohibits the origination and assignment, direct and indirect, of credit rights to the FIDC by its administrator, manager, custodian, and specialized consultant or parties related to them.

Although art. 39, §2º, does not provide for the assignment of credit rights by the FIDC to its administrator, manager, custodian, and specialized consultant or parties related to them, we understand that such situation is equally prohibited.

Regarding a possible assignment of credit rights by the FIDC to the administrator, such prohibition is expressly stated in art. 24, §1º, inc. IV, of ICVM 356, which does not allow the administrator to act as counterparty of FIDC with any other purpose, other than to carry out cash and liquidity management of the fund.

Considering that the activities of management, custody, and specialized consulting are primarily attributed to the administrator and can be contracted with third parties, at the administrator's discretion, we understand that the prohibition of art. 24, §1º, inc. IV, of ICVM 356 extends to the other service providers of the fund, in accordance with art. 39 of ICVM 356.

This interpretation arises from the fact that the conflict of interest existing in the assignment of credit rights from service providers to the fund is also valid in the reverse sense, that is, from the fund to its service providers. We understand, as mentioned in the Public Hearing Report of ICVM 531, that conflicts of interest in an FIDC occur when a participant dominates two ends within a structure: (i) the origination and assignment of credit, for which we could make an analogy with the asset sale side (sell-side); and (ii) when this same participant works in the acquisition of these previously originated credits (buy-side). Analogously, we have the same situation of conflict between buy-side and sell-side in cases where the fund assigns its credit rights to its service providers.

To reinforce the understanding, we can observe that the functions of the custodian, as attributed in art. 38 of ICVM 356, that of the manager in accordance with ICVM 306 and that of the specialized consultant provided for in art. 39, subsection I, of ICVM 356, are incompatible with the acting of these participants as counterparties of the FIDCs in which they act.

This situation is aggravated when the specialized consultant also performs the role of collection agent for defaulted credit rights, in accordance with art. 39, §3º, item “a”, of ICVM 356. The aggravation lies in the fact that the consultant has the power to negotiate the “price” with the debtor for the settlement of defaulted credit rights and, at the same time, negotiate the repurchase of a defaulted credit right with the FIDC in which it acts.

6.2.12. ART. 39, §2º – INDIRECT ORIGINATION THROUGH THE ACTION OF SERVICE PROVIDERS IN THE CAPACITY OF DEBTORS/DEBTORS OF THE FIDC.

In view of resolving market doubts regarding the scope and applicability of the term indirect origination for the purposes of art. 39, §2º, of ICVM 356, when service providers of the FIDC, in accordance with the aforementioned provision, act in the capacity of debtors/debtors of the fund, we clarify that, in our opinion, the prohibition established in the Instruction also applies to such participants.

Just as in the case of direct assignment, the administrator, manager, specialized consultant of the FIDC, or parties related to them, in the capacity of debtor/debtor, would also breach the sellside/buy-side boundary, which the norm sought to preserve; consequently, such operations are also prohibited, according to the understanding of this technical area.

6.2.13. ART. 39, §2º – INDIRECT ASSIGNMENT; AND ART. 36, ITEM I (ICVM 356) – CO-OBLIGATION IN THE NAME OF THE FIDC.

We identified that some specialized consulting companies and/or FIDC managers adopted the practice of advancing resources to the assignor of credit rights so that, in the future, when the FIDC came to acquire such receivables from the assignor, the payment would be made to the consultant/manager for the previously granted advance.

We understand that such a procedure of advance with subsequent reimbursement by the fund is prohibited under art. 39, §2º, of CVM Instruction No. 356/01, as it would characterize a situation of indirect assignment of credit rights to the FIDC by the consultant and/or manager, in addition to potentially constituting an infraction of art. 36, item I, of ICVM 356, which prohibits the administering institution from co-obligating in any form in the name of the fund.

6.2.14. ART. 7º, §1º AND §9º (ICVM 444) – LAWYER’S OPINION REGARDING THE LEGAL VALIDITY OF THE CONSTITUTION AND ASSIGNMENT OF CREDITS TO THE FIDC-NP; OPINION OF THE COMPETENT LEGAL ADVISORY BODY (ART. 1º, §1º, II); AND STATEMENT REGARDING THE EXISTENCE OF A FINANCIAL COMMITMENT THAT CONSTITUTES A CREDIT OPERATION, FOR THE PURPOSES OF COMPLEMENTARY LAW NO. 101, OF 05/04/2000.

The lawyer’s opinion referred to in art. 7º, §1º, of ICVM 444 must be submitted for each acquisition of credits by the FIDC-NP. Such opinion applies indiscriminately to all receivables listed in art. 1º, §1º, of ICVM 444.

In this sense, the submission of such document, when registering the FIDC-NP with the CVM, will only occur when the administrator knows in advance the credits that will be acquired by the fund.

In addition to the aforementioned lawyer’s opinion, the same provision also requests an opinion from the competent legal advisory body when it concerns the credits referred to in item II of §1º of art. 1º of the aforementioned Instruction. Regarding the latter, we understand that such opinion must be issued by the legal body of the public entity wishing to assign the receivables to the FIDC-NP, notably its legal counsel, where it must include its considerations regarding the legality of the assignment of receivables to the FIDC-NP. Additionally, it is necessary to present its statement regarding the existence of a financial commitment that characterizes a credit operation, for the purposes of the provision of Complementary Law No. 101, of May 4, 2000, and, in case of a positive finding, the competent authorization of the Ministry of Finance must be attached, in accordance with art. 32 of the aforementioned Complementary Law.

Therefore, when it concerns receivables originated or derived from public entities, as well as their autarchies and foundations, and controlled dependent companies, the administrator must present (i) the legal opinion of a lawyer, which may be issued by its own legal staff, in addition to (ii) the opinion of the legal body of the public entity, which must also include the statement referred to in § 9º, of art. 7º, of the aforementioned Instruction, when applicable.

When it concerns only the credits mentioned in items I, III, IV, V, VI, and VII, of §1º, of art. 1º of ICVM 444, it will suffice to present the lawyer’s opinion referred to in art. 7º, §1º, of the Instruction.

6.3. REAL ESTATE INVESTMENT FUND - FII

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

The operation of the fund requires prior registration, which will be automatically granted, among other requirements, upon proof, to this CVM, of the subscription of the total number of shares subject to the distribution registration or the partial subscription of shares, in the case provided for in art. 13 of the Instruction, provided that the minimum value provided for in § 1º of the provision is reached.

We alert that the forwarding of investment commitments (art. 11, §5º) signed does not satisfy the aforementioned provision, given that they do not have the effect of proving that the shares were subscribed. The provision in question can be satisfied by alternatively forwarding copies of the subscription forms or a statement from 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.

6.3.2. ART. 5º, ITEMS I AND II, AND ART. 13, CAPUT AND §1º, OF CVM INSTRUCTION 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 understanding that the fund may receive its registration of operation 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 that, within the scope of a public distribution offer of FII shares with restricted efforts (CVM Instruction No. 476/09), even after the registration of operation of the fund, it would be possible to effect new subscriptions of the 1st issuance of shares, constituting the initial assets of the fund, up to the total amount provided for in the Bylaws, does not prevail.

6.3.3. ART. 19, § 1º (ICVM 472) - CONVENING OF ASSEMBLY BY SHAREHOLDERS WHO HOLD 5% OF THE ISSUED SHARES.

Art. 16, § 2º, of CVM Instruction 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 number of shares issued by the fund”. Similarly, Art. 19, § 1º, of CVM Instruction 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 § 1º, of CVM Instruction No. 391/03, and Arts. 6º and 7º of CVM Instruction No. 472/08, where it is stated that the shares of the funds correspond to ideal fractions of their net assets and have a nominative form, and whose ownership is verified by the registration of the shareholder’s name in the ‘Register of Nominative Shares’ or in the share deposit account, records that are made only after the subscription of the shares.

6.3.4. ART. 20 (ICVM 472) – SHAREHOLDER ASSEMBLY (CIRCULAR LETTER SIN NO. 05/2013)

In accordance with art. 20, of ICVM 472, two deliberation rules are established in shareholder assemblies: the first, a general rule, in which deliberations are taken by majority vote of the shareholders present, with each share having 1 (one) vote; the second, an exception to the general rule, provides for the approval of shareholders representing at least half of the issued shares, if a higher quorum is not fixed in the Fund’s Bylaws, limited to the following matters: amendment of the Bylaws; merger, incorporation, spin-off, and transformation of the fund; appreciation of the asset valuation report used in the full payment of the fund’s shares; and, acts that characterize a conflict of interest between the fund and the administrator.

In this sense, excluding the provision contained in the sole paragraph of art. 20, all other matters subject to deliberation in shareholder assemblies will follow the general rule (first case). By reserving the provision in the sole paragraph of art. 20, the norm listed which matters could be subject to more restrictive deliberation limits.

In summary, in the understanding of this technical area, any possibility for the administrator to discretionarily choose which matters will be subject to a qualified quorum is excluded, restricting it only to those established in the sole paragraph of art. 20 of ICVM 472.

6.3.5. ART. 21 (ICVM 472) AND ART. 48, §3º (ICVM 409) – METHODS OF DELIBERATION IN SHAREHOLDER ASSEMBLIES (CIRCULAR LETTER SIN NO. 05/2013)

In addition to the in-person method of deliberation in assemblies, in accordance with §3º, of art. 48, of CVM Instruction No. 409/2004, applied by virtue of the provision in §2º, of art. 19, of ICVM 472, this Instruction also establishes the possibility of deliberation through a formal consultation process, in accordance with the provision in art. 21 of ICVM 472, without the need for shareholders to meet, through which the shareholder may vote by written or electronic communication, provided that the provision in the Bylaws is observed.

Even in the case of deliberation through a formal consultation process, all obligations of the administrator regarding communication to shareholders, to the CVM, and to the organized market in which the FII shares are admitted to trading remain preserved, in accordance with the provision in art. 41 of ICVM 472.

In this sense, the minutes of the shareholder assembly will continue to be prepared by the administrator and made available to shareholders within 8 (eight) days after its occurrence. In this specific case, the minutes must consider the final date of the count of the consultation carried out, and must be sent, simultaneously, to the organized market in which the FII shares are admitted to trading and to the CVM, through the Document Submission System, available on the CVM’s website on the World Wide Web, in the field related to general assembly minutes, in accordance with articles 41 and 42 of ICVM 472.

Regarding the convening notice in the case of a formal consultation process, it must contain all matters subject to deliberation, in accordance with the provision in art. 48, §1º, of ICVM 409, applied to FIIs by virtue of art. 19, §2º, of ICVM 472.

Such notice must be made available to the CVM, to the organized market in which the FII shares are admitted to trading, and on the administrator’s website on the World Wide Web on the same day as the sending of communications regarding the formal consultation process, in accordance with articles 41 and 42 of ICVM 472.

Finally, it is worth clarifying that, in the case of formal consultations where the consultation letter serves as the convening notice, such document must also be forwarded to the CVM, to the organized market in which the FII shares are admitted to trading, in addition to being made available on the administering institution’s website.

6.3.6. ART. 21 C/C ART. 20 (ICVM 472) – COMPUTATION OF VOTES WITHIN A FORMAL CONSULTATION

The formal consultation is subject to the same regulation applied to in-person Assemblies, and the norm, in its art. 20, establishes the need for a vote, which does not confuse with the absence of manifestation by the shareholder. In this sense, provisions contained in Bylaws that provide for the automatic ratification of the proposal presented by the Administrator in cases of absence of response by the investor to the formulated consultation, as if it were a positive vote, are null.

It is worth noting, that in Circular Letter SIN No. 05/2013, although not explicitly stating the case in question, it makes clear that the obligations and procedures applied to in-person Assemblies must also be followed in the case of formal consultations. If this were not the case, the entire regulation established for deliberation in FII Assemblies, notably the exposition in the sole paragraph of art. 20 of ICVM 472, would be prejudiced within the scope of a deliberation by formal consultation.

We emphasize, lastly, that Formal Consultation and In-person Assembly are merely forms of deliberation applied to FIIs, whose rules and procedures apply indiscriminately to both cases.

6.3.7. ART. 24, SOLE PARAGRAPH, ITEM II (ICVM 472) – VOTE OF THE ADMINISTRATOR, MANAGER, AND RELATED PARTIES, IN THE CAPACITY OF FII SHAREHOLDERS, IN ASSEMBLY.

Art. 24, items I to IV, of ICVM 472 prohibits the possibility of the administrator, manager, service providers, related companies, their partners, directors, and employees, and companies from voting in the general assemblies of the fund.

As an exception to the aforementioned rule, art. 24, sole paragraph, of ICVM 472 provides in its item I that voting is permitted if the only shareholders of the fund are the conflicted persons referred to in items I to IV of art. 24, mentioned in the previous paragraph.

Another exception provided in art. 24, sole paragraph, item II of ICVM 472 allows voting by the persons referred to in items I to IV of art. 24 when “there is express acquiescence of the majority of the other shareholders, manifested in the assembly itself, or in a power of attorney instrument that specifically refers to the assembly in which the permission to vote will be granted”.

We clarify that the “other shareholders” mentioned in the aforementioned provision correspond to the other shareholders of the fund as a whole, considering the total number of shares issued and held by them, not the persons mentioned in items I to IV of art. 24.

The Instruction, by allowing that a power of attorney be obtained from the “other shareholders”, refers obligatorily to the total universe of fund shareholders who can manifest through power of attorney or in person at the specific assembly. Thus, for the persons referred to in items I to IV of ICVM 472 to vote in an assembly, authorization from the majority (50% + 1) of the other issued shares of the fund must be obtained, either in the assembly itself or through power of attorney.

This understanding is in line with art. 20, sole paragraph, and art. 34 of ICVM 472, which establishes, at minimum, half of the issued shares for the approval of matters that represent conflicts of interest. Thus, considering that the persons mentioned in items I to IV of art. 24 of ICVM 472 are conflicted from voting in accordance with the device itself, it is our understanding that their participation in the fund must be excluded and the permission of the other shareholders of the FII, in their entirety, must be considered for the approval of this type of matter, in order to reach the majority of the other shareholders established in art. 24, sole paragraph, item II, of ICVM 472.

6.3.8. ART. 31-A (ICVM 472) – HIRING OF MARKET MAKER

Art. 31-A of the Instruction provides for the main rules that must be followed by administrators, in order to hire a market maker for FIIs, among which, the explicit prohibition of the provision of these services by their administrators and managers, according to § 1º.

Additionally, in § 2º of the same article, the Instruction makes it possible that such hiring may be carried out with parties related to the administrator and manager of the fund, which is subject to the approval of the general assembly of shareholders, in accordance with art. 34 of the Instruction, by a qualified quorum of, at minimum, majority of the issued shares, if a higher quorum is not fixed in the Bylaws, in accordance with Art. 20, Sole Paragraph, of the Instruction.

We understand that this type of hiring between related parties – even when without any burden to the real estate fund – in accordance with article 31-A, § 2º, of the Instruction, does not dispense with the need for approval in assembly in accordance with art. 34.

In this sense, it is the interpretation of the SIN that the hiring of market maker services between related parties presents potential risks and conflicts that go beyond the pricing of the services themselves, notably the risk of privileged access to non-public information, and that its hiring must be submitted to the appreciation of investors, in accordance with the provision in art. 34 of CVM INSTRUCTION NO. 472/08, among other reasons so that they can assess the risks and benefits of this type of hiring.

Thus, the hiring of market maker services must follow the provisions of art. 31-A of the Instruction without exceptions, even in the case of non-remunerated hiring.

6.3.9. ART. 34 (ICVM 472) – CONFLICT OF INTEREST IN FIIS (CIRCULAR LETTER SIN NO. 05/2013)

Law 8.668/93, of 06/25/1993, regulated the constitution of Real Estate Investment Funds in Brazil. The aforementioned law, in its art. 12, among other provisions, prohibited the administering institution, in the specific exercise of its functions and using the resources of the FII, from carrying out fund operations when characterized by a situation of conflict of interest between the fund and the administering institution, or between the fund and the entrepreneur.

ICVM 472, in turn, in its art. 34, reaffirmed the legal provision, considering that, if the fund operations that constituted conflicts of interest were submitted to the approval of a Shareholder Assembly, the situation provided for in Law would be discharacterized. For this, it conditioned the operation to prior, specific, and informed approval in assembly, whose quorum is established by the provision in art. 20, sole paragraph, of ICVM 472.

§1º of art. 34 further enumerates some examples of conflict of interest situations, such as: the acquisition, lease, rental, or exploration of the surface right, by the fund, of a property owned by the administrator or persons related to it; the alienation, lease, rental, or exploration of the surface right of a property included in the fund’s assets having the administrator or persons related to it as the counterparty; as well as the hiring by the administrator of the service providers referred to in art. 31 of the same instruction, namely: the share distributor, the specialized consultant, the specialized company, and the market maker.

This technical area understands that, for the 1st distribution of fund shares, it would be possible to hire a distributor related to the administrator, given that the provision of this service has a determined period for its closure, that is, it is not a service that will be provided continuously, ending before the registration of operation of the FII, therefore not characterizing conflicts of interest with shareholders, as they do not yet formally exist at this moment.

The SIN also understands that the hiring of a distributor related to the administrator or manager, but whose form of remuneration does not characterize a burden for the existing shareholders of the FII, also does not constitute a situation of conflict of interest referred to in art. 34, of ICVM 472.

However, the SIN also understands that all other hirings of parties related to the administrator will in principle be subject to deliberation in a shareholder assembly, in accordance with the provision of the sole paragraph of art. 20 of ICVM 472.

We also alert that situations of conflicts of interest, as well as any others subject to the shareholder assembly, cannot, for these purposes, be subject to prior approval, knowledge, or agreement under any other name, in the Fund’s Adhesion Term, given the reasons exposed above.

6.3.10. ART. 35, ITEM IV (ICVM 472) – CO-OBLIGATION IN FII (CIRCULAR LETTER SIN NO. 05/2013)

Recently, we have observed that some FIIs have begun to assign their real estate receivables for the purpose of securitization in the form of Real Estate Receivable Certificates (CRI). In this context, follow some alerts regarding the prohibitions imposed on real estate fund administrators:

ICVM 472 imposes some prohibitions on the FII administrator related to fund operations, especially regarding the assumption of obligations by these funds. Art. 35 prohibits the administrator, in the exercise of the functions of manager of the fund’s assets and using the fund’s resources, from contracting or making loans, providing guarantee, surety, as well as accepting or co-obligating in any form in the operations practiced by the fund, as well as constituting real liens on the real estate included in the fund’s assets.

It is common, in credit assignment operations for the purpose of securitization, for the assignor to provide some form of guarantee to the acquirer. However, when the assignor is an FII, the administrator, in accordance with the aforementioned art. 35, is unable to co-obligate in any form using the fund’s resources.

Finally, we emphasize that the non-compliance with this provision, given the provision in art. 59, of ICVM 472, may constitute a serious infraction for the purposes of the provision in §3º, of art. 11 of Law 6.385, of December 7, 1976.

6.3.11. ART. 35, ITEM XII (ICVM 472) – CONDUCTING OPERATIONS WITH CERTIFICATES OF POTENTIAL ADDITIONAL CONSTRUCTION - CEPAC OUTSIDE ORGANIZED MARKETS AUTHORIZED BY THE CVM.

Within the scope of CVM Process No. RJ-2012-11216, the Collegiate Body appreciated a request for exemption from compliance with art. 35, XII, of ICVM 472, which prohibits the conducting of operations with shares or other securities outside organized markets by the CVM, except for the cases of public distributions, exercise of preemptive rights, and conversion of debentures into shares, exercise of subscription bonuses, and in cases where the CVM has granted prior and express authorization. The request was presented by Caixa Econômica Federal, administrator of the Porto Maravilha Real Estate Investment Fund.

This technical area manifested itself through MEMO/SIN/GIE/No. 054/2013.

The Fund requested to transfer the CEPAC to the SPEs through the full payment of their shares/shares. Thus, it is perceived that, through such operation, the administrator intended (i) that the Fund maintain the CEPAC in its assets, even if indirectly, so that the shareholder’s capital (FGTS) was invested in the project of the Consortiumed Urban Operation; and (ii) that the SPEs did not have to bear the disbursement of the value necessary to obtain the CEPAC.

In this sense, the Fund sought to obtain a return on its investment from the results obtained in the SPE operations, or, ultimately, from the interventions coordinated by the Municipal Government within the scope of the Consortium Urban Operation (OUC), but not from the simple acquisition and alienation of CEPAC.

Alternatively, if the Fund were prevented from participating in the SPEs as requested, the CEPAC would be alienated directly (in the public market), which would ultimately disqualify its own object and the object of the Fund (viability of the OUC of the Rio de Janeiro Port Region).

As an alternative to the capitalization of the SPEs, the Fund intended to alienate part of the CEPAC to individuals who would be obliged to link them to specific real estate projects, in exchange for a percentage of the value of the sale of the real estate units.

Generally, ICVM 401 provides for the possibility of trading CEPAC in unorganized over-the-counter markets, as seen in its article 5, §1, transcribed above. However, within the scope of ICVM 472, which regulates FII, there is a restriction regarding the trading of any securities in unorganized markets, with the exceptions listed above.

On the other hand, we agree with the Administrator's position, when it alleges that CEPAC are sui generis securities, whose value is attributed by data and exogenous factors to the capital market, but proper to the real estate market. Its linkage to real estate of a specific OUC indeed constitutes the essence of this specific asset. Thus, its alienation in authorized markets would not necessarily result in the best negotiation or the fair price that the Fund could obtain.

CEPAC are securities that have a very particular dynamic when compared with other securities, given that they have effects only to meet a specific objective established in a specific municipal law, namely, within the scope of consortium urban operations and, in order to promote the urban restructuring of the Area of Special Urban Interest.

Considering these characteristics, the CEPAC itself has purposes linked to a specific urban project; however, it is worth noting that the fact that the CEPAC has a specific object does not necessarily mean that it cannot be used in other ways by the various players in the market, for example, the investor who has a direct interest in the project, which is the case of Caixa FII Porto Maravilha, which was created and structured with the objective of participating in the results arising from the consortium operation; on the other hand, there is still the possibility of acting of a speculative investor, who can give liquidity to the security until it is linked to the building project within the urban area covered by the urban project.

In the case at hand, Caixa, as administrator of the Fund, sought to meet the Fund's investment policy through the diversification of the Fund's investments, either operating indirectly via capitalization of SPE quotas, or through the alienation of CEPAC to individuals whose objective is to link such Certificates to the real estate projects in the affected region, earning remuneration through a percentage participation in the result of the sale of the real estate units.

In summary, there was a concern of the Fund not to distort the purposes for which it was structured, namely, to contribute to the realization of the urban project referred to in Municipal Complementary Law No. 101/09 (Rio de Janeiro City Hall), which could be harmed if the CEPAC were used by investors with different objectives.

It is also worth noting that, although the aforementioned security has only a specific purpose, as mentioned above, the urban project to which it is linked has its own schedule for execution and investment realization that does not necessarily coincide with the interest of the various types of investors.

The Collegiate Body, in the concrete case and observing the considerations of the technical area, deliberated, unanimously, to approve the request presented, in the form of the operations intended by Caixa Econômica Federal, considering also that the Fund had a single quota holder, a highly qualified investor, and that the intended operation would not prejudice the public interest, adequate information, and investor protection.

6.3.12. 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 10/31/2008, and therefore, subsequent to the issuance of art. 119-A of Instruction CVM 409/04, which occurred on 6/22/2007, and that art. 36 of Instruction CVM 472/08 establishes a parameter for the performance fee in FII – calculation based on the performance of the fund or a relevant indicator for the real estate market –, this Superintendence does not consider it appropriate to apply item I of § 1 of art. 62 of Instruction CVM 409/04 to real estate investment funds.

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:

item II of § 1, a device 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;
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;
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, since it does not confront art. 36 of Instruction CVM No. 472/08, it should also be applicable to retail FII;
§ 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 which, therefore, had already been remunerated) - a healthy command for the regulation of products destined for retail and does not conflict with art. 36 of Instruction CVM 472/08;
§ 3, a device that establishes the possibility of individualized charging of performance (from the quota holder and not the fund) only for cases where the investor entered the fund at a quota value lower than the "waterline" criterion – without conflicting with art. 36 of Instruction CVM 472/08, this possibility makes sense in economic terms and protects the other investors in the retail fund from undue transfer of wealth among quota holders, since in these cases the performance charge is made individually and directly from the quota holder; and
the area understands that, for the purposes of this analysis, § 4 should be interpreted as a rule that establishes 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 device 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.

Briefly, 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 of FII (also) destined to the retail investor public; and (2) art. 62, § 1, item I, of Instruction CVM 409/04 is not applicable to FII.

As for the CVM Collegiate Body regarding the matter, within the scope of Decision Reg. No. 8145/12, of 3/20/2012, 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 to the entire market.

6.3.13. Art. 39, IV (ICVM 472) – SENDING OF SEMI-ANNUAL REPORTS OF FII.

Art. 39, IV, of ICVM 472, provides that the administrator of real estate funds must send, "within 60 days after the closing of the first semester", documents such as the cash flow statement and the administrator's report.

In the understanding of this technical area, the aforementioned device, by referring to the term "first semester", established a periodic obligation that always refers to the social exercise of the fund, and not to the civil year, although such periods may coincide, in the case of FII, given that they can only close their social exercises on June 30 or December 31 of each year, in accordance with art. 44, §1, of ICVM 472.

Thus, for funds that begin their social exercise in January, for example, the semi-annual reports will be due for the month of competence of June, in which they must be sent, simultaneously, to CVM and to the administrative entity of the organized market in which the fund's quotas are admitted to trading, until August 29 of the reference year (60 days after the end of the semester), in accordance with the sole paragraph of art. 40, of ICVM 472.

We remind you that such publication must also occur on the administrator's page on the worldwide web, in accordance with art. 40, of ICVM 472.

6.3.14. ART. 41, §1 (ICVM 472) – DISCLOSURE OF RELEVANT FACTS, NOTICES OR NOTICES TO THE MARKET BY FII.

Given the increase in Alert Letters sent to FII administrators regarding the publication of relevant facts, we clarify some points on the matter.

We emphasize that, as provided in §1, of art. 41, the disclosure of the relevant fact, in addition to being immediate, must be broad, in order to guarantee quota holders and other investors access to information that may, directly or indirectly, influence their investment decisions, whether acquiring or alienating quotas.

In other words, the list of information made available to quota holders and the market must be clear enough for such an objective to be achieved, which, in certain cases, involves the disclosure of information that allows investors to understand the magnitude of the impact of the disclosed fact on the FII's earnings, such as, for example, in the case of real estate vacancy.

It is notorious that one of the great attractions of FII is the distribution of periodic earnings in accordance with Law 8.668 of 1993, which provides for the distribution to its quota holders of, at least, ninety-five percent of the profits earned, calculated according to the cash regime. In this sense, if there is an estimate of the impact on the distribution of the fund's profits, this information must be disclosed.

We also warn about the mistake that some administrators have been making in choosing the best instrument for disclosing information to quota holders and the market. We observe that some institutions have been using Notices or Market Communications instead of the disclosure of Relevant Facts.

We clarify that these forms of communication differ significantly from each other in terms of the degree of amplitude of investors affected by the information. Thus, the disclosure of information that may, directly or indirectly, influence investors' decisions to acquire or alienate fund quotas, in the form of any other communication that is not a Relevant Fact, constitutes a serious offense, in accordance with art. 59, of ICVM 472.

Finally, we understand that the disclosure of the relevant act or fact, in accordance with art. 41, §1, of ICVM 472, must be made, whenever possible, before the start or after the closing of business on stock exchanges and entities of the organized over-the-counter market in which the fund's quotas are admitted to trading, as occurs with listed companies.

6.3.15. ART. 45, ITEM VII (ICVM 472) – ACQUISITION OF CRI OFFERED VIA INSTRUCTION CVM NO. 476/2009 BY FIIS

In a joint consultation carried out by ANBIMA and BM&FBovespa (CVM Process No. RJ2012-11170), the Collegiate Body manifested itself regarding the interpretation of art. 45, VII, of ICVM 472, regarding the possibility of FII acquiring Real Estate Receivables Certificates offered within the scope of ICVM 476, given the reference to permission only for assets whose issuance or trading is subject to registration with CVM.

This technical area manifested itself, through MEMO/CVM/SIN/GIE/No. 111/2013, that the best interpretation of the provision in art. 45, VII, of ICVM 472 is in the sense of allowing FII to also invest in CRI offered in accordance with ICVM 476.

At the time of the issuance of ICVM 472, there was only the possibility of an asset being publicly offered according to the procedure set forth in Instruction CVM No. 400/2003. Thus, in our opinion, the requirement that the issuance or trading of CRI be previously registered with CVM as a condition for being part of an FII's portfolio, indeed intended to prohibit FII from acquiring privately offered CRI and not the CRI object of a public offering with restricted efforts, possibility introduced by ICVM 476.

We also emphasize that FII must comply with the issuer limits set forth in art. 86 of ICVM 409, in accordance with the provision in art. 45, §§ 5 and 6, of ICVM 472, regardless of whether the assets in the fund's portfolio were offered via ICVM 400 or ICVM 476. Therefore, an FII may invest a maximum of 10% of its net asset value in CRI from the same issuance, understood as "separate assets in the form of the law", in accordance with the provision in art. 86, item II and art. 86, §1, item I, of ICVM 409.

This SIN also considered that some characteristics of FII, such as the closed condominium form, and the new informational regime applied to CRI, introduced by Instruction CVM No. 520/12, minimize the risks arising from potential reduction in liquidity and the lower availability of information regarding assets distributed through public offerings with restricted efforts.

The Collegiate Body, considering the specific characteristics of FII, as well as the arguments exposed, followed our understanding, in the sense that the limitation imposed on the acquisition of CRI, in accordance with the provision of art. 45, VII, of ICVM 472, refers only to assets offered privately and not to those distributed through the procedure established in ICVM 476.

6.3.16. ADHERENCE TERM (CIRCULAR LETTER SIN No. 05/2013)

In accordance with the Collegiate Body's decision in CVM Process No. RJ-2008-7977, of 03/03/2009, it was reiterated that the Adherence Term has a specific purpose, namely, to register the delivery of certain information to quota holders. Thus, it is not an adequate means for other purposes that are not its own, such as, for example, the granting of powers or the concession of rights by the signing quota holder to the fund administrator.

In the same sense, such Term does not serve to pre-approve matters that are subject to deliberation in a quota holders' assembly, in accordance with art. 18, of ICVM 472 and, in particular, to the matters referred to in the sole paragraph of art. 20, regarding art. 34 of the Instruction, which deals with conflicts of interest between the fund and the administrator.

6.3.17. ALLOCATION OF RESPONSIBILITIES BETWEEN THE ADMINISTRATOR AND THE INTERMEDIARY (CIRCULAR LETTER SIN No. 05/2013)

This SIN understands that, in the event that the investor enters the collective investment vehicle through the acquisition of quotas in the secondary market, the required documents must be collected by the intermediary.

The administrator is always responsible for keeping the adherence term available to CVM, which is why it must take due care in this regard when establishing its relationship with distributors and make efforts to collect them from intermediaries.

Furthermore, the technical area highlights that, by virtue of the provision in art. 65, XV, of Instruction CVM No. 409/04, the administrator is already obliged to supervise the services provided by intermediaries that distribute quotas of the administered funds.

Additionally, this SIN understands that the model of division of responsibilities described in the above paragraph also applies, with due adaptations, to other dimensions of this relationship, for example, the delivery of documents and information provided for in regulation, notably the Bylaws and the Prospectus, as well as the preparation and maintenance of the customer registry.

This understanding does not exempt the administrator from accessing all necessary information and documents from the intermediary to fulfill the responsibilities delegated to it by legislation, such as those related to the prevention and combating of money laundering, as well as the forwarding of information and communication with the quota holder.

Finally, it is worth noting that in a decision taken in the meeting of 1/29/2013, the CVM Collegiate Body unanimously deliberated on the inapplicability of the obligations imposed on intermediaries in art. 2, sole paragraph, of Annex I of Instruction CVM No. 301/99, when acquiring quotas of investment funds in the secondary market.

In this decision, it was recognized that this type of registry update (i) ends up being equivalent to the collection of a new adherence term for each new investor; (ii) is not part of the dynamics adopted for products traded in organized markets; and (iii) that in such markets there are often assets with significantly higher risk degrees than investment funds to which such a requirement does not apply.

6.4. INVESTMENT FUNDS IN PARTICIPATION – FIP

6.4.1. ART. 16, §2 (ICVM 391) – CONVENING OF ASSEMBLY BY QUOTA HOLDERS WHO HOLD 5% OF THE ISSUED QUOTAS.

Art. 16, § 2, of Instruction CVM No. 391/03 states that general assemblies may be convened by the administering institution or "by quota holders who hold, at least, 5% (five percent) of the total quotas issued by the fund".

For the purposes of counting the minimum percentage necessary for convening general assemblies in these funds, it is the understanding of this Superintendence that only quotas that have already been subscribed should be admitted in this count. Thus, if there are issued quotas 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 provision in 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 quotas of the funds correspond to ideal fractions of their net asset value and have a nominative form, and whose ownership is verified by the registration of the quota holder's name in the 'Register of Nominative Quotas' or in the quota deposit account, records that are made only after the subscription of the quotas.

6.4.2. ART. 15, §2 (ICVM 391) – DELIBERATION RULES IN QUOTA HOLDERS' ASSEMBLY

We have carried out an express number of requirements regarding the device in question, regarding the deliberation rules within FIPs, in this sense, providing the clarifications below regarding the interpretation of art. 15, §2, of ICVM 391.

In accordance with art. 15, §2, of ICVM 391, two deliberation rules are established in quota holders' assemblies: the first, a general rule, in which deliberations are taken by majority of votes of the quota holders present; the second, an exception to the general rule, provides for the approval of quota holders by a qualified majority previously established in the fund's bylaws, limited to the matters established in art. 15, items II, III, IV, VI, VII, VIII, and IX, and in item V of the same article, in case there is no provision for new quotas.

In this sense, excluding the reservations of art. 15, §2, all other matters subject to deliberation in a quota holders' assembly will follow the general rule (first case).

In summary, in the understanding of this technical area, any possibility of the administrator to choose discretively which matters will be subject to qualified quorum is removed, restricting it only to the exceptions in art. 15, §2, of ICVM 391.

6.4.3. ART. 32, II AND III, OF INSTRUCTION CVM NO. 391/03

Art. 32, item II, letters "b", "c", "d", and item III, of the Instruction, enumerate the information that must be forwarded by Investment Funds in Participation at the end of each semester of their social exercises.

In the understanding of this technical area, the deadline provided for in item II, letters "b", "c" and "d" (60 days) refers only to the 1st semester of each exercise, while the deadline of item III (120 days), to the closing of each social exercise, i.e., the 2nd semester.

Thus, the documents referring to the 1st semester of each exercise must be delivered within 60 days after the end of the period. As for those related to the 2nd semester of

For each fiscal year, the deadline shall always be 120 days, regardless of whether they are provided for in item II or III. Furthermore, these annual financial statements (second semester) must be submitted obligatorily together with their respective Audit Reports, which is why their deadline is longer than that of the first semester.

Finally, it is worth highlighting that, unlike other documents provided for in the Instruction, the one referred to in art. 32, II, “a” (Portfolio Composition), must be prepared with base dates in the civil semesters of each year, in accordance with the sole paragraph of art. 32 of ICVM 391, introduced by CVM Instruction No. 535/2013, and previously clarified in the terms of Circular-Office/CVM/SIN No. 10/2013, in its item 6.8.

6.5. MUTUAL FUNDS FOR INVESTMENT IN EMERGING COMPANIES - FMIEE

6.5.1. ART. 1 (ICVM 209)

The § 1 of art. 1 of CVM Instruction No. 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 fiscal year prior to the acquisition of the securities issued by it.

As for § 3 of the same article, it provides that FMIEEs are prohibited from investing in a society whose share control is held by a group of societies, de facto or de jure, whose consolidated net equity is higher than R$ 300 million.

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

Such understanding arises from a systematic interpretation of the regulation that governs the matter, since it contemplates 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.

6.6. CINEMATIC INDUSTRY FINANCING FUNDS - FUNCINE

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

The Collegiate Body, in a meeting on 31/1/2012, within the scope of process CVM RJ-2010-10966 (FUNCINE Lacan Downtown Filmes), 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 and 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 decision of the Collegiate Body, as well as the manifestation of the technical area, recognized that, to harmonize the long-term characteristics of the cinematic industry and the need for resource injection in each fiscal year by investors, the best interpretation of art. 9 of CVM Instruction 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 still 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.

6.6.2. ART. 78 (CVM INSTRUCTION NO. 398/03) – DEADLINE FOR PORTFOLIO ALIGNMENT OF FUNCINE RAISED IN EACH QUOTA ISSUANCE - CVM PROCESS NO. RJ-2012-14820.

In a response to BNY Mellon Serviços Financeiros DTVM, in the capacity of administrator of Investimage 1 - Cinematic Industry Financing Fund – FUNCINE, the Collegiate Body manifested itself regarding the interpretation of art. 78, of ICVM 398, when of distribution offers of FUNCINE subsequent to the first distribution, having in view that such normative provision mentions rules for portfolio alignment only for the first distribution offer of quotas. The SIN manifested itself through MEMO/SIN/GIE/No. 40/2013.

Art. 78 establishes that the fund will have a deadline of 360 (three hundred and sixty days), counted from the date of closing of the first quota distribution, to align its portfolio with the composition norms contained in its bylaws and legislation, as specified in art. 9, of ICVM 398.

The administrator, based on art. 78 of CVM Instruction 398/03 (“Instruction”), requested an additional period of 360 days for the complete alignment of the Fund's portfolio to the parameters established in the caput of art. 9 of the aforementioned Instruction, having in view its understanding that art. 78 should also apply to the other distributions of the Fund and not only when of the closing of the first distribution, as explicitly stated in the aforementioned art. 78.

This technical area observed that the granting of the deadline for portfolio alignment and destination of the fund's resources has the objective of allowing the manager to apply such resources in a careful and coherent manner, respecting the characteristics of the industry, therefore, there is no reason why an equivalent deadline should not be given for each new issuance of quotas carried out by the fund. Thus, we expose that the best interpretation of the expression “counted from the date of closing of the first quota distribution” should be made in a broader way, ensuring that only the specific resources raised in each new quota distribution have 360 days after the date of closing of the respective distribution to be destined and aligned to the parameters defined in art. 9 of the Instruction.

The Collegiate Body, following our understanding, deliberated that the 360-day period, referred to in art. 78 of the Instruction, also applies to the other distributions. Consequently, the 360-day period also applies after the closing of quota distributions subsequent to the first distribution, observed that such period is limited solely to the resources raised in the reference distribution.

CVM INSTRUCTION NO. 476/09

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

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

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

Similar understanding was had by the CVM Collegiate Body on 27/3/2012, within the scope of Process RJ-2011-14594, in which, taking into account that the fund's quotas will not be admitted to negotiation, as well as the small number of quota holders, and following the manifestation of the technical area, it was deliberated that art. 9 of CVM Instruction 476/09 is inapplicable to the concrete case.

CVM INSTRUCTION NO. 514/11

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

The Instruction, result of Public Hearing SNC Funds No. 02/11, includes in the COFI the requirement of disclosure, in explanatory notes, of 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 information provided, so that users of financial statements, especially investors, can evaluate the extent of the effects of these transactions on the equity, financial, and results position of investment funds.

The concept of related party used in the Instruction has 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 that reports the information (Investment Fund).

CVM INSTRUCTION NO. 359/02 – INTERNATIONAL INDEX FUNDS

In the decision of CVM Process No. RJ-2012-11653, the Collegiate Body deliberated to communicate to the market that it judges it opportune and convenient to evaluate, case by case, the possibility of granting exemption from requirements of CVM Instruction 359/02, for purposes of constitution, registration, issuance, distribution, and negotiation of quotas of market index funds in Brazil, known abroad as exchange-traded funds – ETF, based on indices of other jurisdictions.

To enable the constitution of funds with such characteristics, the Collegiate Body understood that it would be necessary at least to provide in the exemptions (i) the possibility that the index fund has as eligible asset for acquisition also quotas of other index funds traded in other jurisdictions; (ii) allow integralization and redemption in national currency, without any limit; and (iii) the provision for the collection of entry and exit fees that pass to the applicant quota holder of the application/redemption the costs resulting from the creation or destruction, respectively, of the basket.

As conditions to evaluate requests of this nature, the Collegiate Body determined that (1) the international index funds invested are compatible with Brazilian regulatory requirements, in order to prevent the constitution of index funds that invest, for example, in international index funds known as leveraged, inverse, or synthetic replication model; and (2) the index funds in Brazil are destined exclusively to individual or legal investors with financial investments higher than R$ 1 million in the market.

CVM INSTRUCTIONS NO. 505 AND 506/2011 – APPLICABILITY TO INVESTMENT FUNDS

In response to a consultation made by the Brazilian Association of Entities of the Financial and Capital Markets – ANBIMA, the CVM Collegiate Body, within the scope of CVM Process No. RJ-2013-1139, deliberated on 24/1/2013 to manifest itself regarding the best interpretation of certain provisions of the Instructions to investment funds.

In this sense, the understanding was established for the inapplicability of certain provisions of these Instructions to investment funds, with the exception of closed funds whose quotas are traded in a regulated market and index funds (“ETFs”). These are articles 12 and 13, which deal with the registration of transmission of orders; articles 19, 20, and 21, which deal with the order execution processes, and article 25, which disciplines the linked persons.

As a foundation for this understanding, it is worth noting (i) the price formation characteristics of the fund's quotas, which count on the market marking of the portfolio, which makes the cited provisions little relevant for funds, (ii) the little relevance in the prioritization of order execution, since the price is the same for all fund investors, (iii) and the empirical evidence, based on the number of complaints received by the CVM, that the current distribution process already works satisfactorily.

It was also defined in that decision the inapplicability, also, of the provision in article 2, Sole Paragraph, of Annex I to CVM Instruction No. 301/99, which requires the investor to sign an adherence term to the investment and awareness of risks, to investment funds whose quotas are traded in the secondary market, as is the case of ETFs, for example.

It was also highlighted in the mentioned decision that article 35, I, of CVM Instruction No. 505/2011, by prohibiting the use of “checking accounts with more than 2 (two) holders”, limits its incidence to checking accounts maintained by intermediaries in the name of their clients, and thus, is a provision that should not be extended to bank accounts in general.

Finally, it is also necessary to highlight the understanding, manifested in that decision, that the prohibition on executing client orders with outdated registration, as provided for in article 35, II, of CVM Instruction No. 505/2011, in the case of investment funds, must be limited to cases that represent new resource injections by quota holders, but not to cases of redemptions, even partial, requested by these investors.

CO-MANAGEMENT IN INVESTMENT CLUBS - CVM INSTRUCTION NO. 494/2011

In the meeting held on 27/8/2013, the CVM Collegiate Body, when reviewing a consultation filed by BNY Mellon Serviços Financeiros DTVM, in the capacity of administering institution of the Investment Club of Vale Employees (“InvestVale”), deliberated in the following sense:

(i) the CVM has competence to review the understanding of the Exchange (organized market administering entity) regarding the admissibility of co-management in investment clubs, because broad and unrestricted powers were not delegated to the Exchange and the resolution of the issue involves interpretation of CVM Instruction 494;

(ii) co-management is not admitted for clubs in general, but such possibility can be exceptionally authorized by the CVM when it is an atypical club where such structure is justified, as is the case of Investvale;

(iii) given the singularities of the concrete case, it is up to the Assembly to deliberate whether to maintain or not the current co-management structure;

(iv) if the Assembly deliberates not to maintain the current co-management structure, it will also be up to the Assembly to choose the service provider that will become its sole manager, being able to either dismiss one of the current managers, or even replace both with a new service provider;

(v) if the Assembly deliberates to maintain the current co-management structure, the Assembly must also approve the policies described in the President's vote;

a) Such policies, to be approved by the General Assembly and implemented by the Administrator, must define clearly the procedures to be observed: (i) in attending to redemption requests that may be formulated by its quota holders, especially regarding the eventual need for asset sale; (ii) in the re-alignment of the Club in case of non-compliance with portfolio concentration and diversification limits and risk concentration defined in the bylaws and current regulation; and (iii) regarding any other matter that Mellon deems necessary to ensure the proper functioning of Investvale.

(vi) although the qualified quorum for approval of deliberations that have as object bylaw alterations provided for in art. 34 of the Investvale bylaws is not formally in conflict with the Club Regulations, such provision, in practice, makes the realization of Club assemblies unfeasible; and

(vii) it is up to the Exchange to evaluate this issue and alter its rule that deals with deliberation quorums, in order to ensure the representativeness and viability of assembly deliberations of clubs.

COMPATIBILITY OF CVM INSTRUCTION NO. 459/2007 WITH CVM DELIBERATION NO. 244/98

As is known, CVM Instruction No. 459/2007 regulates investment funds linked exclusively to supplementary pension plans or life insurance with survival coverage clause, structured in the variable contribution modality, to which arts. 76 and following of Law No. 11.196, of November 21, 2005, refer.

Article 6 of this norm requires that the fund administrator be authorized “by the Securities and Exchange Commission – CVM for the exercise of securities portfolio administration”.

On the other hand, however, CVM Deliberation No. 244/98 provides that insurance companies and open private pension entities (“EAPP”) are exempt from the registration referred to in art. 23 of Law No. 6.385/76 when “they administer portfolios of exclusive financial investment funds” and “the insurance company or open private pension entity itself is the sole quota holder of the fund whose portfolio it administers”.

In the interpretation of this technical area, we understand that there is no antinomy between the requirements of CVM Instruction No. 459/2007 and the exemption provided in CVM Deliberation No. 244/98, especially when considering the context of investment fund regulation.

This is because article 56 of CVM Instruction No. 409/04 provides that “fund administration comprises the set of services related directly or indirectly to the functioning and maintenance of the fund”, although § 2 of the same article provides that “portfolio management of the fund is the professional management, as established in its bylaws, of the financial assets comprising it”.

In this context, we recall the content provided in CVM Deliberation No. 244/98, which provides, as one of the foundations for its exemptions, the fact that insurance companies or EAPPs “administer portfolios of exclusive investment fund”, in clear specific allusion, thus, to the activity that would later be qualified by CVM Instruction No. 409/04 as investment fund management.

Thus, in the case of constitution of investment funds based on CVM Instruction No. 459/2007, the insurance company or EAPP, in the constitution of the fund, must designate an institution accredited by the CVM for the exercise of portfolio administration activity, without prejudice to the possibility of exercising fund management, in accordance with article 56, § 2, of CVM Instruction No. 409/04, in which case it will not need accreditation by the CVM required by CVM Instruction No. 306/99, in the exact terms of the exemption provided in CVM Deliberation No. 244/98.

At this opportunity, we recall that, to insurance entities and EAPPs that intend to exercise the activity of investment fund management, prior registration must be carried out at the CVM, by sending a request with this scope to the Management of Records and Authorizations – GIR, accompanied by the following documents:

form with complete registration data of the requester,
proof of entity qualification (as insurance company or EAPP, as the case may be),
indication of responsible person with full name, CPF, and contact email, and
declaration of the entity that it will act in the strict terms of CVM Deliberation No. 244/98.

LAW NO. 6.385/76

13.1. ARTICLE 9, I

Article 9, item I, of Law No. 6.385, of 12/7/1976, 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 work papers of independent auditors, 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 that relates to business activity developed in the securities market or that, in some way, are related to facts that may figure as 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.

PARAMETERS FOR FORMULATION OF CONSULTATIONS

This Superintendence receives, with frequency, 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. If, however, the doubt is not based specifically 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 count on all the legal foundation that supports this understanding.

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

If the consultation refers to the application of norms and accounting procedures provided for in CVM Instruction 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 consultation must be accompanied by the manifestation of the independent auditor, when it deals with change or adoption of new practices or accounting procedures.

Sincerely,

FRANCISCO JOSÉ BASTOS SANTOS
Superintendent of Institutional Investor Relations

Circular Letter CVM/SIN No. 05/2014

Lineage: In force

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