Circular Letter CVM/SIN No. 10/2021

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL
Rua Sete de Setembro, 111/2-5th and 23-34th Floors - Center - Rio de Janeiro - RJ - CEP: 20050-901 - Brazil Tel.: (21) 3554-8686 - www.cvm.gov.br

CIRCULAR LETTER/CVM/SIN/No. 10/2021

Rio de Janeiro, December 22, 2021

To investment fund administrator institutions ("FI") regulated by CVM Instruction No. 555

Subject: Guidelines for FI administrators regarding internal controls for compliance with regulatory obligations to send periodic documents

Dear Sirs,

1. CVM Instruction No. 555 establishes, pursuant to its Article 59, the obligation for administrators of the FIs regulated therein to send various periodic documents. These are:

I – daily report, within 1 (one) business day;

II – monthly, by the 10th (ten) day after the end of the month to which they refer:

a) balance sheet;

b) statement of composition and diversification of portfolio;

c) monthly profile; and

d) essential information sheet, if applicable;

IV – annually, within 90 (ninety) days counted from the end of the fiscal year to which they refer, the accounting statements accompanied by the opinion of the independent auditor...

2. Thus, it is the duty of the administrator to maintain robust and effective internal controls aimed at ensuring compliance with these obligations within the deadlines established by regulation, in favor of due transparency to investors and the market regarding the fund's operations; as well as the preservation of the viability of the supervision work of this technical area. The untimely submission of the documents provided for in items II, III, and IV of Article 59 of the Instruction, as is known, results in the application of coercive fines that can reach R$ 30,000 or R$ 60,000 per document, depending on the case, pursuant to CVM Resolution No. 47.

3. Therefore, we understand that the institution must possess and maintain a team and systems dedicated to fulfilling this obligation that are compatible with its size, the quantity, and different types of funds administered. In addition, they must have appropriate planning and expertise for the task, including contingency plans and lines of reporting and internal governance that identify and mitigate the occurrence of errors of any nature, all with the objective of ensuring that the mechanism for delivering these documents will follow uninterrupted and intact to the same extent required by CVM regulation.

4. Furthermore, such controls must include, for example, double-check mechanisms regarding the submission of the document, in order to timely identify the occurrence of an error in its submission and, thus, proceed with a possible late submission with the least possible delay. Consulting the submitted document on the CVM website itself, in order to verify if it was effectively processed, is an example of a routine, without prejudice to others, that meets this objective.

5. On the other hand, in cases where the fund administrator faces system problems in sending a given document, they must formalize these difficulties through a request to CVM External Support (suporteexterno@cvm.gov.br). It goes without saying that the intermittency of the Authority's IT systems only justifies delays in the delivery of documents for the days taken for their resolution; the participant must provide for its delivery as soon as the systems allow again. Such procedures must be kept on file so that, in the event of the application of a coercive fine for delay, this evidence can justify the cancellation of the fine by SIN.

6. Also in this regard, it is important to emphasize that the person responsible for the delivery of the documents of an investment fund is its administrator at the moment the obligation to deliver the document expires, because only at this moment can the fund administrator be constituted in default. Thus, for example, if a fund owes a balance sheet for January 2021, the person responsible for its delivery is the fund administrator on 2/10/2021, the deadline for delivery of the document to CVM. In this context, if a replacement of the administrator has been carried out a few days before this deadline, the new administrator must ensure that they will have the conditions to deliver the document by the deadline, even with the support of the former administrator, in order to avoid the application of coercive fines for possible delays or non-compliance.

7. Another issue that generates recurring doubts is the occurrence of fund registration operations in CVM systems that keep it unavailable for sending periodic documents for a certain period. As explained in item (4) above, this unavailability justifies any delay in the delivery of the document only for the time during which the fund was not available for sending the document. Thus, FI administrators must maintain adequate control for these circumstances, so that, once the fund is made available, it can deliver any missing documents of its informational regime.

8. Thus, for example, if a given fund, with its fiscal year ending in December of each year, was transformed from an investment fund in credit rights ("FIDC") to an FI on 2/5/2021, but the operation was only finalized at CVM on 4/12/2021, the monthly documents (balance sheet, CDA, and monthly profile) of the FI for February and March 2021 must be sent by 4/13/2021.

Sincerely,

Digitally signed by
DANIEL WALTER MAEDA BERNARDO
Superintendent of Institutional Investor Supervision