Circular Letter CVM/SRE 03/23 - System SRE - Guidelines on Procedures for Coordinators in Automatic Registration Requests for Public Distribution of Securities - CVM Resolution No. 160/2022

COMMISSION OF SECURITIES
Rua Sete de Setembro, 111/2-5º and 23-34º Floors, Center, Rio de Janeiro/RJ – CEP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brazil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4th Floor, Brasília/DF – CEP: 70712-900 – Brazil -Tel.: (61) 3327-2030/2031 www.cvm.gov.br Circular Letter No. 3/2023/CVM/SRE Rio de Janeiro, February 8, 2023. Subject: SRE System - guidelines on procedures to be observed by coordinators in requests for automatic registration of public distribution of securities - CVM Resolution No. 160/2022. Characterization of primary, secondary, and mixed offers and new parametrized document.

Dear Director,

1. This Circular Letter complements the previous Circular Letters No. 3/2022-CVM/SRE (Circular Letter CVM/SRE 03/22), published on 12/30/2022, No. 1/2023-CVM/SRE (Circular Letter CVM/SRE 01/23), published on 01/13/2023, and No. 2/2023-CVM/SRE (Circular Letter CVM/SRE 02/23), published on 01/19/2023, and should be read together with those documents, for the purpose of clarifying requests for registration of public distribution of securities that follow the automatic registration procedure provided for in art. 26 of CVM Resolution No. 160/22 (“RCVM 160”).

2. In this sense, we provide the following guidelines regarding the correct entry of primary, secondary, or mixed offers in the SRE - Offer Registration System (“SRE System - CVM” or “System”). Such guidelines are necessary because we have observed frequent errors by some Lead Coordinators when entering requests for primary offers in the SRE System, particularly in distributions of investment funds.

3. In addition to the following guidance, improvements have been implemented in some screens of the System with the aim of providing greater clarity when filling out the Electronic Offer Request Form by Lead Coordinators. We will also address the inclusion of a new parametrized document, as informed below.

Primary Offers, Secondary Offers, and Mixed Offers (role of administrators and managers of investment funds)

4. The SRE System characterizes an offer as primary, secondary, or mixed automatically, depending on the offerors involved.

5. Therefore, it is extremely relevant to reiterate the concepts identified above. An offer will be primary whenever there is the issuance of new securities, which means that the funds from the offer will be raised by the issuer, who also assumes the role of offeror. A secondary offer, on the other hand, results from the sale of securities issued at a previous time, held by the selling investor, so that the funds from the offer will not be received by the issuer of the security, but rather by the investor who sells them, who is therefore the offeror. Mixed offers are those that have both a primary distribution component (issuance of securities) and a secondary component (sale of already issued securities), that is, in this case, there will be primary and secondary offerors.

6. With this in mind, the administrator and the manager of investment funds act on behalf of the fund in the case of primary distributions and although they are considered offerors by regulation[1], assuming the responsibilities inherent to this role, for the purpose of the SRE System's operating logic, they should not be identified as offerors since (i) the three actors, namely the administrator, the manager, and the investment fund itself, represent the same component of the offer, i.e., the primary distribution and (ii) the identification of the "offeror" serves to determine whether the offer is primary, secondary, or mixed. Thus, the definitions above, brought in paragraph 5, must be observed in order to correctly identify the offerors within the Electronic Offer Request Form.

7. Thus, when starting to fill out the Electronic Offer Request Form, on the Request Opening screen, the "Issuer is also an Offeror" checkbox located in the "Issuer" area serves to identify a primary distribution component in the offer and once checked, it automatically passes the information from this to the area that in the current version of the system is titled "Offerors (Primary and/or Secondary)". Furthermore, we clarify that the "Offerors (Primary and/or Secondary)" area should only be manually filled with the names of any sellers of the secondary portion of the offer, if it exists. The administrator or manager of the fund should never be added to the "Offerors (Primary and/or Secondary)" area; otherwise, the System will understand them as secondary sellers and the offer will be considered secondary, or mixed, if the "Issuer is also an Offeror" checkbox is checked.

How to correctly request primary, secondary, or mixed offers?

8. When starting a request, on the "Request Opening - Public Distribution Offer" screen, the requester must always inform the name of the issuer of the securities in the "Issuer" area. If it is a primary or mixed offer, therefore with the issuance of securities to raise funds by the issuer itself, in whole or in part, the Lead Coordinator must select the "Issuer is also an Offeror" checkbox through which the System recognizes that there is a primary component in the distribution.

9. When selecting this checkbox, the title of the "Issuer" area is automatically changed to "Issuer/Primary Offeror" and the identification of the issuer also appears in the "Offerors (Primary and/or Secondary)" area, indicating that the issuer is also an offeror, i.e., that it is an offer with a primary distribution component. The following screen shows the system's behavior after selecting the checkbox. In this case, it is a purely primary offer.

10. If the offer has a secondary distribution component, i.e., investors who will sell securities held by them, the Lead Coordinator must use the green "+Add" button to add as many secondary sellers as there are. It should be noted that this button serves only to add secondary offerors, since the primary offeror is automatically identified once the "Issuer is also an Offeror" checkbox is checked, as detailed in paragraph 9, above. The following screen shows the system's behavior without selecting this checkbox and with the inclusion of a secondary seller. In this case, it is a purely secondary offer.

11. Mixed offers, those that present primary and secondary distribution components, must be informed by checking the "Issuer is also an Offeror" checkbox and adding secondary offerors through the green "+Add" button. The following screen shows the system's behavior with the selection of the checkbox that identifies the primary component of the distribution and with the addition of a secondary seller. In this case, it is a mixed offer (primary and secondary).

12. Note that the issuer (primary offeror) appears in the "Offerors (Primary and/or Secondary)" area as a non-editable element, unlike secondary sellers who can be included via the "+Add" button or excluded via the "Remove" button. This is an expected behavior of the system. With the request as shown above, but if one wished to exclude the issuer from the list of offerors, to make the request refer to a purely secondary offer, it would suffice to uncheck the "Issuer is also an Offeror" checkbox.

13. A common error that has been observed is the submission of requests for primary offers of investment funds without the proper selection of the "Issuer is also an Offeror" checkbox and with the addition of the fund administrator as if it were a secondary offeror. As a result, the primary offers of these funds are interpreted by the System as if they were secondary offers, considering the administrator as if it were a secondary seller. As addressed in paragraphs 4 to 7 above, for the purpose of the SRE System, offerors are always the issuer itself in a primary distribution or the secondary sellers in a secondary distribution and never the administrator or manager of the fund, except in the event that these eventually appear as fund holders and wish to sell their shares in a secondary offer.

14. In this sense, to minimize doubts and filling errors, the following changes were made on the "Request Opening - Public Distribution Offer" screen:
    a) After selecting the "Issuer is also an Offeror" checkbox, the title of the "Issuer" area was changed from "Issuer/Offeror" to "Issuer/Primary Offeror". In the case of a primary or mixed (primary and secondary) offer, the title that appears in this area is "Issuer/Primary Offeror". In the case of a purely secondary offer, the title that appears in this area is "Issuer"; b) The title of the "Offerors" area was changed from "Offerors" to "Offerors (Primary and/or Secondary)"; and c) Between the "Issuer" area and the "Offerors" area, the following explanatory text was inserted: "Attention: The checkbox above determines the nature of the offer: primary, secondary, or mixed. In this sense, it must be selected whenever the offer, in whole or in part, involves raising funds by the issuer itself. If there is a secondary sale of already issued securities, previously held by a selling investor, use the "Add" button to identify the offeror(s).".

New parametrized document

15. A document named "End of Distribution Announcement" was created in the "Document Submission" tab in the "Offer Documents" section so that one can comply with what is provided for in art. 13, item V, regarding such a document, without prejudice to the obligation to inform in the "Placement Data" tab the information requested there, in a structured manner.

16. We alert that: (i) the new document will only appear in offers whose filling of the Electronic Offer Request Form started from 01/26/2023; (ii) exclusively in the case of offers whose filling of the SRE - CVM System was done prior to that date, we request that any End of Distribution Announcements be presented in the same "Document Submission" tab in the "Additional Documents" section.

Update of the Relationship Matrix available in the SRE - CVM System (Request x Security - S)

17. The requests "OPD Aut Professional - communicating vessels without bookbuilding" and "OPD Aut Qualified - communicating vessels without bookbuilding" were included in the Relationship Matrix available in the SRE - CVM System, informed in Circular Letter No. 2/2023-CVM/SRE dated 01/19/2023. Furthermore, aiming for greater usefulness of this document, it is now also accessible via the "Help" link located in the blue upper bar of the System screen.

Support Contact

18. We reiterate the guidance that inquiries regarding the SRE - Offer Registration System should be directed exclusively to the email suporte-sistemasre@cvm.gov.br. Only electronic messages directed to this address will be answered; it is not necessary to send a copy to any other address.

[1] CVM Resolution No. 161/22
Art. 2 For the purposes of this Resolution, it is understood as:
...
XIV – offerors:
a) the issuer, in the case of primary distribution; b) the sellers on their own behalf, in the case of secondary distribution; and c) the administrator and the manager of the fund, in the case of primary distribution of investment fund shares;

Sincerely,

LUIS MIGUEL R. SONO
Superintendent of Securities Registration

Document electronically signed by Luis Miguel Jacinto Mateus Rodrigues Sono, Superintendent of Registration, on 02/08/2023, at 18:15, with basis in art. 6 of Decree No. 8.539, of October 8, 2015.
The authenticity of the document can be verified on the site https://super.cvm.gov.br/conferir_autenticidade, by informing the verification code 1714652 and the CRC Code A0FD28A9.
This document's authenticity can be verified by accessing https://super.cvm.gov.br/conferir_autenticidade, and typing the "Verification Code" 1714652 and the "CRC Code" A0FD28A9.
Reference: Process No. SRE Circular Letters 2023 SEI Document No. 1714652