Circular Letter CVM/SSE/SNC 02/24

SECURITIES COMMISSION OF BRAZIL
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brasil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brasil - Tel.: (11) 2146- 2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4º Andar, Brasília/DF – CEP: 70712-900 – Brasil -Tel.: (61) 3327-2030/2031 www.cvm.gov.br Circular Letter No. 2/2024/CVM/SSE/SNC São Paulo and Rio de Janeiro, May 23, 2024. To Administrators of Credit Rights Investment Funds (“FIDC”) Subject: Guidelines on the establishment of provisions in FIDC considering the state of calamity in Rio Grande do Sul. Dear Sirs,

1. In response to questions raised by market participants, the Superintendencies of Securitization and Agribusiness (SSE) and of Accounting Standards and Audit (SNC) publish their understanding regarding the adequate interpretation of the provisions of CVM Instruction No. 489 (“ICVM 489”) concerning the establishment of provisions on the credit rights invested by FIDCs, whose debtors have been impacted by the declaration of public calamity in the State of Rio Grande do Sul, in accordance with State Decree No. 57.596, of May 1, 2024.

2. In this context, it is important to highlight the need to evaluate the adequacy of the model used to calculate the provision against the presented calamity scenario, and it is not appropriate to wait for default to perform this evaluation.

3. Thus, in a situation where the fund has credit rights whose debtors are located or have relevant operations in RS or who, otherwise, may clearly be impacted by the events occurring in RS, it is expected that the fund administrator provides an evaluation of the economic situation of these debtors, individually or by groups with similar credit risk characteristics, with the objective of concluding on the impact of the current economic scenario on these debtors' future payment capacity.

4. At the same time that there may be no increase in the provision resulting from the evaluation performed by the administrator, it will not be appropriate to maintain provision percentages that were calculated based on historical scenarios divergent from the situation experienced at the present moment, without detailed analyses justifying them.

Circular Letter 3 OC SSE/SNC 2/24 - FIDC - PDD calamidade RS (2041925) SEI 19957.009383/2021-43 / pg. 1

5. ICVM 489 requires that a provision be established whenever there is evidence of a reduction in the recoverable value of the fund's assets, for the benefit of adequate information for users in general, including investors.

6. Similarly, regarding events of delay or renegotiation of payment conditions, in line with item 6 of Circular Letter No. 6/2020/CVM/SIN, issued during the COVID-19 pandemic, the understanding of the technical areas is that the guidelines of ICVM 489 do not determine that a provision be established only in the event of delay or renegotiation of the payment conditions of a given credit right, but rather in cases where there appears to be a change in the perspective of expected loss on the asset. That is, a change in expectation regarding future cash flow due to an increase in credit risk (credit spread).

7. Although it is undeniable that delays in the payment of a credit or the need for its renegotiation can be considered as evidence of a deterioration in the quality of that credit held in the portfolio, necessitating a risk reassessment by the administrator, the latter may conclude, after its reassessment, that the delay or renegotiation in question does not result in an expectation of reduction in the recoverable value of the asset, but emerges as a consequence of abnormal, exceptional, and temporary market situations, with a planned resolution.

8. However, it is important to reiterate that, even if the situations described above may, in some cases, not necessitate the establishment of a provision or an increase in its value, it is also the administrator's duty not to delay its establishment when the facts and circumstances of the moment indicate a deterioration in the recovery capacity of the credits in question.

9. We emphasize that financial statements aim to provide useful information to their users, helping them to predict the fund's future cash flows, and in particular, the timing and degree of certainty of their generation. For this purpose, the information must be relevant, reliable, comparable, and understandable, so as to allow users to understand the impact of transactions, events, and conditions on the fund's positions and performance.

10. Therefore, we understand that any postponement in the recognition of a provision, when the facts and circumstances of the moment indicate a deterioration in the expectation of recovery of asset values, regardless of whether a payment delay or renegotiation has occurred, in addition to being in disagreement with ICVM 489, misleads the market and the users of accounting information.

11. Finally, for additional clarifications regarding the content of this Circular Letter, we request contacting the Securitization Supervision Management 1, via the electronic address gsec-1@cvm.gov.br.

Sincerely,
Cynthia Barião da Fonseca Braga
Securitization and Agribusiness Manager - GSEC-1 Bruno de Freitas Gomes Circular Letter 3 OC SSE/SNC 2/24 - FIDC - PDD calamidade RS (2041925) SEI 19957.009383/2021-43 / pg. 2

Superintendent of Securitization and Agribusiness - SSE Osvaldo Zanetti Favero Junior Accounting Standards Manager - GNC Paulo Roberto Gonçalves Ferreira Superintendent of Accounting Standards and Audit - SNC

Document electronically signed by Cynthia Bariao da Fonseca Braga, Manager, on 05/23/2024, at 10:32, based on art. 6 of Decree No. 8.539, of October 8, 2015.

Document electronically signed by Bruno de Freitas Gomes Condeixa Rodrigues, Superintendent, on 05/23/2024, at 10:33, based on art. 6 of Decree No. 8.539, of October 8, 2015.

Document electronically signed by Osvaldo Zanetti Favero Junior, Manager, on 05/23/2024, at 10:53, based on art. 6 of Decree No. 8.539, of October 8, 2015.

Document electronically signed by Paulo Roberto Gonçalves Ferreira, Superintendent, on 05/23/2024, at 12:10, based on art. 6 of Decree No. 8.539, of October 8, 2015.

The authenticity of the document can be verified on the site https://sei.cvm.gov.br/conferir_autenticidade, by informing the verification code 2041925 and the CRC code 26F4D38F.

This document's authenticity can be verified by accessing https://sei.cvm.gov.br/conferir_autenticidade, and typing the "Verification Code" 2041925 and the "CRC Code" 26F4D38F.

Reference: Process No. 19957.009383/2021-43 SEI Document No. 2041925 Circular Letter 3 OC SSE/SNC 2/24 - FIDC - PDD calamidade RS (2041925) SEI 19957.009383/2021-43 / pg. 3