Circular Office CVM/SIN 10/2013

CIRCULAR OFFICE/CVM/SIN/Nº 10/2013
Rio de Janeiro, October 18, 2013

To Portfolio Administrators, Securities Consultants and Analysts, Directors Responsible for Portfolio Administration, Securities and Investment Fund Consulting, Regulated by CVM Instruction No. 409/04, and Representatives of Non-Resident Investors.

Subject: Guidelines on procedures related to the operation of investment funds, registration of non-resident investors, and portfolio administration, consulting, and securities analysis activities.

Dear Sir,

The publication of this Circular Office has as its main objective 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 securities analysis.

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

Observance of the recommendations listed below will contribute to minimizing any deviations and, consequently, reducing the need for SIN to formulate requirements. 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 opportune moment, that some positions and interpretations of this Superintendence regarding certain aspects of the regulation presented here do not necessarily represent the final interpretation of the Securities and Exchange Commission (CVM) on the subject.

We highlight that this circular was prepared taking as a basis Circular Office/CVM/SIN/Nº 4, of September 12, 2012. The changes and additions made are in bold and blue characters. We also alert that the addition of new items causes eventual renumbering in relation to the previous edition of the Circular Office.

1. CVM INSTRUCTION NO. 409/04 – INVESTMENT FUNDS

1.1 SHARES OF CLOSED COMPANIES IN PORTFOLIO – ART. 2, VII AND ART. 64, VI

It is prohibited for an investment fund administrator to voluntarily acquire shares issued by a closed company, as these are assets that do not meet the requirement set forth in Article 2, § 3 of the Instruction, according to a decision by the CVM Board of Directors on 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 to cancel its registration with the CVM, in accordance with Article 2, I, of CVM Instruction No. 361/02.

In such cases, the issue must be treated as a passive disqualification, in the manner provided for 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 offering registration for distribution 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 Central Bank of Brazil (BACEN) or by the CVM, within their respective areas of competence, as established in § 3 of the cited Article.

It is also necessary for the administrator to verify, at the time of investment and also throughout the maintenance of these debentures in the fund's portfolio, compliance with the limits established in Articles 86 and 87, relating respectively to concentration by issuer and by asset category.

However, we alert that if the issuers of the debentures are not open companies registered with the CVM, the administrator must have procedures for accessing the information and documents necessary for pricing and evaluating the debentures, prior to their acquisition, and also during their maintenance in the fund's portfolio, employing in the analysis and evaluation of this information the care and diligence that 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, referred to 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" – decision of the Board of Directors 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 for Credit Rights Investment Funds (FIDCs, CVM Instruction No. 356/01) and Non-Standardized Credit Rights Investment Funds (FIDC-NPs, CVM Instruction No. 444/06), as applicable.

1.4 HIRING THIRD PARTIES FOR 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 who 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 they meet its own control criteria and those established in the legislation in force in Brazil.

Although it is the duty of the custodian hired abroad to ensure the existence of the fund's portfolio assets, the fund administrator, by duty of diligence, as provided in art. 65-A, must, in the case of investments in quotas of other funds (not admitted to trading in 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 judge that the obligation to have a cooperation agreement with the CVM, which is imposed on the jurisdiction where the registration, custody, and financial settlement system used is located, does not extend to the jurisdiction where the institution responsible for registering the assets in those systems is headquartered.

1.5 NECESSITY AND POSSIBILITY OF REGISTERING A FUND WITH PRIVATE PLACEMENT OF QUOTAS – ART. 7

In accordance with the decision of the Board of Directors of CVM Process No. RJ-2005-2345, taken on 2/21/2006, we remind you that "there is neither necessity 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 of Directors 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 inspection fees provided for in Law No. 7.940/89 (as reiterated in the decision of CVM Process No. RJ-2006-7654, 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, as also provided for in CVM Instruction No. 425/07; and (3) compliance with all limits and prohibitions provided for in the regulation that are applicable to the fund.

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

In accordance with the sole paragraph of art. 9, the CVM may, due to a reasoned request, extend once, for a period of up to 180 days, the initial 180-day period provided for the distribution of quotas of closed investment funds.

For its part, the reading of 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 representing the initial net asset value 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 aims not to burden 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 longer public distribution deadline for quotas, as 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 deadline for closed fund quotas, 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 by an equal period...".

The request must be made with some advance notice before the end of the placement period, so that the CVM has sufficient time to adopt a careful decision by that date, and must be justified in a reasoned manner, ensuring the absence of prejudice to quota subscribers up to the moment of the request.

To this end, it is necessary for the request to include 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 TRANSFER OF INVESTMENT FUND QUOTAS – ART. 12

The Board of Directors expressed its understanding, in a meeting on 07/03/08, that the constitution of guarantees on open fund quotas through fiduciary transfer operations is regular, in accordance with art. 66-B of Law No. 4.728, of July 14, 1965.

This decision was based on the possibility that this guarantee enables the granting of credits under more favorable conditions to the transferring quota holders, which would stimulate greater circulation of wealth. It was also taken into consideration that this practice, which has already been adopted in the market – based on a legitimate interpretation of the rule – means 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, transferring debtors, and assigning creditors, and the definition of the duties of administrators and quota holders regarding redemption, voting, and other events related to encumbered quotas.

1.8 RESTRICTIONS ON QUOTA HOLDERS' REDEMPTION RIGHTS – ARTICLES 15 AND 16

In accordance with the Board of Directors decision in CVM Process No. RJ-2008-4449, of 2/9/2010, it is irregular for the administrator to establish in the fund's regulations conditions and restrictions on quota holders' 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 Board of Directors decision also reiterated that the Adhesion Term has a specific purpose, namely, to record the delivery of certain information to quota holders (as, indeed, had also been highlighted in the Board of Directors decision regarding CVM Process 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 quota holder to the fund administrator.

When using the faculties provided for in article 16, the administrator must also respect the guidelines established by the Board of Directors decision in CVM Process No. RJ-2009-0247, of 1/16/2009, where it was reminded 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 quota pricing has been done or not), given the purpose of the relevant provision of the regulation, which aims to protect, directly, much more the integrity of the fund (that is, the totality of quota holders) than that of the investor who requested the redemption.

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

Also regarding this, as determined in that decision, investors in the fund maintain the condition of quota holders until their respective redemption requests have been priced. After pricing, investors are considered creditors of the fund, with the rights and duties proper to this condition.

Regarding the application of article 16 of the Instruction, it is also worth mentioning the Board of Directors decision regarding CVM Process No. RJ-2006-5768, of 1/30/2007, in which the taxative nature of the regulation was recorded regarding the possibilities of deliberation in assemblies convened based on that provision, namely: (1) the substitution of the administrator, the manager, or both; (2) the reopening or maintenance of the closing of the fund; (3) payment in securities and financial assets; (4) the spin-off; or (5) the liquidation of the fund.

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

It is regular to establish fixed and determined dates for the conversion of quotas, as provided for in art. 15, I, provided that the fund's regulation provides for the matter with clarity and objectivity, and the prospectus alerts regarding the special liquidity condition of the quotas of this fund, in compliance with the requirement of art. 39.

We emphasize that this freedom to stipulate deadlines in the conversion of quotas does not confuse 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 the aforementioned quota conversion.

1.10 PAYMENT OF REDEMPTION AFTER BANKING HOURS – ART. 15, III

It is common practice in the market to adopt the closing price methodology as a parameter for the daily calculation of amounts due for redemption requests.

However, in specific cases where the redemption payment occurs on the same day as the request, it is certain that this calculation can only be performed after the closure of the markets in which the fund operates, so that the payment of this redemption is made at a time when it may no longer be possible for the quota holder to carry out, for example, several banking transactions 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.

In this way, in cases where the fund provides for redemption payment on the same day as the request, and also adopts calculation based on the closing price, it is important that investors and quota holders 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 several banking transactions with their resources.

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

There is no irregularity in adopting distinct limits for minimum initial application in the same investment fund, which vary according to different segments of the target audience to which it is intended. As an example, we cite the use of lower minimum 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. In this way, this differentiation – as long as it is in accordance with reasonable and non-arbitrary criteria – does not offend the Principle of Equality among Quota Holders, or any other provision of the Instruction.

The purpose of this principle is 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 its part, in conformity with the decision in Board of Directors Meeting No. 47, of December 9, 2008, it is also worth emphasizing that this possibility is not restricted only to minimum initial application limits, but also to movement limits, as well as to the minimum maintenance limit of the fund.

We emphasize, however, that these criteria must always be stated clearly and objectively in the fund's prospectus, in compliance 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 call for a general meeting of quota holders must expressly enumerate, 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 Board of Directors, in deciding on an appeal object of CVM Process 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 regulation, when its alteration is the subject of deliberation.

This technical area understands, however, in accordance with 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 regulation to be eventually deliberated in a general assembly, as well as other documents pertinent to the proposals to be submitted for the assembly's appreciation.

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 on equal conditions to all its quota holders, in compliance, especially, with what art. 40, XIII determines.

In this context, considering the wide reach of the distribution of quotas of certain funds in the Brazilian market, we understand that the making available 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 making available be done through the maintenance of a 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 the Collegiate Board's decision within Process CVM No. RJ-2010-12738, the CVM considered it regular the adoption of electronic systems that allow remote investor participation in general assemblies of funds in which they are unitholders.

To enable such a mechanism, the Collegiate Board understood that access to the unitholders' information necessary for structuring the electronic platform and for the unitholders' participation in the meeting is possible. For this purpose, prior approval from each unitholder is not required, but the adoption of this mechanism and the sharing of information must be communicated to the investors involved.

Still with the same objective, there is no legal impediment for the system to: (1) adopt proxies signed digitally with a private digital certificate, (2) provide a chat, blog, or forum on the Internet for the exchange of information or comments among unitholders, (3) share information obtained by this service provider with the fund administrator for the purpose of updating the unitholder's registration, or (4) broadcast the general assemblies live via the worldwide computer network.

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 it regular the constitution of an investment fund that hires more than one manager, since 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 assembly of unitholders convened for this purpose, in accordance with art. 47, II, of the aforementioned Instruction, and that the responsibility for management acts was fully assumed, in a regime of contractual solidarity, by both service providers.

Thus, in 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, § 1º, which (1) ensures the joint liability of the managers for the acts of shared management; (2) grants authorization for orders, before the fund's custodian, limited to the specific market of 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 regulations and the 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 arising 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, § 2º; and (c) the role of the administrator as an arbitrator for the resolution of conflicting investment decisions.

We emphasize that, in the interpretation of this technical area, the possibility of co-management also extends to Investment Participation Funds (FIPs), in accordance with the position adopted when granting the 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 operate in specific and distinct markets, since in FIPs co-management may involve only the joint work on one or several projects, as a reflection of the sum of specific skills and expertise.

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

In a decision regarding a consultation formulated concerning the possibility of constituting an investment fund with a remunerated advisory committee paid by the fund itself (RJ-2009-3936), it was emphasized that, based on the principles provided for in art. 37 of the Constitution of the Republic and art. 2º of Law No. 9.784/99, the granting of exceptions to the compliance with CVM normative provisions must always be 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 application in securities or are not intended for public distribution, are subject to all burdens inherent to the condition of registered funds.

Thus, in such cases, the registration must be examined and granted as if the effort of public sale of shares were carried out, and the fund is subject to all norms imposed by CVM regulation, in accordance, furthermore, 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, which may induce the investor to judge that the investment is exempt from the risk of not remunerating it as promised.

Thus, a perspective of yield measurable by strictly objective and previously known parameters, when accompanied by the necessary warnings that this yield may not be obtained, does not characterize a "promise of predetermined yield," which would remove the prohibition under analysis.

It is important to say that objective and previously known parameters do not confuse with the mere expectation, opinion, or desire of the administrator, even if theoretically founded.

In this sense, mechanisms are required, such as put options, insurance contracts, etc., that allow ensuring the achievement of the desired yield, despite typical market fluctuations.

Thus, whatever 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 targeted 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 for exemption from 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 exemption from the prohibitions contained in Articles 12, 64, VI, and 110, I of the Instruction.

With the objective of making the procedure of such operations more expeditious, the CVM delegated competence to this Superintendence to authorize the transfer of assets from investment funds privately, through the issuance of CVM Deliberation No. 546, of August 4, 2008.

As a rule, these operations involve the constitution of a fund that 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 may occur based on Article 110, I, of the Instruction.

Preliminarily, it is worth observing that the examination of these consultations is limited to the verification, by the technical area, of the feasibility, convenience, and opportunity of exempting the requirement contained in the cited norm, which is why we reiterate that, in these cases, no judgment of value is issued regarding the operations presented.

We emphasize that, if the aforementioned funds hold shares of other open-ended investment funds in their portfolio, the request must also detail what treatment the administrator intends to give to these assets, considering the prohibition on transfer of ownership imposed by art. 12 of the Instruction.

Furthermore, we observe that the prohibition treated by art. 64, VI is limited to the specific trading of shares outside the stock exchange or organized over-the-counter market, which is why operations involving funds that do not have shares or shares of open-ended funds in their 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 prejudice 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 changes in redemption conditions.

On the other hand, since these processes involve the alteration of regulations, a requirement for their approval is that the restructuring, with all the appropriate detailing of advantages and risks to unitholders, be submitted for appreciation by the unitholders involved 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 some funds of the same family to present differences in relevant aspects, such as the period for redemption subscription, which implies a risk that, in scenarios of significant redemption demands, the fund with the longer period to meet them will be prejudiced in relation to the others.

In these cases, we emphasize the need for this risk to be highlighted in the call 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 for 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 option 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, since they represent mere "continuation of the offer previously carried out in a stock exchange environment."

For this reason, we inform that in line with the aforementioned 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 article 10, §§ 2º and 3º, of CVM Instruction No. 361/02.

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

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

Thus, in line with the Collegiate Board decisions of Process CVM No. RJ-2013-0869, taken in the meetings of 12/3/2013 and 22/3/2013, this Superintendence understands that the granting of authorization that exempts this prohibition, in cases where the unitholders 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, that such authorization is not necessary.

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

This Superintendence understands as positive the establishment of objective references to evidence the yield goals (provided they do not constitute a guarantee of future results, in accordance with art. 74) that the fund intends to achieve, such as percentages on indices known to the market (CDI, Ibovespa, IbrX-100, etc.) or fixed percentages above a certain price index (IPCA, IGP-M, etc.) 1, since they serve as further information regarding the goals and management objectives of the fund, in accordance with art. 40, I, of the Instruction.

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

However, we warn that such goals must always be based on reasonable and objectively calculated expectations of the results that the fund expects to obtain based on the investment policy and cost structure it adopts.

Thus, any objective reference must take into account, in addition to the fund's own investment policy, also the expenses that will be incurred by the fund, such as those resulting, for example, from the charging of fees (administration and performance, 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 hired by the fund. Regarding the duties and responsibility of the manager of the investment fund portfolio, 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 the case of investment funds with outsourced management, it is up to the manager, before concluding operations on behalf of the fund, to carry out all due diligence, in accordance with the provisions of art. 65-A of the Instruction, to verify the adequacy of the same to the fund's policy, its regulations, as well as to the limits imposed by CVM Instruction No. 409/04, and for the administrator to supervise the diligent operation of the manager, although post-facto, in accordance with what is provided in arts. 65, XV and 65-A of the norm.

In this sense, and also in light of 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 administers as soon as their operations are settled.

A recent Collegiate Board decision within the scope of the CVM Administrative Sanctioning Process No. RJ-2012-6987 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 relevant contours with the recent inclusion of Art. 65-B to 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 that are 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 regulations, it is up to the administrator, in the exercise of his supervisory power, to notify him for the appropriate timely correction and, also, to the CVM, in accordance with § 1º of art. 88 of CVM Instruction No. 409/04. In the limit, the administrator has powers even to carry out the compulsory sale of fund assets to align with applicable limits, as well as to carry out any communication to unitholders, if the case arises, in accordance with art. 72 of the Instruction and to take the other appropriate measures compatible with the fiduciary duty dealt with 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 with regard to the duty of diligence when acquiring assets for the investment fund's portfolio.

Specifically regarding private credit assets, it is usual for the regulations 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 even 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, the guarantees, financial statements, among many others.

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

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

When answering 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 asset value in a certain 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 of the same group as the administrator or the manager.

Thus, the Collegiate Board concluded that the provisions of 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 INVESTMENT IN FIP SHARES BY QUALIFIED FIS 110-B AND 110-A – ARTICLE 86, § 10,
II

As is known, it is prohibited for investment funds to invest in shares of other investment funds that are not provided for in article 87, I, in accordance with the provision of 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 10/8/2010, deliberated that such prohibition would not extend to exclusive funds (Article 111-A) or those with a minimum initial application of R$ 1 million (Article 110-B), as they are expressly exempt from observing the concentration limits by asset class provided for in Article 86 of the Instruction.

Thus, it is possible for these funds to invest in shares of other non-listed investment funds under Article 87, I, of the Instruction, such as, but not limited to, Investment Funds in Participations (FIPs), Investment Funds in Shares 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 complying with these limits does not exempt any fund (not even exclusive ones or those with a minimum initial application of R$ 1 million) from observing the provisions of item I of § 10, given the specific and distinct objective of this provision, which intends to preserve the integrity of the fund's assets.

1.26 EXPOSURE LIMITS TO FOREIGN ASSETS – ART. 87

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

Thus, the best interpretation for the provisions of Article 85, § 2º, of the Instruction, especially regarding the term "cumulatively" stated therein, is 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 the regulation permitting effective application abroad within the limits provided by law is respected, 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.

1.27 INVESTMENT IN FIDCS AND FICFIDCS SHARES – ARTICLE 87, I, AND 112, § 5º

In line with the decision regarding Process CVM No. RJ-2009-7903, of 16/3/2010, the Collegiate Board reiterated the possibility of application by investment funds and investment funds in shares of investment funds in shares of Investment Funds in Credit Rights (“FIDCs”) and Investment Funds in Shares of Investment Funds in Credit Rights (“FICFIDCs”).

Thus, the Collegiate Board, in 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 shares 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.

Furthermore, regarding the application and incidence of Article 87, I, of the Instruction, it is also worth recalling the content of the Collegiate Board decision in Process CVM No. RJ-2009-7219, judged on 1º/6/2010, in which, in response to a consultation, it was decided that any committed operations that are not specifically backed by public bonds, in conformity 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 committed 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 framework of a regular and conventional normative alteration process that includes, among other things, market participation in a public hearing process.

1.28 APPLICATION IN SHARES OF STOCK INDEX FUNDS (ART. 87, I, “F”)

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

Index Fund shares representing a stock portfolio are securities with characteristics similar to shares of equity investment funds, and may be acquired by investment funds and investment funds in shares.

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 provide the following clarifications:

a) Index Fund shares may be subject to lending operations in accordance with current legislation, under 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 shares must be considered as financial assets, for the purpose of the limit provided for in Article 87; c) Stock Index Fund shares 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 an equity fund; d) Provided it is stipulated in its regulations, an Investment Fund in Shares of Investment Funds in Equity or an Investment Fund in Shares of Multimarket Investment Funds may apply up to 100% of its net assets in stock Index Fund shares, given the provisions of Art. 112, § 4º.

1.29 MINIMUM NET ASSETS – ART. 105

Article 105 of the Instruction specifies that, after 90 days from the start of activities, an open fund that maintains, at any time, a daily average net asset value 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 rule, the calculation of daily average net assets must be performed only after the 90-day period from the start of the fund's activities has elapsed, which occurs upon the first subscription of fund shares.

For this reason, it is stated that the obligation of liquidation or incorporation into another fund, required by Article 105, can only occur, in the most unfavorable scenario, after 180 days from the first subscription of fund shares.

1.30 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 shareholders or determined by the redemption of all its shares cannot effectuate it, due to exogenous reasons unrelated to the will of its administrator and shareholders.

Examples of reasons that prevent the regular closure of the funds in these cases are: (1) judicial decisions ordering the maintenance of the fund in operation; (2) assets in the portfolio with no liquidity; and (3) dividends and other proceeds declared in favor of the fund, but which have not yet been paid.

These funds, given the particular situation they 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, under Article 105.

Thus, under CVM Deliberation No. 571, of 31/3/2009, it was defined that, in these exceptional cases, the administrator of the investment fund may request this Superintendency 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 fund shareholders gathered in a general meeting; c) Proof of an exceptional situation that prevents the liquidation of all remaining assets in the fund's portfolio; and d) Declaration by the administrator that they remain responsible for the administration of the fund and that the shares will no longer be offered publicly. The contracted distributors must attest that they will no longer offer such shares.

1.31 QUALIFIED INVESTORS – ART. 109

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

Thus, we recall the Collegiate Board's understanding on the matter, manifested on 19.04.05 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 shareholders who, at the time of the alteration, do not meet the qualification requirements of the Instruction.

Still under the terms of that communication, we recall that the transitory permission contained in the provision only extends to shareholders 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 shareholders, even if not qualified investors, may remain in them; or (b) do not admit new shareholders, which, in practical terms, will mean their closure for applications, under Art. 17 of the Instruction.

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

As is known, funds aimed at qualified investors, whose regulations require a minimum investment per investor of one million reais, do not need to comply with the concentration limits by issuer and by financial asset class established in Articles 86 and 87.

Thus, based on Article 110-B, their regulations may provide, with greater freedom, their investment policies. Their concentration limits by issuer and by asset class are generally 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 suitability 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 legislative requirement for the investor to maintain any minimum value in the fund, nor are there predetermined minimum values for additional applications. Nevertheless, rules establishing minimum values for maintaining resources applied in shares may be established in the regulations.

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

1.33 INVESTMENT IN FICFIPS SHARES – ARTICLE 112, §§ 5º AND 6º

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

In this sense, we recall that, also according to that decision, the absence of provision in § 6º of Art. 112 regarding the possibility of investment in FICFIPS shares constitutes a material error that finds no reasonable justification.

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

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

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

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

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

Thus, we cite the concepts brought by the provision of article 3º of CVM Instruction No. 149/91 and article 86, § 2º, of CVM Instruction No. 302/99, which consider two companies as affiliated when (1) one of them or its administrators, and respective spouses, partners, or relatives up to the 2nd degree, hold a participation greater than 10% of the social capital of the other, or when (2) they share administrators or partners with participation greater than 10% of both social 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 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 social capital of the other; or when (2) one is controlled by the other.

Finally, it is worth noting that – despite being expressly revoked – we consider CVM Instructions No. 149/91 and 302/99 as reliable and adequate sources for the conclusions exposed, as they are limited to serving as support for the better interpretation of the concept of affiliated companies.

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

Art. 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 accumulating this function with others in the market, which could, at the limit, facilitate practices 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 should 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 recall, 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 should 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 7º, § 6º, 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 assuming identical responsibility in affiliated companies, as already defined in item 2.1 of this Circular Letter.

2.3 ANNUAL REPORT OF PORTFOLIO ADMINISTRATORS (ICAC) – ART. 12

Article 12 of the Instruction provides that the portfolio administrator accredited at 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, as well as updated registration information, under the terms of article 1º, II, of CVM Instruction No. 510/2011.

It is important to observe that this obligation must be fulfilled even if the administrator does not have 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 by an accredited administrator, a natural person, who is responsible for the administration of securities portfolios in a legal entity authorized by the CVM to exercise such activity.

The aforementioned annual update must be sent through the administrator's restricted access environment available on CVMWeb, in the item “Send Documents Via Form”, option “Registration Report”, type of report “Annual (Mandatory)”, function “Send Documents”.

After entering the report, 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 “Send 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 failure or delay in sending the aforementioned report entails the application of a coercive fine, under the provisions of Article 20 of the Instruction, in conformity, also, with the requirements of Articles 3º and 11 of CVM Instruction No. 452/07.

2.4 EVENTUAL REGISTER UPDATE OF PORTFOLIO ADMINISTRATORS (ICACE) – ART.
1º, 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 administrator, this must be done directly in the restricted access area available on CVMWeb, in the item “Send 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 register alteration, under the terms provided by the aforementioned Article 1º, I.

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

In the case of a change in denomination, 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 change in denomination of the legal entity, and, if it is a financial institution, registration and homologation of this alteration at the Central Bank of Brazil.

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

We remind, finally, of the importance of the accredited entity keeping its registration with the CVM always updated, since the data contained therein are used for any notifications to the interested party, including those that alert to the incidence of penalty fines provided for in the regulation of this Commission.

2.5 SEGREGATION OF ACTIVITIES – ARTICLE 15

One of the most relevant aspects in the conduct of activities of a company accredited as a portfolio administrator of securities concerns the procedures for segregation of activities adopted, with the objective of guaranteeing an efficient policy for the administration 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 covering, at least, the content described below:

a) Segregation of Activities Policies (Article 15, item I) – presented only when the company develops more than one activity. It aims to demonstrate the total separation of areas or present the adopted segregation rules, with discrimination, at minimum, of those related to facilities and equipment, with detail, at 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 applicable requirements, at minimum for its partners, administrators, collaborators, and employees. Furthermore, these rules must identify the 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 society's segregation policies, to guarantee their effectiveness. In addition to the specific Adhesion Term of this Policy, there may also be a declaration by the involved party stating that they have been trained in accordance with the presented Training Policy, and their perfect understanding of the adopted Segregation Policies;

d) Security Policies (Article 15, item IV) – detail the policies for controlling access to confidential information, at least by its partners, administrators, collaborators, and employees who possess them. Furthermore, it must always be possible to identify the holders of this information for accountability in case of leakage;

e) Personal Trading Policies (Article 15, item V) – express the restriction policies for trading 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 society, with clear, objective, and detailed description of the corporate criteria adopted, and containing a model of the Adhesion Term to be signed by the interested party; (2) compliance, containing a description of how the monitoring of policies will be done, and the designation of the person responsible for this activity; and (3) enforcement, with provision of the applicable sanctions in case of non-compliance with the policies, and also of the person designated for this activity.

2.6 APPLICATION OF EMPLOYEES' RESOURCES IN THE MANAGER'S OWN PRODUCTS – ART. 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 managers ("subject persons"), to apply their own resources exclusively in the same products offered by the society to its investors, provided that also under the same conditions given to other investors in the invested vehicle.

However, we remind that such a measure can also subject these people 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 manager, especially when they integrate the processes of elaboration of strategies and investment decision-making of the manager.

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.

2.7 NECESSITY OF ACCREDITATION FOR THE MANAGEMENT OF OWN RESOURCES – ART. 3º

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 those who intend to exercise exclusively the activity of managing own resources, there is no need for accreditation with the CVM under the terms of CVM Instruction No. 306/99, nor would the CVM have the competence to grant it.

Thus, and still under the terms of the Collegiate decision taken within the scope of CVM Process No. RJ-2011-14560, we understand that any applicant who still insists on obtaining accreditation as a portfolio administrator of securities with the CVM must assume all burdens resulting from the accreditation they seek to obtain, which means proving that they have 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.

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

3.1 REPRESENTATION CONTRACT – ART. 5º

As is known, it is the obligation of the non-resident investor's representative to keep the custody of, and provide whenever requested, under the terms of Article 5 of CVM Instruction No. 325/00, the respective custody and representation contracts signed with the client, as well as the forms provided for in that Resolution.

In this sense, we remind that, within 15 days after the constitution of 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 note that any changes in the registration of non-resident investors, under the terms of Article 5, II, of the Resolution, do not need to be accompanied by documentary evidence of the changes made, 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 maintenance of registration with the CVM does not imply automatic update in records of other bodies of the Public Administration, such as the Central Bank of Brazil and the Brazilian Federal Revenue Service. Thus, these updates, when necessary, must be promoted, by its own means, by the representative of the non-resident investor.

3.2 EXERCISE OF SELL OPTIONS ON SHARES IN PUBLIC OFFERINGS – ART. 8º

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

For this reason, we inform that in line with the cited Collegiate decision, the prohibitions provided for in Article 8 of the Resolution do not apply to non-resident investors who meet the conditions provided for in Article 10, §§ 2 and 3, of CVM Instruction No. 361/02.

3.3 FREE TRANSFER OF SUBSCRIPTION RECEIPTS – ART. 8º AND SINGLE PARAGRAPH

Under the terms of the Collegiate decision of 10/13/2009, taken within the scope of CVM Process 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, since it does not characterize, both in the condition of transferor and transferee of these free rights, "the entry of new resources into the Country or the use of resources already entered through Resolution 2.689/00".

Still according to that decision, although the subsequent subscription of shares issued by the company subject to such rights is carried out with resources entered through CMN Resolution No. 2.689/00, such operations are also not considered irregular, because the hypothesis of subscription is expressly cited in Article 8, § 1, as one of the exceptions to the prohibition of carrying out operations outside of stock exchanges or organized over-the-counter markets.

4. 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 1 the definition of the activity of securities analyst. This definition encompasses all those who, on a professional basis, prepare recommendations, monitoring reports, and studies for disclosure to the public, which assist in investment decision-making, regardless of the methodology used for such.

Thus, both the graphical analyst and the fundamentalist analyst are included in the normative definition of securities analyst. Both must prove their technical qualification through accreditation with the accrediting entity so that they can exercise this activity.

In this sense, it is worth clarifying that graphical analyses and recommendations resulting from these analyses, disclosed on sites, chats, or blogs specialized on the Internet, if carried out on a professional basis, must also be prepared and disclosed only by professionals accredited by the accrediting entity and registered with the CVM.

5. CVM INSTRUCTION NO. 43/85 – SECURITIES CONSULTANTS

5.1. ACCREDITATION

The CVM Collegiate, in a meeting on 8/19/2008, established the requirements to be demanded for the purpose of granting accreditation of securities consultant for natural and legal persons, embodied in the documents that must accompany the accreditation requests.

The demanded documents are the following:

1. Natural persons:
   (i) application signed by the interested party containing the reasons why they believe they are qualified to exercise the activity; (ii) copy of the curriculum and proof of the main courses mentioned therein; (iii) proof of registration with the CPF and copy of the identity card; (iv) documentation proving their experience and detailing the nature of the activities exercised by the interested party, their professional experience in an activity that reveals 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 analyst); (v) registration form containing their full name, CPF, address, telephone, facsimile, and email; (vi) declaration signed by the applicant, informing:
   (a) if they are disqualified from holding a position in financial institutions and other entities authorized to operate by the CVM or BACEN, insurance companies, private pension entities, and publicly held companies; (b) if they have been convicted of bankruptcy crime, malfeasance, active or passive corruption, extortion, market manipulation, improper use of privileged information, irregular exercise of position, profession, activity, or function within the scope of the securities market, embezzlement, against the popular economy, public faith, property, the National Financial System, or criminal penalty that prohibits, even temporarily, access to public positions; (c) if they are included in the Register of Issuers of Bounced Checks; (d) if they have titles protested against them; (e) if, in the last five years, they suffered any punishment due to acting in the administration or supervisory board of an entity subject to the control and supervision of the CVM, BACEN, SPC, or SUSEP; and (f) if their assets, by judicial decision or administrative authority, are unavailable.

2. Legal persons:
   (i) application signed by the legal representative of the legal person; (ii) copy of the constitutive acts duly consolidated; (iii) proof of registration with the CNPJ; (iv) information about the investor profile with which they intend to act; (v) document indicating the person responsible for the activity; and (vi) registration form containing, at least, the corporate and trade name, CNPJ, mailing address, telephone, facsimile, email, and the person responsible for the activity.

The accreditation of the legal person is conditioned to the designation of a responsible director, who must be accredited as a securities consultant - natural person - with the CVM.

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

Article 1, II, of the Instruction requires that the securities consultant accredited with the CVM must confirm, annually between May 1 and May 31, the participant's registration information 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 appropriateness of two confirmations, one by the natural person, and another by the legal person for which they are 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 their CPF and password, the participant must look for the item "Participant Registration Update", and then, "Electronic Compliance Declaration". Finally, if the registration data is indeed updated, it is necessary to click on "Send Form".

If, however, the registration data is not correct, before confirmation, it is necessary to update this information in the CVM systems, which must also be done directly through access to the CVMWeb system, in the same option "Registration Update". However, after accessing the system with their CPF and password, the participant must click on "Participant Registration Update", then "Securities Consultant", and finally, on "Update of Registration Data".

After the confirmation entry is made, it is possible and recommended to consult to verify if it was accepted by the system. For this purpose, the same path indicated for sending the Electronic Compliance Declaration must be accessed, and it must be verified if the term "yes" appears in the available option "Form already sent".

Finally, we recall that the lack or delay in sending the cited report entails the application of a penalty fine, under the provisions of Article 20 of the Instruction, in conformity, also, with the requirements of Articles 3 and 11 of CVM Instruction No. 452/07.

5.3 CONDITIONS FOR THE EXERCISE OF THE CONSULTANCY ACTIVITY

As is known, it is CVM Instruction No. 43/85 that currently regulates the consultancy activity subject to registration with this Autarchy.

Without prejudice to the 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 CVM Processes 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 highlight the requirement, provided for in the decision of CVM Process No. RJ-1999-3663, that "the legal person portfolio administrator must segregate its consultancy activities from its administration activities, having a responsible person for each activity".

Two important conclusions deserve to 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) legal person securities consultants must have a specially designated responsible person to answer for this function before the CVM, to the same extent that portfolio administrators already do (in the latter case, based on Article 7, II, of CVM Instruction No. 306/99).

Another observation worthy of mention was provided for in the decision of CVM Process No. RJ-20102-6198, in which it was emphasized that, to exercise the consultancy activity, the legal person must always provide, directly or indirectly, this activity as an integral part of its corporate object.

6 STRUCTURED FUNDS

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

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

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

Furthermore, we alert that the fact that the public offering of distribution of quotas constituting the initial patrimony of the fund occurs under the aegis of CVM Instruction No. 476/09 does not result, by itself, in the applicability of Art. 23-A in question. Thus, even if the constitution of the fund makes use of the aforementioned Instruction, the automatic exemption from risk classification depends on the observance of all items of Art. 23-A of CVM Instruction No. 356/01.

Finally, we inform that the automatic exemption from risk classification is only valid while the characteristics that frame the operation under the provisions of item I of Art. 23-A of CVM Instruction No. 356/01 are maintained. That is, if the fund ceases to be invested exclusively by a single quota holder or by a group of quota holders linked by a single and inseparable interest, the risk classification becomes due.

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

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

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

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

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

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

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

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

The fund's operation requires prior registration, which will be automatically granted, among other requirements, upon proof, to this CVM, of the subscription of 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 § 1st of the provision is reached.

We alert that the forwarding of investment commitments (art. 11, §5th) signed does not satisfy the aforementioned provision, given that they do not have the capacity to prove that the shares were subscribed. The provision in question can be satisfied by the alternative forwarding of copies of the subscription bulletins or of the manifestation of the fund's share registrar agent, in which the volume, in Reais, of subscribed shares is clear.

As a last option, if the share distribution includes a Closing Announcement and it objectively informs the total number of shares subscribed, it can serve as proof of share subscription, satisfying the referenced provision.

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

In the interpretation of the SIN, the systematic reading of the provisions on the registration of operation of real estate investment funds results in the understanding that the fund may receive its operation registration after only the minimum value established in the Bylaws is subscribed.

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

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

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

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

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

1. item II of § 1st, a provision that aims to prevent the calculation of the performance fee from being 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 CVM Instruction 472/08;
2. item III of § 1st, 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 CVM Instruction 472/08;
3. item IV of § 1st, which provides that the fund's expenses must be deducted from the base for calculating the performance fee - it seems to be the best practice in terms of accounting and economics and, by not confronting art. 36 of CVM Instruction No. 472/08, should also be applicable to retail FIIs;
4. § 2nd, which establishes the "waterline" rule, i.e., the impossibility of the manager being remunerated unless the performance achieved is superior to that at the time of the last performance payment (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 CVM Instruction 472/08;
5. § 3rd, a provision that establishes the possibility of individualized charging of performance (from the shareholder and not the fund) only for cases where the investor entered the fund at a share value lower than the "waterline" criterion – without conflicting with art. 36 of CVM Instruction 472/08, this possibility makes sense in economic terms and protects the other investors in the retail fund from undue transfer of wealth among shareholders, since in these cases the performance charge is made individually and directly from the shareholder; and
6. the area understands that, for the purposes of this analysis, § 4th 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 provision is not contrary to the dictates of CVM Instruction 472/08, and should be applied subsidiarily to FIIs, by virtue of the provision in art. 119-A of CVM Instruction 409/04.

Briefly, the SIN understands that (1) items II, III, and IV of §1st and §§ 2nd, 3rd, and 4th, all of art. 62 of CVM Instruction 409/04, are also applicable to the calculation and charging of the performance fee of FIIs (also) destined to the retail investing public; and (2) art. 62, § 1st, item I, of CVM Instruction 409/04 is not applicable to FIIs.

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

6.7 ART. 31-A OF CVM INSTRUCTION NO. 472/08

Art. 31-A of the Instruction deals with 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 § 1st.

Additionally, in § 2nd of the same article, the Instruction makes it possible that such hiring can be carried out with parties related to the administrator and the manager of the fund, which is subject to the approval of the general meeting of shareholders, in accordance with art. 34 of the Instruction, by a qualified quorum of, at minimum, a 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, § 2nd, of the Instruction, does not dispense with the need for approval in a meeting 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.

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

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

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

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

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

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

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

6.9 ART. 32, II AND III, OF CVM INSTRUCTION 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 the Investment Funds in Participations at the end of each semester of their fiscal years.

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 closure of each fiscal year, i.e., the 2nd semester.

Thus, the documents referring to the 1st semester of each exercise must be delivered within a period of 60 days after the end of the period. Those related to the 2nd semester of each fiscal year will always have a deadline of 120 days, regardless of whether they are provided for in item II or III. Moreover, these annual financial statements (2nd semester) must be forwarded obligatorily together with their respective Audit Reports, which is why their deadline is longer than that of the 1st semester.

Finally, it is worth highlighting that, unlike the 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, as already clarified in item 6.8 of this Circular Letter.

6.10 ART. 16, § 2ND, OF CVM INSTRUCTION NO. 391/03, AND ART. 19, § 1ST, OF CVM INSTRUCTION NO. 472/08.

Art. 16, § 2nd, of CVM Instruction No. 391/03 states that general assemblies may be convened by the administering institution or "by shareholders who hold, at minimum, 5% (five percent) of the total shares issued by the fund". Similarly, Art. 19, § 1st, of CVM Instruction No. 472/08 opens this possibility for "shareholders who hold, at minimum, 5% (five percent) of the issued shares".

For the purposes of counting the minimum percentage necessary to convene general assemblies in these funds, it is the understanding of this Superintendence that only shares that have already been subscribed should be admitted in this count. Thus, if there are issued shares that have not yet been subscribed, they must be disregarded for the purposes of counting the minimum percentage of 5%.

In the interpretation of the technical area, this understanding is consistent with the provisions of art. 20 and its § 1st, of CVM Instruction No. 391/03, and Arts. 6th and 7th of CVM Instruction No. 472/08, where it states 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, these records being made only after the subscription of the shares.

6.11 ART. 9TH OF CVM INSTRUCTION NO. 398/03

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

The Collegiate Body's decision, 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. 9th of CVM Instruction 398/03 is that which considers that the "resources directed to the projects provided for in item I of art. 2nd" 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.

6.12 COMMUNICATION OF CHANGES IN BYLAWS OF FIIS, FIDCS, FIPS, FUNCINES AND FMIEES, AND CHANGE OF SERVICE PROVIDERS OF THE RESPECTIVE FUNDS

Each of the Instructions of the funds mentioned above determines that any changes in the bylaws 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. 7th, I, of CVM Instruction No. 391/03, for FIPs; Art. 5th, 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 bylaws via the 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 updating of the registry of service providers of the aforementioned funds that allows the effective implementation of changes directly by the Administering Institutions via CVMWeb, any change, whether deliberated in a shareholders' meeting or not, must be requested through the sending of an email to the box gie@cvm.gov.br, without prejudice to the sending of the respective deliberation minutes to the CVMWeb System, when applicable.

In order to effectuate the registry changes, the current Administered Institution of the fund must inform in the subject of the email the title "Change of Service Provider Registry", to which it must attach the minutes that approved the modification, accompanied by information on (i) the type of service provider that is desired 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 provision in the assembly minutes, if applicable.

For changes to the Fund's Administrator, such request must be made by the replaced institution.

7. CVM INSTRUCTION NO. 209/94

7.1 ARTICLE 1ST

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

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

In the understanding of this Superintendence, the most appropriate interpretation of art. 1st, §§ 1st and 3rd, of CVM Instruction 209/94, is in the sense 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 exercise the quantitative parameters provided for in the provisions will be observed.

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

8. CVM INSTRUCTION NO. 476/09

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

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

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

A 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 shares will not be admitted to negotiation, as well as the small number of shareholders, and following the manifestation of the technical area, it deliberated that art. 9th of CVM Instruction 476/09 is inapplicable to the concrete case.

9. CVM INSTRUCTION NO. 514/11

As is well known, the Securities and Exchange Commission (CVM) issued CVM Instruction No. 514/11 on 12/28/2011, which provides for amendments to the Accounting Plan for Investment Funds – COFI, annexed to CVM Instruction No. 438, of July 12, 2006.
The Instruction, resulting from Public Hearing SNC Funds No. 02/11, includes in the COFI the requirement to disclose, in explanatory notes, transactions carried out by the fund with the administrator 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 assess the extent of the effects of these transactions on the net asset position, financial position, and results of investment funds. The concept of related party used in the Instruction has a meaning adapted from that used in Technical Pronouncement CPC 05 (R1), approved by CVM Deliberation No. 642, of October 7, 2010. It is worth noting that the adaptation refers to the application of the concept of related party to the administrator or manager institution and not to the entity reporting the information (Investment Fund).

10. CVM INSTRUCTION NO. 359/02 – INTERNATIONAL INDEX FUNDS
    In the decision of CVM Process No. RJ-2012-11653, the Collegiate Board decided to communicate to the market that it deems it opportune and convenient to evaluate, on a case-by-case basis, the possibility of granting dispensation from requirements of CVM Instruction 359/02, for the purposes of constitution, registration, issuance, distribution, and trading of shares of market index funds in Brazil, known abroad as exchange-traded funds – ETF, based on indices from other jurisdictions. To enable the constitution of funds with such characteristics, the Collegiate Board understood that it would be necessary at least to provide in the dispensations (i) the possibility that the index fund may also have as an eligible asset for acquisition shares of other index funds traded in other jurisdictions; (ii) allow subscription and redemption in national currency, without any limit; and (iii) the provision for the charging of entry and exit fees that pass on to the investor requesting the investment/redemption the costs arising from the creation or destruction, respectively, of the basket. As conditions to evaluate requests of this nature, the Collegiate Board determined that (1) the international index funds invested in must be compatible with Brazilian regulatory requirements, so as to prevent the constitution of index funds that invest, for example, in international index funds known as leveraged, inverse, or synthetic replication models; and (2) index funds in Brazil must be intended exclusively for individual or legal entity investors with financial investments exceeding R$ 1 million in the market.

11. CVM INSTRUCTIONS NO. 505 AND 506/2011 – APPLICABILITY TO INVESTMENT FUNDS
    In response to a consultation made by the Brazilian Association of Financial and Capital Markets Entities – ANBIMA, the CVM Collegiate Board, within the scope of CVM Process No. RJ-2013-1139, decided on 1/24/2013 to express itself regarding the best interpretation of certain provisions of the Instructions to investment funds.
    In this sense, it was established the understanding of the inapplicability of certain provisions of these Instructions to investment funds, with the exception of closed-end funds whose shares are traded on 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 order execution processes; and Article 25, which regulates related persons. As a basis for this understanding, it is worth noting (i) the characteristics of share price formation of the fund, which include mark-to-market of the portfolio, making the cited provisions little relevant for funds, (ii) the little relevance in prioritizing order execution, since the price is the same for all fund investors, (iii) and 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 shares are traded on a 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 emphasize 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 contributions of resources from unitholders, but not to cases of redemptions, even partial, requested by these investors.

12. CO-MANAGEMENT IN INVESTMENT CLUBS - CVM INSTRUCTION NO. 494/2011
    In the meeting held on 8/27/2013, the CVM Collegiate Board, when reviewing a consultation filed by BNY Mellon Serviços Financeiros DTVM, in the capacity of administrator institution of the Investment Club of Vale Employees (“InvestVale”), decided in the following sense:
    (i) the CVM has competence to review the understanding of the Exchange (entity administering an organized market) regarding the admissibility of co-management in investment clubs, as 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 this possibility may 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 General Assembly to decide whether to maintain or not the current co-management structure; (iv) if the General Assembly decides not to maintain the current co-management structure, it will also be up to the General 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 General Assembly decides to maintain the current co-management structure, the General 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 clearly define the procedures to be observed: (i) in attending to redemption requests that may be formulated by its unitholders, especially regarding the eventual need to sell assets; (ii) in the reclassification of the Club in case of non-compliance with concentration and diversification limits and risk concentration defined in the statute 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 their object statutory amendments provided for in art. 34 of the Investvale statute is not formally in conflict with the Clubs Regulation, this provision, in practice, makes it impossible to hold Club assemblies; and (vii) it is up to the Exchange to evaluate this issue and alter its rule dealing with deliberation quorums, in order to ensure the representativeness and viability of Club assembly deliberations.

13. 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 may “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 required to be kept in perfect order and state of conservation for a period of at least five years...”
    This Superintendency understands that electronic communications that relate to business activity developed in the securities market or that, in some way, are related to facts that may figure as the object of investigation by the CVM fall under documents subject to retention for the period provided for in item I of Article 9 of Law 6.385/76.

14. PARAMETERS FOR FORMULATING CONSULTATIONS
    This Superintendency frequently receives 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 detailed.
    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 administrator institution.
    If the consultation refers to the application of accounting norms and 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 for Investment Funds – COFI.
    Finally, as required by the mentioned Instruction 438, the consultation must be accompanied by the manifestation of the independent auditor, when it concerns change or adoption of new practices or accounting procedures.

Sincerely,
FRANCISCO JOSÉ BASTOS SANTOS
Superintendent of Institutional Investor Relations