CVM Explanatory Note No. 12/79

CVM EXPLANATORY NOTE NO. 12/79.
Ref.: INSTRUCTION NO. 06/79, which considers it a serious offense not to comply with determinations by the CVM requiring publicly held companies to republish financial statements, reports, or information disclosed.

Law No. 6.385, of December 7, 1976, which created the Securities and Exchange Commission (Comissão de Valores Mobiliários), established that the application of penalties depends on the prior initiation of an administrative inquiry.

It also provided that the imposition of penalties such as suspension from the exercise of office as an administrator of a publicly held company or disqualification from exercising such office, as well as suspension or revocation of authorization or registration legally required for the exercise of activities related to the securities market, is further conditioned on the matter being a recurrence or a serious offense, thus defined in a norm of the Commission.

The concept of serious offense, in any context, must necessarily stem from the relevance of the protected interest, which justifies the qualified punishability of those who, through their behavior, attack this interest.

In defining serious offenses, the CVM considers it necessary to pay attention, above all, to its institutional purposes, among which stands out the guarantee of access, by the investing public, to information about securities traded in the market and about the companies that issued them.

The relevance of access to information cannot receive greater emphasis than that given by the National Monetary Council, when approving, in a meeting on December 20, 1978, the foundations and principles of the CVM's information disclosure policy.

Within its scope, it was sustained that the CVM considers the availability, in due time, of the necessary information for making decisions to invest in securities, as well as for voting and having representation at assemblies of publicly held companies, as an indispensable condition for achieving an efficient market, both in the allocational plane and in the operational field.

Understanding that the CVM considers it indispensable the existence of a regime of mandatory provision of exact, reliable, and complete information, such as that regulated by Law No. 6.404, of December 15, 1976, with a view to protecting the investing public and the reliability of the market itself, it could not relegate to a secondary position the competence attributed to it by Law No. 6.385 to determine that publicly held companies republish, with the corrections and amendments deemed necessary, and within the period established by the CVM itself, financial statements, reports, or information disclosed by them.

CVM EXPLANATORY NOTE NO. 12/79.
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For this reason, the CVM considers it fully justified that non-compliance with determinations made in this sense to the administrators of publicly held companies may be considered a serious offense, for the purpose of also triggering the application of the qualified penalties provided for in Law No. 6.385, referred to above.

This is the meaning of CVM Instruction No. 06/79, now issued by the CVM, founded on the relevance of the duties of administrators of publicly held companies to the securities market and on the corresponding interest, sensitive to all titles, of the investing public in having access to the necessary information, free from the indispensable correction and prepared according to legal standards, for making decisions regarding their investments.

RIO DE JANEIRO, FEBRUARY 19, 1979.
Original signed by
JORGE HILÁRIO GOUVÊA VIEIRA
Acting President