CVM Instruction 255 (Repealed) - Issuance and Trading of BDRs

FULL TEXT OF CVM INSTRUCTION NO. 255, OF OCTOBER 31, 1996, WITH CHANGES INTRODUCED BY CVM INSTRUCTION NO. 321/99.
CVM INSTRUCTION NO. 255, OF OCTOBER 31, 1996.
Provides for the issuance and trading of depositary receipts of securities - BDRs backed by securities issued by open companies, or similar, with headquarters abroad.

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Collegiate Body, in a session held on October 25, 1996, and in accordance with the provisions of Articles 19 and 21 of Law No. 6,385, of December 7, 1976, and Article 3 of National Monetary Council Resolution No. 2,318, of September 26, 1996, resolved to issue the following Instruction:

OF THE DEFINITIONS
Art. 1 For the purposes of this Instruction, the following are understood:
I - Depositary receipt of securities - BDRs - the certificates representing securities issued by an open company, or similar, with headquarters abroad and issued by a depositary institution in Brazil; II - Custodian institution - the institution, in the country of origin of the securities, authorized by a body similar to the CVM to provide custody services; III - Depositary or issuing institution - the institution that issues, in Brazil, the corresponding depositary receipts, based on the securities custodied in the country of origin; IV - Sponsoring company - the open company, or similar, with headquarters abroad, issuer of the securities object of the deposit receipts, and which is subject to supervision and inspection by an entity or body similar to the CVM; and V - BDR Program - the classification of BDRs, according to their characteristics of information disclosure, distribution and trading and the existence, or not, of sponsorship by the companies issuing the securities object of the deposit receipts.

Art. 2 Only securities issued by open companies, or similar, with headquarters in countries whose regulatory bodies have entered into an agreement with the CVM on consultation, technical assistance and mutual assistance for the exchange of information will be accepted.

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OF THE PROGRAMS
Art. 3 BDR programs, sponsored or not by the open company, or similar, issuer of the securities object of the deposit receipts, may be established, which must be previously registered with the CVM. §1 The sponsored BDR program is characterized by being established by a single depositary or issuing institution, contracted by the company issuing the securities object of the deposit receipts, and may be classified in the following levels:
I - Sponsored BDR Level I - characterized by:
a) exclusive trading in the over-the-counter unorganized market; b) waiver of the requirement for other information from the issuing company beyond what it is obliged to disclose in its country of origin; and c) waiver of company registration with the CVM. II - Sponsored BDR Level II - characterized by:
a) admission to trading in an organized over-the-counter market or on a stock exchange; and b) waiver of company registration with the CVM.
III - Sponsored BDR Level III - characterized by:
a) public distribution in the market; b) admission to trading in an organized over-the-counter market or on a stock exchange; and c) company registration with the CVM.
§2 A non-sponsored BDR program is characterized by being established by one or more depositary or issuing institutions of receipts, without an agreement with the company issuing the securities object of the deposit receipts, only admitting trading in the manner of Sponsored BDR Level I.

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§3 When it comes to a registration request for BDR Programs Levels II and III, the company issuing the securities object of the deposit receipts must meet the following minimum prerequisites: (NR)* I – possess net equity higher than the amount of the planned distribution; (NR)* II – have a minimum of three years of operation regarding its corporate purpose; and (NR)* III – in the case of a holding company, it must be, for a minimum period of three years, a shareholder of a company that meets the requirement set forth in the previous item. (NR)* OF THE REGISTRATION OF THE PROGRAM Art. 4 The depositary or issuing institution of BDRs must request the CVM to register the program, specifying its characteristics. Art. 5 The registration request must be accompanied by the following documents and information:
I - contracts entered into between the depositary institution, the custodian institution and the sponsoring company, if applicable; II - indication of the director responsible for the program at the depositary institution; III - declaration from the Stock Exchange, or the body administering the organized over-the-counter market, approving the request for admission to trading of the BDRs, conditioned only on obtaining registration with the CVM; IV - copy of the payment slip for the Inspection Tax related to the distribution of BDRs and to company registration, if applicable; V - term of assumption of responsibility by the depositary or issuing institution of BDRs for the simultaneous disclosure to the market of the information provided by the sponsoring company in its country of origin; VI - information disclosed in the country of origin of the securities, when it comes to BDR Level I; VII - request for company registration, or its waiver, which will be granted when it comes to BDRs Levels I and II; and

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VIII - documents and information contained in CVM Instruction No. 202, of December 6, 1993, when it comes to BDRs Levels II and III, observed the following:
a) for the BDR Level II program, if there are asymmetries in the preparation and presentation of information, these must be identified in explanatory notes and, when referring to financial statements, their effects on the result and net equity must be quantified; and b) for the BDR Level III program, the financial statements must be reconciled and adapted to the laws and standards in force in Brazil. IX – specifically for the case of BDR Level III, compliance with CVM Instruction No. 13, of September 30, 1980, and other CVM standards applicable to the distribution regime of the securities object of the program will also be required. (NR)* §1 For each BDR Program, a single species or class of securities will be considered. §2 The contracts referred to in this article must stipulate that the depositary or issuing institution of BDRs is obliged to provide the CVM, at any time and within the period that may be determined, under penalty of a daily fine in the amount of 69.20 Reference Fiscal Units, any information and documents related to the approved programs and to the issued securities. §3 The CVM may, in special and fully circumscribed cases, authorize the Program, by waiving the provisions of Art. 3 of this Instruction, for receipts backed by securities issued by companies headquartered in the other member countries of MERCOSUR. (NR)* §4 The director responsible for the Program of the depositary institution has the responsibilities and duties provided for in Articles 153 to 160 of Law No. 6,404, of December 15, 1976, as well as that of Art. 6 of CVM Instruction No. 202, of December 6, 1993, insofar as applicable. (NR)* OF THE RESPONSIBILITIES Art. 6 The depositary or issuing institution of BDRs is liable to the CVM for any irregularity in the conduct of BDR programs. Art. 7 It is the responsibility of the depositary or issuing institution of BDRs to keep updated and available to the CVM the statements that reflect the daily movement of BDRs issued and cancelled. OF THE PENALTIES Art. 8 It constitutes a serious offense, for the purposes of the provisions of § 3 of Art. 11 of Law No. 6,385, of 12/07/76, the transgression of Art. 4 of this Instruction.

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Art. 9 The failure to comply with the obligations set forth in item V of Art. 5 and in Art. 7 of this Instruction, in addition to the cases already provided for in the items of item I, of Art. 1 of CVM Instruction No. 251, of 06/14/96, constitute hypotheses of objective nature infractions, in which a summary administrative process may be adopted, in accordance with the Regulation annexed to CMN Resolution No. 1,657, of 10/26/89. Art. 10. This Instruction enters into force on the date of its publication. Original signed by FRANCISCO AUGUSTO DA COSTA E SILVA President (NR)* = NEW WORDING INTRODUCED BY CVM INSTRUCTION NO. 321, OF DECEMBER 10, 1999. We emphasize that this text does not represent the formal consolidation of the normative in question, having a merely informative character.