CVM Instruction 460 (Revoked) - Infrastructure Investment Funds and R&D Intensive Production Funds

FULL TEXT OF CVM INSTRUCTION NO. 460, OF OCTOBER 10, 2007, WITH THE AMENDMENTS INTRODUCED BY CVM INSTRUCTION NO. 501/11.

Provides for Infrastructure Investment Funds and amends CVM Instruction No. 406, of April 27, 2004.

Provides for Infrastructure Investment Funds and Economic Production Investment Funds Intensive in Research, Development and Innovation and amends CVM Instruction No. 406, of April 27, 2004.

• Summary with wording given by CVM Instruction No. 501, of July 15, 2011.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Collegiate Board, in a meeting held on October 9, 2007, in accordance with the provisions of art. 8, item I, of Law No. 6.385, of December 7, 1976, and Law No. 11.478, of May 29, 2007, RESOLVED to issue the following Instruction:

Art. 1st This Instruction provides for Infrastructure Investment Funds (FIP-IE or fund).

Art. 1st This Instruction provides for Infrastructure Investment Funds (FIP-IE) and Economic Production Investment Funds Intensive in Research, Development and Innovation (FIP-PD&I).

• Article with wording given by CVM Instruction No. 501, of July 15, 2011.

Art. 2nd The provisions of CVM Instruction No. 391, of July 16, 2003, apply to FIP-IE, with the exception of the provisions of this Instruction.

Art. 2nd The provisions of CVM Instruction No. 391, of July 16, 2003, apply to FIP-IE and FIP-PD&I, with the exception of the provisions of this Instruction.

• Article with wording given by CVM Instruction No. 501, of July 15, 2011.

Art. 3rd The name of the fund must contain the expression "Infrastructure Investment Fund", and it is not permitted that names or expressions be added to the fund's name that may induce an improper interpretation regarding its objectives, its investment policy, or its target audience.

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Art. 3rd The name of the FIP-IE and the FIP-PD&I must contain the expression "Infrastructure Investment Fund" and "Economic Production Investment Fund Intensive in Research, Development and Innovation", respectively.

Sole Paragraph. Names or expressions that may induce an improper interpretation regarding the fund's objectives, its investment policy, or its target audience cannot be added to the fund's name.

• Article with wording given by CVM Instruction No. 501, of July 15, 2011.

Art. 4th FIP-IEs must maintain at least 95% (ninety-five percent) of their net assets invested in shares and subscription bonuses of publicly or privately held corporations that develop new infrastructure projects in the national territory, in the sectors of:

Art. 4th FIP-IEs and FIP-PD&Is must maintain at least 90% (ninety percent) of their net assets invested in shares, subscription bonuses, debentures, convertible or non-convertible into shares, or other securities issued by publicly or privately held corporations, provided they are permitted by CVM regulation on investment funds in participations, that develop, respectively, new infrastructure projects or economic production intensive in research, development and innovation in the national territory, in the sectors of:

• Caput with wording given by CVM Instruction No. 501, of July 15, 2011.

I – energy;
II – transport;
III – water and basic sanitation; and
IV – irrigation.

§ 1st For the purposes of the provision in the caput, projects implemented after January 22, 2007, and expansions of existing projects as of that date are considered new, provided that, in the latter case, the investments and results of the expansions are segregated through the creation of special purpose entities.

§ 2nd The fund will have a period of 180 (one hundred and eighty) days after its constitution to reach the investment percentage set forth in the caput.

§ 3rd The period provided for in §2nd also applies to the reversal of any non-compliance resulting from the closure of a project in which the fund has invested.

III – water and basic sanitation;

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IV – irrigation; and
V – other areas considered priorities by the Federal Executive Branch.

• Items III to V with wording given by CVM Instruction No. 501, of July 15, 2011.

§ 1st For the purposes of the provision in the caput, projects implemented after January 22, 2007, are considered new.

§ 2nd The following are also considered new projects:
I - economic production intensive in research, development and innovation projects implemented from the effective date of Law No. 12.431, of June 27, 2011, by specific companies created for this purpose and that comply with the regulation of the Ministry of Science and Technology; and II - expansions of existing projects, implemented or in the process of implementation, provided that the investments and results of the expansion are segregated through the creation of a special purpose entity.

§ 3rd FIP-IEs and FIP-PD&Is have a period of 180 (one hundred and eighty) days after obtaining the registration of operation with the CVM to commence their activities and to meet the minimum investment level established in the caput.

§ 4th The period provided for in § 3rd also applies to the reversal of any non-compliance resulting from the closure of a project in which the fund has invested.

§ 5th The administrator must immediately notify the CVM, after the period referred to in § 3rd has expired, of any non-compliance, with the appropriate justifications, and also inform of the re-compliance of the portfolio, when it occurs.

• §§ 1st to 5th with wording given by CVM Instruction No. 501, of July 15, 2011.

Art. 5th The companies in which FIP-IEs invest must follow, at least, the following corporate governance practices:

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I – prohibition of the issuance of beneficiary shares and the non-existence of these securities in circulation; II – establishment of a unified mandate of a maximum of 2 (two) years for the entire Board of Directors;

III – availability of contracts with related parties, shareholders' agreements, and stock option programs or other securities or financial instruments issued by the company; IV – granting the option to use arbitration as a mechanism for resolving corporate conflicts; V – annual audit of their financial statements by independent auditors registered with the CVM; and VI – in the case of going public, obligate itself, vis-à-vis the FIP-IE, to adhere to a special segment of a stock exchange or organized over-the-counter market that ensures, at a minimum, differentiated levels of corporate governance practices provided for in this article.

Art. 5th The companies in which FIP-IEs and FIP-PD&Is invest must follow, at least, the corporate governance practices established by the CVM for companies invested by investment funds in participations.

• Article with wording given by CVM Instruction No. 501, of July 15, 2011.

Art. 6th Each FIP-IE must have, at a minimum, 10 (ten) unitholders, with each unitholder not being able to hold more than 20% (twenty percent) of the units issued by the FIP-IE or earn income exceeding 20% (twenty percent) of the fund's income.

Art. 6th Each FIP-IE and FIP-PD&I must have, at a minimum, 5 (five) unitholders, with each unitholder not being able to hold more than 40% (forty percent) of the units issued by the FIP-IE or the FIP-PD&I or earn income exceeding 40% (forty percent) of the fund's income.

• Article with wording given by CVM Instruction No. 501, of July 15, 2011.

Art. 7th The fund's regulations and disclosure materials, including the prospectus, if any, must highlight:
I – the risk of low liquidity of the assets in which the fund may invest; and II – the tax benefits of the fund and the unitholders, if applicable, and the conditions that must be observed to maintain these benefits.

Art. 8th Violation of the norms contained in this Instruction is considered a serious offense, for the purposes of the provision of art. 11, § 3rd, of Law No. 6.385/76.

Art. 9th Art. 2nd-A of CVM Instruction No. 406, of April 27, 2004, shall be effective with the following wording:

“Art. 2nd-A The provision of art. 2nd also applies to the funds specified below, in case they obtain direct financial support from development organizations:

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I – Mutual Funds for Investment in Emerging Enterprises – FMIEE as provided for in CVM Instruction No. 209, of March 25, 1994; and II – Infrastructure Investment Funds as provided for in CVM Instruction No. 460, of October 10, 2007.” (NR)

• Article revoked by CVM Instruction No. 501, of July 15, 2011.

Art. 10. This Instruction enters into force on the date of its publication in the Official Gazette of the Union.

Signed original by
MARIA HELENA DOS SANTOS FERNANDES DE SANTANA
President