CVM Instruction 469 of May 2, 2008 (Repealed) - Application of Law No. 11,638 of December 28, 2007

FULL TEXT OF CVM INSTRUCTION NO. 469, OF MAY 2, 2008, WITH THE CHANGES INTRODUCED BY CVM INSTRUCTION NO. 480/09.

Provides for the application of Law No. 11,638, of December 28, 2007. Amends CVM Instructions No. 247, of March 27, 1996 and No. 331, of April 4, 2000.

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Collegiate Board, in a meeting held on April 30, 2008, based on §§ 3 and 5 of art. 177 of Law No. 6,404, of December 15, 1976, combined with items II and IV of § 1 of art. 22 of Law No. 6,385, of December 7, 1976, and also considering the provisions of Law No. 11,638, of December 28, 2007, APPROVED the following Instruction:

Application of Law No. 11,638, of 2007

Art. 1 The provisions of Law No. 11,638, of December 28, 2007, apply to the financial statements closing the social year starting from January 1, 2008, and to the statements especially prepared to comply with the provisions of §2 of art. 45 and § 1 of art. 204 of Law No. 6,404, of December 15, 1976.

Sole paragraph. Open companies must disclose, in a note to the Quarterly Information – ITR of 2008, a description of the changes that may have an impact on their financial statements closing the year, as well as an estimate of their possible effects on equity and the result of the period or the explanations of the reasons that prevent the presentation of this estimate.

Art. 2 It is optional for open companies to apply immediately, in the ITR of 2008 and in the statements especially prepared for registration purposes with the CVM under terms of art. 7, item X, of CVM Instruction No. 202, of December 6, 1993, all the accounting provisions contained in Law No. 11,638, of 2007.

§ 1 Open companies that opt for the immediate application of Law No. 11,638, of 2007, must do so:

I - based on standards issued by the CVM, including those contained in this Instruction and, in their absence, on standards issued by the International Accounting Standards Board - IASB that deal with the matter; and

II - consistently in all quarterly information of 2008.

§ 2 Open companies that exercise the option provided in the caput must disclose, in a note to the ITR of 2008, a description of the effects on the result and equity resulting from the adoption of the provisions of Law No. 11,638, of 2007.

Balances of Capital Reserves Changed by Law No. 11,638, of 2007

Art. 3 Premiums received in the issuance of debentures and donations and subsidies, resulting from operations and events occurring from the effective date of Law No. 11,638, of 2007, will be temporarily registered in specific accounts of future exercise results, with disclosure of the fact and the values involved, in a note, until the CVM issues a specific standard on the matter.

Sole paragraph. The balances of capital reserves related to premiums received in the issuance of debentures and donations and subsidies for investment, existing at the beginning of the 2008 social year, may be maintained in their respective accounts until their total use, as provided by law.

Revaluation Reserve

Art. 4 The balances of revaluation reserves constituted until the effective date of Law No. 11,638, of 2007, including reflexive revaluations resulting from the application of the equity method, may be maintained in their respective accounts until their effective realization or until they are reversed.

§ 1 Open companies that opt for the reversal must carry it out by the end of the first social year starting from January 1, 2008.

§ 2 Without prejudice to the provisions of CVM Instruction No. 358, of January 3, 2002, open companies must disclose, until the presentation of the 2nd ITR of the year starting in 2008, their option regarding the alternatives provided in the caput of this article.

§ 3 In the case of reversal, the effects of the reversal of the revaluation reserve and the adjustments in the respective deferred tax liabilities must retroact to the beginning of the social year, and these effects must be disclosed in a note.

§ 4 In the case of maintaining the balances of the revaluation reserve, the following must be observed:

I - its realization to the account of accumulated profits and losses must be made in accordance with CVM Deliberation No. 183, of June 19, 1995, and the value of the revalued fixed asset existing at the beginning of the social year must be considered as the new cost value for future measurement and determination of recoverable value; and

II - the obligation to carry out periodic revaluations, provided in CVM Deliberation No. 183, of 1995, ceases to be applicable.

§ 5 Open companies must use the same alternative for their own and reflexive revaluations and determine that their affiliates adopt the same alternative, and the investor, in the case of associates and equivalent companies, must adjust, if necessary, the balance sheets of those companies to adapt them to the alternative used.

Accumulated Profits

Art. 5 At the end of the social year, the account of accumulated profits and losses must not show a positive balance.

Sole paragraph. Any remaining positive balance in the account of accumulated profits and losses must be allocated to profit reserves, in accordance with arts. 194 to 197 of Law No. 6,404, of December 15, 1976, or distributed as dividends.

Statement of Added Value - DVA

Art. 6 The statement of added value may be prepared and disclosed based on the guidelines contained in item 1.12 of CVM/SNC/SEP Circular Letter No. 01, of February 14, 2007, while the CVM does not issue a specific standard regulating this matter.

Share-Based Compensation

Art. 7 Open companies must disclose information on share-based compensation in the ITR and financial statements in accordance with the guidelines contained in item 25.10 of CVM/SNC/SEP Circular Letter No. 01, of February 14, 2007, while the CVM does not issue a specific standard regulating this matter.

Present Value Adjustments - PVA

Art. 8 The elements comprising assets and liabilities resulting from long-term operations, or short-term when there are relevant effects, must be adjusted to present value based on discount rates that reflect the current best market assessments regarding the time value of money and the specific risks of the asset and liability.

Sole paragraph. Open companies must adopt the following procedures, while the CVM does not issue a specific standard on this matter:

I - the quantification of the present value adjustment must be carried out on an exponential "pro rata die" basis, from the origin of each transaction, with its effects appropriated to the accounts to which they are linked;

II - the reversals of present value adjustments of qualifying monetary assets and liabilities must be appropriated as financial revenues or expenses;

III - the notes must detail the premises and grounds that justified the discount rates adopted by Management;

IV - the premises and grounds that justify the accounting estimates related to the calculation of present value adjustments, including discount rates, will be subject to evaluation regarding reasonableness and relevance by independent auditors; and

V - in the calculation of the present value adjustment, the provisions contained in CVM Deliberations No. 527, of November 1, 2007 and No. 489, of October 3, 2005, must also be observed in the operations subject to these deliberations.

Merger, Consolidation and Spin-off Operations

Art. 9 In merger, consolidation or spin-off operations, carried out between independent parties and linked to the effective transfer of control, under terms of § 3 of art. 226 of Law No. 6,404, of 1976, the market values of all identifiable and measurable assets and liabilities, including contingencies, must be determined.

Sole paragraph. The operations referred to in the caput of this article carried out during 2008 may be accounted for at their book value, and must be adjusted to market value by the end of the ongoing social year, while the CVM does not issue a specific standard on this matter.

Sponsoring Companies of a BDR Program

Art. 10. The presentation of the reconciliation explanatory note referred to in item III of § 2 of art. 5 of CVM Instruction No. 331, of April 4, 2000, is waived for companies sponsoring a securities deposit certificate program – BDR whose financial statements, in the country of origin or disclosed in an external market for registration purposes, are prepared adopting international accounting standards issued by the International Accounting Standards Board – IASB.

Art. 11. Article 5 of Instruction 331, of 2000, shall enter into force with the following wording:

“Art. 5º ......

§3º The information cited in items “b” and “c” of item IV of the caput, as well as those provided in §2 of this article, must be presented in national presentation currency according to Technical Pronouncement 2 of the Accounting Pronouncements Committee approved by CVM Deliberation No. 534, of January 29, 2008.

......” (NR)

• Article repealed by CVM Instruction No. 480, of December 7, 2009

Evaluation of Investments in Affiliates

Art. 12. Arts. 5 and 16 of CVM Instruction No. 247, of March 27, 1996, shall enter into force with the following wording:

“Art. 5º ......

I - the investment in each direct or indirect controlled company;

II - the investment in each affiliate or its equivalent, when the investor has significant influence on administration or when the percentage of participation, direct or indirect, of the investor represents 20% (twenty percent) or more of the voting capital; and

III – the investment in other companies that are part of the same group or are under common control.

...... (NR)”

“Art. 16. ......

Sole paragraph. Notwithstanding the provisions of art. 12, the negative result of equity method shall have as limit the book value of the investment, which comprises the acquisition cost plus equity method, goodwill and unamortized discount and provision for losses.” (NR)

Art. 13. Open companies with investments in affiliates and equivalents that cease to be evaluated by the equity method due to the provisions of this Instruction must observe the following:

I – consider the book value of the investment in the balance sheet prior to the entry into force of Law No. 11,638, of 2007, including unamortized goodwill or discount, as the new cost value for future measurement and determination of its recoverable value, immediately ceasing to apply the equity method;

II – account for, in counterpart to these investments, the dividends received on account of profits that had already been recognized by equity method; and

III – indicate, in a note in the ITR and financial statements of 2008, the book value of those investments.

General Provisions

Art. 14. Arts. 4 and 8 and item IV of art. 16 of CVM Instruction No. 247, of March 27, 1996, are repealed.

Art. 15. This Instruction enters into force on the date of its publication in the Official Gazette of the Union, applying, inclusive, to the ITR relating to the first quarter of 2008.

Original signed by

MARIA HELENA DOS SANTOS FERNANDES DE SANTANA

President