CVM Instruction 566 (Revoked) - Public Offering of Promissory Notes

SECURITY AND EXCHANGE COMMISSION OF BRAZIL (CVM) 7 de Setembro Street, 111/2-5th and 23-34th Floors – Center – Rio de Janeiro - RJ – CEP: 20050-901 – Brazil Tel.: (21) 3554-8686 - www.cvm.gov.br

CVM INSTRUCTION NO. 566, OF JULY 31, 2015, WITH CHANGES INTRODUCED BY CVM INSTRUCTION NO. 583/16.

Regulates the public distribution offering of promissory notes.

THE PRESIDENT OF THE SECURITY AND EXCHANGE COMMISSION OF BRAZIL – CVM makes public that the Board, in a meeting held on July 22, 2015, based on the provisions of Decree No. 2,044, of December 31, 1908, the Convention for the Adoption of a Uniform Law on Bills of Exchange and Promissory Notes, promulgated by Decree No. 57,663, of January 24, 1966, and on Articles 2, item VI, §§ 2 and 3, and 8, item I, of Law No. 6,385, of December 7, 1976, APPROVED the following Instruction:

CHAPTER I – CHARACTERISTICS OF THE SECURITIES

Art. 1 This Instruction regulates the public distribution offering of promissory notes.

Art. 2 Companies and limited liability companies may issue, for public distribution, promissory notes that confer upon their holders a credit right against the issuer, observing the characteristics of the securities provided for in this Instruction.

Sole Paragraph. Cooperatives whose activity is the production, commercialization, processing, or industrialization of agricultural products or inputs, or of machinery and equipment used in agricultural activity, may also issue promissory notes for public distribution, observing the characteristics of the securities provided for in this Instruction.

Art. 3 Promissory notes must be fully paid at the time of their issuance and subscription, on sight and in current currency.

Art. 4 The promissory note must circulate by endorsement in black ink, which must obligatorily contain the clause “without guarantee” given by the endorser.

§ 1 While subject to centralized deposit, the circulation of promissory notes is effected through bookkeeping records made in deposit accounts maintained with the central depository, which will endorse the note to the definitive creditor, upon the extinction of the centralized deposit.

§ 2 The provisions of the caput and § 1 must be included in the Notice of Start of Distribution and, as applicable, in the prospectus or the summary information sheet of Annex I.

Art. 5 The maturity period of the promissory note must be a maximum of 360 (three hundred and sixty) days from the date of its issuance, with only one maturity date per series being mandatory.

§ 1 The maximum maturity period referred to in the caput does not apply to promissory notes that, cumulatively:
I – have been the object of a public distribution offering with restricted efforts, as per specific regulation; and II – contain the presence of a trust agent for the holders of the promissory notes. II – contain the presence of an agent hired to represent and safeguard the interests and rights of the community of holders of the promissory notes, subject to the specific rule that provides for the exercise of the function of a trust agent.

• Item II with wording given by CVM Instruction No. 583, of December 20, 2016.

§ 2 The promissory note must provide for the redemption and settlement of the security in current currency on the maturity date.

§ 3 The issuer may, if expressly provided for in the security, redeem the promissory note in advance.

§ 4 The redemption of the promissory note implies the extinction of the security, and its retention in treasury is prohibited.

§ 5 Partial redemption is effected by lottery or auction.

Art. 6 The bylaws or social contract of the issuer must provide for the competence to authorize the issuance of promissory notes for public distribution offering.

Sole Paragraph. The authorization referred to in the caput must be filed in the competent public registry.

Art. 7 The authorization referred to in Art. 6 must provide for:
I – the issuance value, and its division into series, if applicable; II – the quantity and nominal value of the promissory note; III – the remuneration and monetary update conditions, if any; IV – the maturity period of the securities; V – the guarantees, if any; VI – the place of payment; VII – the designation of the entities administering organized markets where they will be negotiated, if applicable; and VIII – the hiring of service provision, such as custody and settlement, as applicable.

CHAPTER II – PUBLIC DISTRIBUTION OFFERING

Section I – General Rules

Art. 8. Except as provided in this Instruction, the public distribution offering of promissory notes must be carried out in observance of the provisions of the specific regulation on public offerings of securities.

Section II – Automatic Registration

Art. 9. The registration of a public distribution offering of promissory notes issued by an issuer registered with the CVM will be granted automatically, provided that:
I – it is accompanied by the documents and information required by the specific regulation on public distribution offerings of securities, with the exception of the prospectus, all in their final version, and the presentation of a request for waiver of requirements provided for in the regulation on public distribution offerings of securities is prohibited; II – the summary information sheet, in the form of Annex I, is attached to the registration request for the public offering, in substitution for the prospectus; and III – no advertising material intended for public dissemination is used.

Sole Paragraph. While an automated system for granting automatic registration and receiving documents is not available, the automatic registration referred to in the caput will take effect five (5) business days after the filing of the request with the CVM.

Art. 10. The subscription or acquisition of a promissory note distributed in accordance with Art. 9 may only be carried out after the adoption, cumulatively, of the following measures:
I – dissemination of the Notice of Start of Distribution; and II – making available the summary information sheet of Annex I to investors, at least five (5) business days in advance, as provided in the specific regulation on public distribution offerings of securities.

Art. 11. The public distribution offering of promissory notes carried out in accordance with Art. 9 must be directed exclusively to qualified investors, as defined in specific regulation.

Sole Paragraph. The intermediary institution of the public distribution offering of promissory notes carried out in accordance with Art. 9 is responsible for verifying compliance with the provisions of the caput.

Art. 12. The promissory note distributed in accordance with Art. 9 may be negotiated in regulated markets.

§ 1 In the first 90 (ninety) days after the offering, the promissory note distributed in accordance with Art. 9 must be negotiated only among qualified investors.

§ 2 The intermediary is responsible for verifying compliance with the provisions of the caput and § 1.

Section III – Waiver of Hiring of Intermediary Institution

Art. 13. Issuers with large market exposure, as defined in specific regulation, are exempt from hiring an intermediary institution when carrying out a public distribution offering of promissory notes in accordance with Arts. 9 and 10, provided that:
I – the promissory notes thus offered have a maturity period equal to or less than 90 days; and II – the offering is directed exclusively to professional investors, as defined in specific rule.

§ 1 The issuer is responsible for verifying compliance with the provisions of item II of the caput.

§ 2 The promissory note distributed in accordance with this article may be negotiated in regulated markets, provided that only among professional investors.

§ 3 The intermediary is responsible for verifying compliance with the provisions of § 2.

Section IV – Responsibilities

Art. 14. The carrying out of public distribution offerings of promissory notes under conditions different from those stated in the registration or in Arts. 3, 4, 5, 9, item III, 10, 11, 12, and 13 of this Instruction is considered a serious offense, for the purposes of § 3 of Article 11 of Law No. 6,385, of December 7, 1976.

CHAPTER III – FINAL PROVISIONS

Art. 15. Annex II of CVM Instruction No. 400, of 2003, shall enter into force with the addition of item 9-A, with the following wording:
“9-A. copy of the promissory note, if applicable;” (NR)

Art. 16. The following are revoked:
I – CVM Instruction No. 134, of November 1, 1990; II – CVM Instruction No. 155, of August 7, 1991; III – CVM Instruction No. 422, of September 20, 2005; IV – CVM Instruction No. 429, of March 22, 2006; and V – Arts. 4 and 11 of CVM Instruction No. 554, of December 17, 2014.

Art. 17. This Instruction enters into force on October 1, 2015.

Sole Paragraph. The provisions of Art. 16, item V, of this Instruction enter into force on the date of its publication.

Original signed by
LEONARDO P. GOMES PEREIRA
President

ANNEX I
Summary Information on Public Distribution Offering of Promissory Notes

1. Notices
   “THE REGISTRATION OF THIS DISTRIBUTION DOES NOT IMPLY, ON THE PART OF THE CVM, GUARANTEE OF THE VERACITY OF THE INFORMATION PROVIDED OR JUDGMENT ON THE QUALITY OF THE ISSUER, AS WELL AS ON THE PROMISSORY NOTES TO BE DISTRIBUTED.” And, if applicable:
   “THE PROMISSORY NOTES OBJECT OF THIS OFFERING WILL NOT BE NEGOTIATED ON A STOCK EXCHANGE OR IN AN OVER-THE-COUNTER MARKET SYSTEM, AND THE AVAILABILITY OF INFORMATION ON THE PRICES PRACTICED OR ON THE TRANSACTIONS CARRIED OUT SUBSEQUENT TO THEIR OFFERING CANNOT BE ASSURED.”

2. Main Characteristics of the Operation:
   2.1. Identification of the issuer (name, address of its headquarters, and website);
   2.2. Corporate act that authorized the issuance of the security;
   2.3. ISIN Code;
   2.4. Issuance Value;
   2.5. Number of series;
   2.6. Quantity;
   2.7. Unit nominal value;
   2.8. Subscription and payment procedures;
   2.9. Pricing method;
   2.10. Remuneration conditions;
   2.11. Maturity period;
   2.12. Placement regime;
   2.13. Guarantees, if any, and declaration by the lead distribution institution that it verified the regularity of their constitution, sufficiency, and enforceability.
   2.14. Scenarios for early maturity and redemption conditions;
   2.15. Proration procedure;
   2.16. Place of negotiation, if any;
   2.17. Trust agent or note agent, if any;
   2.17. Note agent or the agent referred to in item II of § 1 of Art. 5, if any;

• Item 2.17 with wording given by CVM Instruction No. 583, of December 20, 2016.
  2.18. Risk classification, if any;
  2.19. Identification of the institutions comprising the distribution consortium; and
  2.20. Destination of the resources.

3. Summary description of the issuer's activities.

4. Identification of guarantors, their corporate type and general characteristics of their business must be informed.

5. Selected financial information (comprising the last three fiscal years and quarterly information of the current fiscal year. The balance sheet accounts of the current quarter must be compared with the balance sheet accounts at the end of the immediately preceding fiscal year, and the income and comprehensive income accounts of the current quarter (accumulated in the current fiscal year) must be compared with those of the quarter of the previous fiscal year (accumulated in the year):
   5.1. Main Asset/Liability Accounts
   5.1.1. Assets
   5.1.1.1. Total current assets
   5.1.1.2. Total non-current assets
   5.1.1.2.1. Realizable in the long term
   5.1.1.2.2. Other non-current asset accounts
   5.1.1.3. Total assets
   5.1.2. Liabilities
   5.1.2.1. Total current liabilities
   5.1.2.2. Total non-current liabilities
   5.1.2.3. Total liabilities
   5.1.2.4. Total shareholders' equity
   5.1.2.5. Total liabilities plus shareholders' equity
   5.1.3. Main Income Statement Accounts
   5.1.3.1. Net revenue
   5.1.3.2. Cost of products/goods/services sold/provided
   5.1.3.3. Gross profit
   5.1.3.4. Result before financial result and taxes
   5.1.3.5. Net profit or loss for the period
   5.1.4. Main Comprehensive Income Statement Accounts
   5.1.4.1. Items that will not be reclassified subsequently to profit or loss
   5.1.4.2. Items that will be reclassified subsequently to profit or loss
   5.2. Identification of the independent auditor, or, if the statements have not been audited, explicitly state this condition.

6. Description of the operation's risk factors.

7. Description of the relationship between the offeror and the intermediary institutions comprising the consortium.

8. Declaration by the offeror and the lead institution regarding the veracity, consistency, quality, and sufficiency of the information provided.