CVM INSTRUCTION NO. 167, OF DECEMBER 17, 1991.

Establishes criteria and guidelines on procedures to be adopted in the registration of monetary correction provided for in Law No. 8,200, of June 28, 1991, and in Decree 332, of November 4, 1991.

The BOARD OF DIRECTORS OF THE SECURITIES AND EXCHANGE COMMISSION makes it known that, in a meeting held on this date, based on Article 22, sole paragraph, items I, II, IV and VII of Law No. 6385, of December 7, 1976, and Article 177 of Law No. 6404, of December 15, 1976, considering, furthermore, the provisions of Article 48 of Decree No. 332, of November 4, 1991, resolved to issue the following Instruction:

COMPLEMENTARY MONETARY CORRECTION OF IPC X BTNF

Art. 1. Public companies shall recognize the effect of monetary correction provided for in Article 3 of Law No. 8,200, of June 28, 1991, directly in accumulated profits or losses and:

I - if the effect results in a monetary correction credit balance, the value shall be accounted for net of the resulting tax charges, which shall be recorded as long-term current liabilities; or

II - if the effect results in a monetary correction debit balance, the value of the resulting tax credit shall not be recognized, except in cases where there is guarantee for its realization, based on an obligation with income tax in the long term. In this case, the amount of the tax credit, limited to the value of this liability and respecting its realization period, shall be accounted for in long-term realizable assets, with a corresponding entry in accumulated profits or losses.

Art. 2. The same treatment provided for in Art. 1 shall apply to the effect of the complementary correction of IPC X BTNF on taxes, accounted for by public companies in long-term realizable assets and long-term current liabilities, associated with controlled values in part "B" of LALUR, as provided for in Article 40 of Decree No. 332, of November 4, 1991.

Art. 3. The tax effect on values accounted for as depreciation, amortization, depletion and other forms of asset realization expense, related to the complementary correction of IPC X BTNF, in the base periods of 1991 and 1992, shall be registered in long-term realizable assets when there is evidence of future realization, as provided for in paragraphs 1 and 2 of Article 39 of Decree No. 332, of November 4, 1991.

Art. 4. A public company that holds investments evaluated by the equity method shall, after the monetary update provided for in Article 1, apply the equity method, based on the net equity of affiliated and/or controlled companies, after adjustment for the effects of said complementary monetary correction, with a corresponding entry in accumulated profits or losses, after amortizing any goodwill or discount constituted on this economic basis, if existing.

Art. 5. If the company has already adopted the IPC in 1990 or another index other than BTNF, it shall give the treatment provided for in Articles 1 to 4, insofar as applicable, to any differences resulting from the application of Decree No. 332, of November 4, 1991.

SPECIAL MONETARY CORRECTION

Art. 6. The option to apply or not apply the special monetary correction provided for in Article 2 of Law No. 8,200, of June 28, 1991, and regulated in Chapter III of Decree No. 332, of November 4, 1991, must be exercised by public companies in light of Fundamental Accounting Principles, observing the following procedures:

I - the retroactive calculation must respect the date of formation of assets, admitting, subject to materiality, a shorter period, applying the INPC until January 1991 and taking as a basis the balances existing in that month.

II - this monetary correction shall not apply to investments evaluated by the equity method, leased fixed assets and deferred assets, except interest on construction;

III - upon recognition of this special correction, the criteria previously adopted for appropriating costs to constructed assets, as well as for depreciation, amortization and depletion, shall be reanalyzed, in order to write off unrecoverable values through future results, especially remaining effects of the maxidevaluation of the cruzeiro launched in assets;

IV - the counterpart of this monetary correction shall be accounted for in a specific capital reserve account, net of the resulting tax charges, which shall be recorded as long-term current liabilities;

V - this special correction shall be recognized in the investor or parent company that evaluates permanent investment by the equity method, and its counterpart shall be used to amortize the goodwill constituted on this economic basis. The remaining value shall be registered in the account referred to in the previous item;

VI - this special correction shall be registered until December 31, 1991, referring to January 31, 1991, therefore producing its effects in the accounts of depreciation, amortization, depletion and other forms of asset realization, starting from February 1991.

Art. 7. The Independent Auditor is responsible for evaluating the criteria and reasons of management regarding the need to recognize or not the special monetary correction and to opine on the adequacy of the financial statements in light of Fundamental Accounting Principles.

GENERAL PROVISIONS

Art. 8. Assets that received, during the construction phase, the debit of nominal financial charges from liabilities, net of active correction, regardless of whether the registration was made in deferred expenses, shall not be subject to the corrections provided for in Articles 2 and 3 of Law No. 8200, of June 28, 1991.

Art. 9. Whenever calculations reveal relevant effects on results, dividends, equity or other comparison bases, the company shall observe the provisions of CVM Instruction No. 31, of February 8, 1984, which deals with the disclosure and use of information on material acts or facts, regardless of whether formal financial statements are completed.

Art. 10. Values registered by the company regarding the revaluation reserve, in equity, even when accounted for in the year 1991, shall be transferred to the specific capital reserve account, when they correspond to the special monetary correction registered by the company, and/or to accumulated profits or losses, when they refer to the complementary monetary correction of IPC X BTNF.

§1. The effects of this reclassification shall be reproduced in the balance sheet of the investor or parent company, when the equity method is applicable.

§2. The remaining balance of the revaluation reserve, not transferred to the specific capital reserve account and/or to accumulated profits or losses, shall be maintained net of the resulting tax charges.

Art. 11. Companies that have used the revaluation reserve for an increase in share capital or amortization of losses shall disclose in explanatory notes the balance that would remain and the destination that would have been given to it in the application of this rule, including with regard to incident taxes.

Art. 12. The disclosure of comparative financial statements shall be made by adjusting the statements with full monetary correction of the previous period, contemplating the calculated effects of the application of Articles 2 and 3 of Law No. 8200, of June 28, 1991, regulated by Decree No. 332, of November 4, 1991, in consonance with this norm.

§1. Public companies may disclose the statement of results of the fiscal year and the statement of sources and applications of resources without comparison with those of the previous fiscal year.

§2. Companies with securities admitted to trading on Stock Exchanges shall send such comparative statements to the CVM and to said Exchanges by June 30, 1992.

Art. 13. The following shall also be subject to complementary disclosure in explanatory notes:

a) general procedures adopted and the amounts accounted for of the complementary correction of IPC X BTNF and special monetary correction in the main asset accounts;

b) justification of the option chosen regarding the special monetary correction in light of Fundamental Accounting Principles;

c) net operating revenue and net result of the fiscal year of 1990 that would have been determined if the INPC had been used throughout the retroaction period provided for in Article 6 of this Instruction;

Art. 14. The requirements for accounting for values representing the corrections provided for in Articles 2 and 3 of Law No. 8,200, of June 28, 1991, may be met by auxiliary records, when integrated into the accounting system of the public company.

Art. 15. For the preparation of accounting statements in constant purchasing power currency, the company may adopt, at its option, provided that consistently throughout each fiscal year, for recording its transactions, in addition to the alternatives provided for in Article 2 of CVM Instruction No. 146, of June 13, 1991, the following: adopt the monthly variation of FAP for non-monetary items provided for in Article 4 of DECREE 332, of November 4, 1991, and (a) average variation of FAP for other transactions or (b) daily variation of FAP for other transactions.

Art. 16. This Instruction shall enter into force on the date of its publication, repealing any provisions to the contrary.

Signed original by
ARY OSWALDO MATTOS FILHO
President