CVM Instruction No. 227 of December 23, 1994, with Amendments Introduced by CVM Instruction No. 615/19

INSTRUCTION CVM NO. 227, OF DECEMBER 23, 1994, WITH AMENDMENTS INTRODUCED BY CVM INSTRUCTION NO. 615/19

Establishes provisions regarding Conversion Funds and consolidates legislation on the matter.

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM - makes public that the Collegiate Body, in a meeting held on December 8, 1994, based on article 11 of the Regulation annexed to CMN Resolution No. 1,460, of February 1, 1988, and CMN Resolution No. 1877, of October 22, 1991,

HAS RESOLVED:

CHAPTER I
ON CONSTITUTION AND CHARACTERISTICS

Art. 1 The Conversion Fund - Foreign Capital (FCCE) and the Conversion Fund - Foreign Capital (Incentivized Areas), in which individuals or legal entities residing, domiciled, or headquartered abroad, foreign collective investment funds, or other foreign entities participate, are a pooling of resources destined for application in a diversified portfolio of securities and financial instruments, constituted in the form of an open-end condominium without legal personality.

Art. 2 The resources of the FCCE (Incentivized Areas) shall be destined exclusively for applications in companies headquartered in the areas of SUDAM, SUDENE, Espírito Santo, and the Jequitinhonha Valley.

Art. 3 The Funds shall include in their denomination the expressions "Conversion Fund - Foreign Capital" and "Conversion Fund - Foreign Capital (Incentivized Areas)".

Art. 4 The constitution of the FCCE and the FCCE (Incentivized Areas), as well as the following acts related to the Funds, shall depend on prior authorization from the Securities and Exchange Commission:
I - amendment of the bylaws;
II - indication and substitution of the person responsible for the technical department of the administering institution; III - substitution of the administering institution; IV - merger; V - incorporation; VI - spin-off; VII - liquidation; VIII - contracts entered into with intermediary agents.

§1º The Central Bank of Brazil shall be consulted in the constitution of the Funds and in the cases provided for in items II, III, and VIII of this article.

§2º The request for authorization to constitute the Funds shall be accompanied by:
I - deliberation of the administering institution regarding the constitution of the Funds, which shall contain the full text of its bylaws, which, after authorization, shall be registered at the Registry of Titles and Documents; I – deliberation of the administering institution regarding the constitution of the Funds, which shall contain the full text of its bylaws;

• Item I with wording given by CVM Instruction No. 615, of October 2, 2019.
  II - indication of the administering institution; III - information regarding the accreditation of intermediary agents; IV - indication of the initial assets of the Funds, which shall not be less than the equivalent in national currency to R$ 50,000.00 (fifty thousand reais).

§3º The bylaws of the Funds shall contain the following information, which shall be highlighted from the other clauses:
I - duration period;
II - management fees for obtaining credits eligible for conversion, or criteria for their fixation, and service fees related to the promotion, dissemination, and representation of the Fund, and remuneration of the fiduciary agent, where applicable; III - administration fee; IV - period of stay of resources in the country, for redemption purposes, as provided in article 33.

Art. 5 The Securities and Exchange Commission shall cancel the authorization for the constitution of the FCCE and the FCCE (Incentivized Areas) that, within a period of 60 (sixty) days, counting from the date of authorization, have not obtained the resources necessary for the formation of their initial assets.

§1º The above period may be extended provided that the justifications presented demonstrate that the non-integration of the initial assets did not result, directly or indirectly, from a decision of the administering institution.

§2º For Funds that have already obtained authorization for their constitution, the period stipulated in this article shall be computed from the effective date of this Instruction.

§3º Funds already authorized by this Commission shall adapt their bylaws to the provisions of this Instruction within a period of 120 (one hundred and twenty) days counting from the date of its entry into force.

CHAPTER II
ON ADMINISTRATION

Art. 6 The Administration of the FCCE and the FCCE (Incentivized Areas) shall be exercised exclusively by an investment bank, brokerage firm, securities distribution company, or other legally equivalent entities, authorized by the Securities and Exchange Commission to practice the activity provided for in article 23 of Law No. 6,385, of December 7, 1976.

§1º The entities referred to in the "caput" of this article shall maintain a specialized technical department for the analysis of securities and financial instruments or contract these services with entities qualified by the Securities and Exchange Commission.

§2º The administration of the Funds shall be under the direct supervision and responsibility of a director of the administering institution, indicated as determined by item II of the "caput" of article 4 of this Instruction.

Art. 7 The administering institution may, with six months' prior notice, via letter, telex, or telegram addressed to each condominium owner, resign from the administration of the Fund, being obliged, in the same act, to communicate its intention to the Securities and Exchange Commission.

Art. 8 The Securities and Exchange Commission, in the exercise of its legal powers, may de-register the administering institution if it fails to comply with current regulations.

§1º The de-registration process shall begin with notification from the Securities and Exchange Commission to the administering institution, indicating the facts that justify it and the period for presenting a defense, which shall not be less than 15 (fifteen) days counting from the date of receipt of the notification issued by the Commission.

§2º The decision of the Securities and Exchange Commission that de-registers the administering institution shall be reasoned, with an appeal to the National Monetary Council, without suspensive effect, within a period of 15 (fifteen) days counting from the date of receipt of the communication issued by the Commission.

Art. 9 It shall be the responsibility of the Central Bank of Brazil to request the Securities and Exchange Commission to de-register the administering institution that violates current regulations within its competence, including those related to the registration of foreign capital and the collection of income tax due on the remittance of earnings.

Art. 10. In the cases of resignation and de-registration, the administering institution is obliged to immediately convene the General Assembly to elect its successor or deliberate on the incorporation of the FCCE into another FCCE or the FCCE (Incentivized Areas) into another FCCE (Incentivized Areas).

Sole Paragraph. The administering institution shall remain in the exercise of its functions until its effective substitution.

Art. 11. The administering institution shall have the power to exercise all rights inherent to the securities and financial instruments comprising the portfolio of the Conversion Fund - Foreign Capital, including the right to sue and to appear and vote in general or special assemblies, and may likewise open and operate bank accounts, freely acquire and alienate securities and financial instruments, settle disputes,

perform, in short, all acts necessary for the administration of the portfolio, observing the limitations of this Regulation.

Art. 12. The obligations of the administering institution include:
I - keeping updated and in perfect order:
a) the registry of condominium owners; b) the minutes book of general assemblies; c) the attendance book of condominium owners; d) the archive of auditor opinions; e) the accounting records related to the Fund's assets; f) the documentation related to the Fund's operations. II - receive dividends, bonuses, and any other earnings or values from the Fund; III - exercise or alienate the subscription rights of shares of other securities; IV - employ, in the defense of the rights of the condominium owners, the diligence required by the circumstances, performing the acts necessary to ensure them, including lawsuits, appeals, and exceptions; V - provide, weekly, the value of the share, the value and date of the last distribution, and the net asset value of the Fund to the Stock Exchange of the location of its headquarters, which shall disseminate this information; VI - annually provide condominium owners with proof of income tax payment; VII - provide each condominium owner, at least semi-annually, a document containing the following information:
a) number of shares held and their value; b) return earned in the semester; c) value and composition of the portfolio, discriminating quantity, type, and quotation of the securities and financial instruments comprising it, value of each application, and its percentage on the total portfolio value; d) balance sheets and other financial statements related to the semester, accompanied by the opinion of the independent auditor.

Sole Paragraph. The custodian institutions of the securities and financial instruments of the FCCE and the FCCE (Incentivized Areas) shall only comply with orders signed by the legal representative(s) or attorney(s) of the administering institution, duly accredited with them for this purpose.

Art. 13. The administering institution shall receive, for the provision of management and administration services, a remuneration to be fixed by the bylaws of the FCCE and the FCCE (Incentivized Areas), and the Securities and Exchange Commission may establish norms regarding it, being prohibited to the administering institution any participation in the results distributed or reinvested by the Funds.

Sole Paragraph. The General Assembly may authorize the administering institution to subcontract individuals or legal entities to provide economic consulting services, and in this case, it shall decide whether the payment for these services constitutes a charge on the Funds.

CHAPTER III
ON THE GENERAL ASSEMBLY

Art. 14. It is exclusively the competence of the General Assembly of Condominium Owners:
I - to take, annually, the accounts related to the Fund, and deliberate on the financial statements presented by the administering institution; II - to amend the Fund's Bylaws; III - to deliberate on the substitution of the administering institution; IV - to deliberate on the transformation, merger, incorporation, spin-off, and eventual liquidation of the Fund, observing the restriction established in article 29.

Art. 15. The convocation of the General Assembly shall be made by issuing a letter, telex, or telegram to all condominium owners registered in the "Registry of Condominium Owners" at least 15 (fifteen) days before the date fixed for its holding, including, in the calculation of the period, the day of the holding of the Assembly and excluding the day of the issuance of the convocation instrument.

§1º If the Assembly is not held, a second convocation shall be made with a minimum advance notice of 5 (five) business days.

§2º The convocation shall obligatorily contain the day, time, and location where the Assembly will be held, and, even if briefly, the matters to be addressed.

§3º Regardless of the convocation provided for in this article, the General Assembly shall be considered regular if all condominium owners attend.

§4º The General Assembly may be convened by the administering institution or by condominium owner(s) who hold at least 5% (five percent) of the total shares issued by the Fund.

Art. 16. In the General Assembly of condominium owners, which may be installed with any number, decisions shall be taken by the criterion of the majority of shares of the condominium owners present, with each share corresponding to one vote, except as provided in § 1 of this article and § 3 of article 17.

§1º Decisions regarding the matters provided for in items III and IV of article 14 shall be taken, in the first convocation, by a majority of the issued shares, and in the second convocation, by a majority of the shares of the condominium owners present.

§2º Only condominium owners registered in the "Registry of Condominium Owners" 15 (fifteen) days before the date fixed for its holding may vote in the General Assembly.

Art. 17. Decisions of the General Assembly may be taken through a formalized consultation process via letter, telex, or telegram addressed by the administering institution to each condominium owner for a response within a maximum period of 30 (thirty) days.

§1º The consultation shall contain all informative elements necessary for the exercise of the right to vote.

§2º The absence of response shall be considered as consent by the condominium owner, provided that such interpretation is contained in the consultation itself.

§3º The quorum for decision shall be an absolute majority of the issued shares, regardless of the matter.

CHAPTER IV
ON THE ACCREDITATION OF INTERMEDIARIES ABROAD

Art. 18. The administering institution of the FCCE and the FCCE (Incentivized Areas) may accredit intermediary agents, via contract, for the purpose of promoting management abroad to obtain credits eligible for conversion, aiming at the subscription or acquisition of shares of the Funds, and to provide services of promotion, dissemination, and representation of the Fund and act as a fiduciary agent.

§1º The accredited agents shall be, as the case may be, qualified to operate and/or act as a fiduciary agent in the financial or capital markets of the country where they maintain their headquarters.

§2º Agency contracts shall only enter into force after being registered with the Securities and Exchange Commission and the Central Bank of Brazil.

Art. 19 Agency contracts, as the case may be, shall contain, at a minimum, the following provisions:
I - reference to the Fund's bylaws, a copy of which shall be integrated into the contract; II - value of the contracted credits, eligible for conversion; III - management fee for obtaining credits eligible for conversion, borne by the investor; IV - minimum value of each subscription or acquisition by condominium owner, which shall not be less than US$ 5,000 (five thousand dollars), or its equivalent in the foreign currency recorded in the credit registry at the Central Bank of Brazil; V - commitment of the intermediary agent to:
a) provide, in the form of guidance received from the administering institution, all elements necessary for the conversion process at the Central Bank of Brazil;

b) not subcontract the agency of management for obtaining credits eligible for conversion, unless previously authorized by the administering institution; c) submit for prior approval by the administering institution any advertising texts related to prospectuses and brochures, as well as periodic information; d) ensure the investor full knowledge of the regulatory provisions of the external debt conversion process and the functioning of the Fund; e) expressly state, in the document provided to the investor, the net value that will be applied in the subscription of Fund shares. VI - service fee related to the promotion, dissemination, and representation of the Fund; VII - remuneration of the fiduciary agent.

CHAPTER V
ON NET ASSETS

Art. 20. Net assets of the FCCE and the FCCE (Incentivized Areas) are understood as the sum of available funds plus the value of the portfolio, plus amounts receivable, minus liabilities.

Sole Paragraph. To determine the value of the portfolio, the accounting standards issued by the Securities and Exchange Commission shall be observed.

CHAPTER VI
ON THE ISSUANCE AND PLACEMENT OF SHARES

Art. 21. The shares of the FCCE and the FCCE (Incentivized Areas) shall correspond to ideal fractions thereof and shall assume the form of book-entry.

§1º The shares shall be maintained in deposit accounts in the name of their holders.

§2º The quality of condominium owner shall be proven by the deposit account statement.

Art. 22. Deposit account statements shall constitute the valid document to prove the obligation of the administering institution to comply with the contractual prescriptions contained in the bylaws of the FCCE and the FCCE (Incentivized Areas), and the norms of this Regulation.

Sole Paragraph. Any restrictive or modifying clause of the obligation referred to in this article shall be deemed unwritten.

Art. 23. Deposit account statements shall prove the ownership of the number of shares belonging to the condominium owners, according to the records of the FCCE and the FCCE (Incentivized Areas).

Sole Paragraph. When the system of whole share numbers is adopted, the residual value of reinvestments shall be maintained in a current account for future investments or, if requested, shall be paid to the condominium owner in cash.

Art. 24. The issuance of shares shall be carried out in accordance with the provisions of the bylaws of the FCCE and the FCCE (Incentivized Areas), determining the share value based on an asset evaluation carried out in accordance with the standards issued by the Securities and Exchange Commission.

§1º The subscribed shares shall be fully paid in current currency, on the date of the actual release of resources resulting from conversion by the Central Bank of Brazil.

§2º The share value shall be calculated daily.

Art. 25. The shares issued by the FCCE and the FCCE (Incentivized Areas) shall be destined exclusively for subscription by individuals or legal entities residing, domiciled, or headquartered abroad, funds, or other collective investment entities constituted abroad, prohibiting their placement and negotiation in the domestic market.

CHAPTER VII
ON THE TRANSFERABILITY OF SHARES ABROAD

Art. 26. The shares of the FCCE and the FCCE (Incentivized Areas), relating to each foreign capital registry, may be transferred abroad, respecting the requirements contained in Resolution No. 1,460/88 of the National Monetary Council, and complementary norms, via a valid document, which shall only produce effects against the Fund after being presented to the administering institution duly formalized.

§1º Upon presentation of the transfer request, the administering institution shall effectuate it within a maximum period of 5 (five) business days, providing, in accordance with the law, the registration changes with the Central Bank of Brazil.

§2º The administering institution may suspend share transfer services for a period not exceeding 15 (fifteen) consecutive days, prior to the dates of result distribution or holding of the General Assembly, and the suspension of these services shall be prohibited during the year for more than 90 (ninety) days.

CHAPTER VII
ON THE REGISTRATION OF CONVERTED EXTERNAL RESOURCES

Art. 27. The resources destined for the acquisition or subscription of shares of the FCCE and the FCCE (Incentivized Areas), as well as the reinvestment of their Accumulated Resources with the counterpart of share issuance, shall be subject to registration at the Central Bank of Brazil, for the purpose of controlling foreign capital and future remittances abroad of earnings, capital gains, and return of invested capital.

§1º To obtain registration, the administering institution shall present a global list of investors, accompanied by individual forms, discriminating the value of the application or reinvestment of each.

§2º Each subscription or acquisition of Fund shares shall correspond to a distinct investment registry in foreign currency in the name of the condominium owner, observing the minimum value provided for in item IV of article 19.

§3º The registry shall be made in the name of the fiduciary agent, especially hired for this purpose, provided that the number of condominium owners is greater than 10 (ten), without prejudice to the presentation of the investor list provided for in paragraph 1 of this article.

§4º The reinvestment of Accumulated Results of the Fund, in exchange for share issuance, shall be registered by the Central Bank of Brazil as reinvestment, in accordance with current legislation, and complying with current tax norms, thereby modifying the value and number of shares of the registry.

§5º The list referred to in § 1 shall be delivered via protocol, and the investments shall be considered automatically registered, without prejudice to the responsibility of the administering institution for the accuracy and propriety of the documents forwarded and information provided, which may be verified at any time by the Central Bank of Brazil, which, if necessary, shall adopt the appropriate measures for the regularization of the registry and accountability of the administrator.

§6º It shall be the responsibility of the administering institution, observing the condition mentioned in article 26, to request the Central Bank of Brazil to alter the foreign capital registry, exclusively for the change of the investor's name, or the fiduciary agent, within a maximum period of 10 (ten) business days, counting from the date of the effective transfer of the shares or the substitution of the fiduciary agent, attaching, as the case may be, the individual form corresponding to the new foreign investor or the list of foreign investors.

Art. 28. The Foreign Capital Registration Certificate, issued by the Central Bank of Brazil, is the valid instrument for the return of foreign capital and remittances abroad to be effected.

Sole Paragraph. Remittances abroad shall be processed by the administering institution, through banks authorized to operate in foreign exchange, corresponding to each type of remittance, a distinct foreign exchange closing.

CHAPTER IX
ON THE LIQUIDATION OF THE INVESTMENT

Art. 29. The resources corresponding to each investment shall be subject to a minimum period of 12 (twelve) years of stay in the Country, counting from the date of its effective conversion, after which the value apportioned in the liquidation of the investment may be returned.

Art. 30. The liquidation of the investment shall be carried out through the redemption of shares in accordance with the provisions of the bylaws of the FCCE and the FCCE (Incentivized Areas).

§1º The request for liquidation of the investment shall be formulated by the investor, at any time, directly or through the intermediary agent to the administering institution.

§2º The liquidation of the investment shall be carried out in cash, within the maximum period established in the Fund's bylaws, counting from the date of receipt of the redemption request by the administering institution.

Art. 31. Redemption, total or partial, of shares before the minimum period of stay of resources in the Country has elapsed, as referred to in article 29, is permitted in the case of transfer of the investment from one FCCE to another FCCE or from one FCCE (Incentivized Areas) to another FCCE (Incentivized Areas).

§1 In the redemption request, the unitholder must indicate the amount in national currency or the number of shares to be redeemed and the Fund to which they intend to transfer the corresponding resources.

§2 When the investment is transferred to another FCCE or to another FCCE (Incentivized Areas), the originating administrator institution must transfer the resources on the redemption date, through a payment order in favor of the receiving administrator institution, which will proceed with the immediate subscription and full payment of the shares.

§3 The administrator institution of the FCCE and the FCCE (Incentivized Areas) to which the resources are transferred, as soon as it receives them, must communicate the fact to the CVM and to the Central Bank of Brazil.

Art. 32. The bylaws of the FCCE and the FCCE (Incentivized Areas) must provide, with precision and detail, regarding:

I - share value for the purpose of subscription and redemption;

II - deadline for the settlement of each investment, through the redemption of shares, which may be differentiated based on the percentage of the redemption value relative to the Fund's equity.

CHAPTER X
FINANCIAL STATEMENTS

Art. 33. The FCCE and the FCCE (Incentivized Areas) shall have their own accounting records, distinct from those of the administrator institution, and must prepare a trial balance at the end of each month and semi-annual balance sheets, these on March 31 and September 30 of each year.

Sole Paragraph. The semi-annual financial statements shall be audited by an independent auditor registered with the Securities and Exchange Commission (Comissão de Valores Mobiliários).

Art. 34. The financial statements of the FCCE and the FCCE (Incentivized Areas) are subject to the accounting standards issued by the Securities and Exchange Commission, which will include criteria for the evaluation of assets comprising the Fund, as well as for the recognition of revenues and expenses inherent to securities, observing, where applicable, the guidance of the Central Bank of Brazil.

CHAPTER XI
TAX TREATMENT

Art. 35. The FCCEs and the FCCEs (Incentivized Areas) are subject to the rules and tax rates of income tax established in the legislation of this tax.

CHAPTER XII
PORTFOLIO COMPOSITION

Art. 36. Of the total value of investments in FCCEs, at least 70% (seventy percent) shall be represented by shares issued by open companies acquired in stock exchanges, in an over-the-counter market organized by an entity authorized by the Securities and Exchange Commission, or by subscription.

Sole Paragraph. To meet the minimum limit set forth in the caput of this article, it is admitted that daily positions in shares be at least 35% of the total value of investments, provided that the average, every 720 days, is at least 70% of the total value of investments.

Art. 37. The remaining resources from FCCE investments may be kept available or invested in the following investment alternatives, individually or cumulatively:

I - shares of Fixed Income Funds;

II - Federal Public Debt securities;

III - other securities issued by open companies.

Art. 38. Of the total value of investments in the FCCE (Incentivized Areas), at least 70% (seventy percent) shall be represented by:

I - investments in projects to be carried out in the areas of SUDENE, SUDAM, Espírito Santo, and Jequitinhonha Valley, as provided in CMN Resolution No. 1,460/88;

II - shares issued by open companies acquired in Stock Exchanges, in an over-the-counter market organized by an entity authorized by the Securities and Exchange Commission, or by subscription; and

III - shares issued by companies benefiting from resources from tax incentives, as provided in Decree-Laws No. 1,376, of December 12, 1974, No. 2,298, of November 21, 1986, and which are registered with the Securities and Exchange Commission.

§1 In the case of item III, when the investment is made through subscription or acquisition of shares held by controlling shareholders, these must previously assume the commitment to obtain the registration of an open company.

§2 The companies cited in item III of this article shall have 3 (three) years to obtain the registration of an open company.

§3 The deadline provided in §2 may be extended at the discretion of the Securities and Exchange Commission, hearing the competent regional body.

Art. 39. To meet the minimum limit provided in article 36, it is admitted that daily positions be at least 35% (thirty-five percent) of the total value of investments.

Art. 40. The remaining resources from FCCE (Incentivized Areas) investments may also be kept available or invested, individually or cumulatively, in shares of Fixed Income Funds and Federal Public Debt securities, in addition to Certificates of Investment of the Northeast (FINOR), of the Amazon (FINAM), and of Economic Recovery of the State of Espírito Santo (FUNRES), acquired in stock exchanges.

Art. 41. In the application of resources from FCCEs and FCCEs (Incentivized Areas), the following diversification criteria shall be observed:

I - the total investments in shares of a single company shall not exceed 5% of the voting capital or 20% of its total capital;

II - the total investments in securities of the same issuing company shall not exceed 10% of the total investments of the Fund;

III - for the determination of the diversification limits established herein, securities received as bonus or resulting from the conversion of debentures and shares or debentures convertible into shares resulting from the exercise of preemptive rights shall not be considered, provided that the excess is eliminated within a period of 6 (six) months, which may be extended when justified and approved by the Securities and Exchange Commission, upon request by the interested party and provided there is just cause.

§1 The Fund shall not be subject to the diversification criterion set forth in item II of this article if it previously and in accordance with Resolution 1,832, of May 31, 1991, and complementary norms issued by the Securities and Exchange Commission, proves that all its co-owners are institutional investors.

§2 The Fund qualified under the terms of §1 must immediately communicate to the Securities and Exchange Commission any change in its list of co-owners, accompanied, in the case of entry of new co-owners, by their respective classification in the items of article 1 of CVM Instruction No. 169, of January 2, 1991.

§3 Non-compliance with the provisions of paragraphs 1 and 2 above shall result, with respect to the Fund, in the automatic and definitive loss of the right to the exception treatment provided therein.

§4 Failure to meet the composition and diversification limits set forth in this Instruction must be justified to the Securities and Exchange Commission, which, without prejudice to applicable penalties, may determine that the administrator institution convene a general meeting of unitholders to decide on one of the following alternatives:

a) transfer of the administration of the FCCE or the FCCE (Incentivized Areas) to another institution;

b) incorporation of the FCCE by another FCCE, or of FCCE (Incentivized Areas) by another FCCE (Incentivized Areas);

c) liquidation of the FCCE or the FCCE (Incentivized Areas), observing the minimum period of permanence of resources in the Country, provided in article 29; and

d) any other useful or necessary measures for its compliance.

Art. 42. The observance of the limits fixed in items I and II of article 41 of this Instruction shall be assessed on the date of acquisition of the shares, and the administrator institution of the portfolio shall not be obliged to eliminate any excess verified subsequently in the following cases:

I - in the case of said item I, if the verified excesses do not result, directly or indirectly, from acts attributable to the Fund's administration; and

II - in the case of said item II, if the excesses result from appreciation or depreciation of securities comprising the Fund's portfolio.

Sole Paragraph. In the case provided for in item I of this article, the verified excesses shall not result, directly or indirectly, in the assumption of control of any company by the fund.

CHAPTER XII
OPERATIONAL NORMS

Art. 43. It is permitted for the FCCE and the FCCE (Incentivized Areas) to carry out operations in the futures markets for exchange rates, stock indices, and in the options market for these indices.

Art. 44. The securities and financial instruments comprising the portfolio of the FCCE and the FCCE (Incentivized Areas) shall be compulsorily custodied in financial institutions or stock exchanges, provided they are authorized by the Securities and Exchange Commission.

CHAPTER XIV
PROHIBITIONS

Art. 45. It is prohibited for the administrator institution, in the name of the Fund:

I - to receive deposits;

II - to contract or effect loans, under any modality;

III - to provide guarantee, surety, acceptance, or co-obligate itself under any other form;

IV - to trade with bills of exchange, promissory notes, or other instruments not authorized by the Monetary Council;

V - to promise predetermined returns to co-owners;

VI - to acquire or sell off the stock exchange floor shares of open companies registered for trading on the exchange, except for the cases of subscription, bonus, and conversion of debentures into shares regarding acquisition, and the cases provided for, for FCCEs (Incentivized Areas), in item III of article 38 of this Instruction;

VII - to apply resources:

a) abroad;

b) in the acquisition of real estate;

c) in securities or financial instruments issued or co-obligated by the administrator institution or a company affiliated with it;

d) in the subscription or acquisition of shares of Investment Companies, or shares of Investment and Conversion Funds, including those of its own issuance, except for the provisions of article 40 of this Instruction for FCCEs (Incentivized Areas).

e) in shares traded in an over-the-counter market segment, not organized or organized by an entity not authorized by the Securities and Exchange Commission.

Sole Paragraph. The provisions of item VII, letter "c", of this article are excepted in cases where there is express consent of all co-owners of the Fund.

Art. 46. It is prohibited for the administrator institution:

I - to sell Fund shares on installment;

II - to delegate powers to manage and administer the Fund, except with specific authorization from the Securities and Exchange Commission.

Art. 47. The values comprising the Fund's portfolio shall not be subject to leasing, loan, pledge, or guarantee, except in cases expressly authorized by the Central Bank of Brazil or by the Securities and Exchange Commission, within their respective areas of competence.

Art. 48. For the purposes of this Instruction, an affiliated company is understood as:

I - a company in which the administrator institution participates, directly or indirectly, with more than 10% (ten percent) of the capital;

II - a company in which administrators of the administrator institution and their respective spouses, partners, or relatives up to the second degree participate, jointly or individually, with more than 10% (ten percent) of the capital, directly or indirectly;

III - a company in which shareholders with more than 10% (ten percent) of the capital of the administrator institution participate, directly or indirectly, with more than 10% (ten percent) of the social capital;

IV - a company whose administrators, in whole or in part, are the same as those of the administrator institution, except for positions held in collegiate bodies, provided for in the statutes or internal regulations of the administrator institution, provided their holders do not exercise executive functions, having previously heard the Securities and Exchange Commission;

V - a company that participates with more than 10% (ten percent) of the capital of the administrator institution, directly or indirectly;

VI - a company whose administrators and their respective spouses, partners, or relatives up to the second degree participate, jointly or individually, with more than 10% (ten percent) of the capital of the administrator institution, directly or indirectly.

CHAPTER XV
FUNDS' CHARGES

Art. 49. The following expenses shall constitute charges of the FCCE and the FCCE (Incentivized Areas), which may be debited by the administrator institution, in addition to the remuneration for services provided in article 13:

I - taxes, federal, state, municipal, or autonomous contributions, which fall or may fall on the assets, rights, or obligations of the Fund;

II - expenses with printing, mailing, and publication of reports and financial statements, forms, and periodic information, provided for in this Instruction or in relevant regulation;

III - correspondence expenses of interest to the Fund, including communications to co-owners;

IV - fees and expenses of auditors responsible for reviewing the Fund's financial statements and analyzing its situation and the performance of the administrator institution;

V - emoluments and commissions paid for the Fund's purchase and sale operations of securities and financial instruments;

VI - attorney fees, court costs, and related expenses incurred in defense of the Fund's interests, in court or out of court, including the value of the condemnation, imputed to the Fund, if applicable;

VII - portion of eventual losses not covered by insurance policies and not resulting directly from fault or negligence of the administrator institution in the exercise of its functions;

VIII - insurance premiums, as well as any expenses related to the transfer of resources from the Fund between banks;

IX - any expenses inherent to the constitution or liquidation of the Fund or to the holding of a General Meeting of co-owners;

X - custody fee for the Fund's assets;

XI - fee for the Fund's dissemination and representation services owed to intermediary agents, if applicable;

XII - remuneration of the fiduciary agent, if applicable;

XIII - other administrative and operational expenses, essential for the proper functioning of the Fund, may be attributed as a charge, provided they are provided for in an Instrument previously approved by the Securities and Exchange Commission.

Art. 50. Promotion expenses to obtain, abroad, credits subject to conversion shall not be imputed as charges of the Fund.

CHAPTER XVI
INFORMATION

Art. 51. The administrator institution must send to the Securities and Exchange Commission and to the unitholders, within a maximum period of 10 (ten) days after the closing of the period to which they refer, without prejudice to others that may be required, the following documents regarding the Foreign Capital Conversion Fund:

I - monthly:

a) trial balance;

b) statement of composition and diversification of investments;

c) statement of source and application of resources.

II - semi-annually:

a) financial statements;

b) copies of information provided to co-owners, with the mailing of the audit opinion on the financial statements relating to the semester admitted, within a maximum period of 60 (sixty) days after the closing of the period to which it refers;

c) information regarding general insurance coverage conditions, in the case of transit of securities;

d) list of institutions responsible for providing custody services for the securities and financial instruments comprising the portfolio;

e) list of judicial or extrajudicial demands, whether in defense of co-owners' rights or against the Fund's administration, indicating the date of their start and final solution.

Art. 52. The administrator institution must, semi-annually, within a maximum period of 10 (ten) days after the closing of the period, publicly disclose, through a medium approved by the Securities and Exchange Commission, a statement of the composition and diversification of investments.

CHAPTER XVII
FINAL PROVISIONS

Art. 53. The provisions of Chapter V of Law No. 4,595, of December 31, 1964, and article 11 of Law No. 6,385, of December 7, 1976, apply to the administrator institution and to its administrators and managers directly responsible for the administration of the FCCE and the FCCE (Incentivized Areas), independent of other legal sanctions eventually applicable.

Art. 54. This Instruction shall enter into force on the date of its publication in the Official Gazette of the Union, revoking CVM Instructions No. 91, of December 6, 1988, and articles 1 and 2, of CVM Instruction No. 213, of May 23, 1994.

Signed original by
THOMÁS TOSTA DE SÁ
President