CVM Instruction No. 266 of July 18, 1997 (Revoked)

FULL TEXT OF CVM INSTRUCTION NO. 266, OF JULY 18, 1997, WITH THE CHANGES INTRODUCED BY CVM INSTRUCTION NO. 545/14.

Provides for the constitution, operation, and administration of Mutual Equity Investment Funds - Free Portfolio intended for participation in privatization programs of a specific company and revokes CVM Instruction No. 241, of January 12, 1996.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes it known that the Collegiate Body, in a session held on this date, and having in view the provisions of Resolution No. 1,787, of February 1, 1991, of the National Monetary Council, RESOLVES to issue the following Instruction:

Art. 1. The constitution, operation, and administration of Mutual Equity Investment Funds - Free Portfolio, intended for participation in privatization programs of a specific company, shall be governed by this Instruction and by CVM Instruction No. 215, of June 8, 1994, insofar as they do not conflict with the specific provisions established below.

Art. 2. The fund's denomination must include the identification of the company subject to the intended auction.

Art. 3. The bylaws must specify the privatizable company that is the object of the fund.

Art. 4. The fund constituted under the terms of this Instruction must maintain, for at least 180 days after the holding of the auction, a minimum percentage of 75% of its investments in shares or securities issued by the company that is the object of the fund.

§1. The fund must be adapted to the above limit on the date of the liquidation of the privatization auction.

§2. In the period prior to the holding of the auction, the fund is exempt from observing the portfolio composition limits established in Art. 49 of CVM Instruction No. 215/94.

Art. 5. After the period provided for in the caput of the previous article, the fund will be free to define its investment policy, provided that the provisions of Arts. 49 and 50 of CVM Instruction No. 215/94 are met, and its denomination must become compatible with the new investment policy, in accordance with §1 of Art. 1 of said Instruction.

Art. 6. If the fund does not acquire the minimum number of shares established in Art. 4, or if the company is withdrawn from the privatization program, or if the privatization auction is not held within 180 days from the constitution of the fund, and in the absence of specific provision in the bylaws, the administrator must hold a General Meeting of unitholders, within a maximum period of fifteen days, from the event that originated it, to deliberate on one of the following alternatives:

I - liquidation of the fund;
II - change of investment policy, with alteration of the fund's denomination; III - distribution to unitholders of the excess resources, for the purpose of classification under Art. 4.

§1. The deliberations regarding the matters of this article must observe the quorum established in §1 of Art. 14 of CVM Instruction No. 215/94.

§2. In the case of item II above, the fund will have a period of thirty days, counted from the holding of the General Meeting or the privatization auction, in the case of specific regulatory provision, to adapt to the composition and diversification limits provided for in Arts. 49 and 50 of CVM Instruction No. 215/94.

Art. 7. The fund constituted under the terms of this Instruction may acquire or subscribe, in the privatization programs, shares of closed companies, provided that, in the public notices of the alienation operations promoted by the respective governments responsible for the programs, there is an obligation for the acquirer of control to promote, within a maximum period of 180 days, counted from the date of the holding of the auction, the registration of an open company with the CVM, for the negotiation of its issued shares in a stock exchange or organized over-the-counter market.

Sole Paragraph. The fund that acquires shares of a closed company must be constituted as a closed condominium, that is, without admitting the redemption of its units, and remain closed until the negotiation of the shares of that company begins in a stock exchange or in an organized over-the-counter market.

Art. 8. The fund administrator must disclose, widely and immediately, for the purposes of Art. 33 of CVM Instruction No. 215/94, the quantity, value, and percentage of the total portfolio value of the shares acquired in the privatization auction.

§1. The announcement of unit distribution and all material related to the disclosure of the fund, constituted under the terms of Art. 7 of this Instruction, must give prominent emphasis to the circumstance that the fund is intended for the acquisition or subscription of shares of a closed company, providing the investor with all necessary information for the adequate evaluation of the investment being offered.

§2. The fund administrator must also disclose to unitholders, widely and immediately, the alternative chosen under the terms of Art. 6 of this Instruction.

Art. 9. In the case of a fund constituted in the form of an open condominium, the redemption requested prior to the period for adaptation to the portfolio composition requirements, in accordance with §§1 and 2 of Art. 4, shall be made at the value of the investment, without any update and yield, or at the value calculated according to Art. 56 of CVM Instruction No. 215/94, whichever is lower, such restriction must appear prominently in the fund's bylaws and in the document referred to in §1 of Art. 52 of said Instruction.

Art. 10. The fund's bylaws may, except for the provision in the sole paragraph of Art. 7 of this Instruction, define the conditions for transforming the fund from an open condominium to a closed one, or vice versa, without the need for a general meeting resolution.

Sole Paragraph. In the case where the bylaws contain a provision for the transformation of an open condominium into a closed one, such transformation must appear in the document referred to in §1 of Art. 52 of CVM Instruction No. 215/94.

Art. 11. Each institution or conglomerate may only constitute a single fund with the objective of participating in the privatization of a specific company.

Art. 12. It is considered a serious offense, for the purposes of Art. 11, §3, of Law No. 6,385, of December 7, 1976, the transgression of the provisions of this Instruction and CVM Instruction No. 215/94, except for the following hypotheses, which constitute offenses of an objective nature, ascertainable through a summary administrative process procedure:

I - failure by the fund administrator to observe, during the period provided for in Art. 4 of this Instruction, the minimum investment limit provided therein; II - failure by the fund administrator to hold the general meeting of unitholders within the period and conditions of Art. 6 of this Instruction; or III - failure by the fund administrator to adapt to and observe the portfolio composition and diversification limits established in Arts. 49 and 50 of CVM Instruction No. 215/94.

• Items I to III revoked by CVM Instruction No. 545, of January 29, 2014.

Art. 13. CVM Instruction No. 241/96 is revoked.

Art. 14. This Instruction enters into force on the date of its publication in the Official Gazette of the Union.

Original signed by
FRANCISCO COSTA E SILVA
President