FULL TEXT OF CVM INSTRUCTION NO. 286, OF JULY 31, 1998, WITH THE CHANGES INTRODUCED BY CVM INSTRUCTIONS NOS. 318/99 AND 370/02.

CVM INSTRUCTION NO. 286, OF JULY 31, 1998.

Provides for the alienation of shares owned by legal entities of public law and entities directly or indirectly controlled by the Public Power, and exempts the registrations referred to in Articles 19 and 21 of Law No. 6,385, of December 7, 1976, in the cases it specifies.

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Collegiate Body, in a meeting held on this date, in accordance with the provisions of Articles 8, item I; 18, item II, letter "a"; 19, § 5, item I, and 21, § 6, item I, of Law No. 6,385, of December 7, 1976, and Article 17, item II, letter "c", of Law No. 8,666, of June 21, 1993, and considering that:

a) the alienation of assets of the Public Administration requires, for its implementation, the observance of formalities governed by legal principles of public morality and full transparency;

b) the alienation of movable assets of the Public Administration depends on prior evaluation and bidding, which is waived in the case of the sale of shares, which may be traded on an exchange, observing specific legislation, in accordance with Law No. 8,666/93 and subsequent modifications;

c) stock exchanges and over-the-counter organized market entities are auxiliary bodies of the Securities and Exchange Commission tasked with supervising their respective members and the operations carried out therein, as per Article 17 of Law No. 6,385/76, with the wording given by Article 2 of Law No. 9,457, of May 5, 1997;

d) the offering of shares preceded by wide dissemination through notices, including the use of public communication services and other mechanisms described in Article 19, § 3, of Law No. 6,385/76, constitutes a public distribution subject to prior registration with this Commission;

e) the characterization of public distribution also implies the prior registration of the open company;

f) the privatization of share participation determined by federal, state, district, or municipal law with pre-identification, pre-qualification, and special conditions for acquirers presents a distinct characteristic from the share offerings contemplated by CVM Instruction No. 88, of November 3, 1988;

g) by legal determination, it is incumbent upon the CVM to protect holders of securities and investors in the market, as well as to ensure public access to information about the securities traded and the companies that issued them,

RESOLVES TO ISSUE THE FOLLOWING INSTRUCTION:

Art. 1. This Instruction regulates the alienation of shares owned by the Union, States, Federal District, Municipalities, and other entities of the Public Administration, providing for cases of exemption from the registration of secondary distribution and of open companies, under the terms and conditions it establishes.

Sole Paragraph. The exemptions provided for in this Instruction do not apply to offerings aimed at dispersing the shares among the general public.

Art. 2. The minority corporate participations held by the Union, States, Federal District, Municipalities, and other entities of the Public Administration shall be alienated through a special auction, on a stock exchange or in an organized over-the-counter market, with identification of the alienor, observing the following provisions:

I - The alienation of participation in an open company whose shares are admitted to trading on stock exchanges or in an organized over-the-counter market shall be preceded by a notice published, at least two business days in advance, in the daily information bulletin of the institution where the auction will be held, and disseminated via fax or electronic means to other exchanges or organized over-the-counter entities;

- Item with wording given by CVM Instruction No. 318, of October 15, 1999.

II - The alienation of participation in an open company whose shares are not admitted to trading on a stock exchange or in an organized over-the-counter market, as well as in a closed company, shall be preceded by a notice, previously approved by the CVM, which shall necessarily contain:

a) information about the object of the auction;

b) the manner in which it will be carried out;

c) the possibility of interference by sellers;

d) the possibility of preference for the highest bidder who proposes to acquire the entire lot of shares offered issued by a closed company;

e) the status of the company, whether closed or open;

f) a warning, in the case of a closed company, that the shares may only be traded by their acquirers through private transactions;

g) other characteristics of the operation.

§1. The provisions of this article apply only to the alienation of minority corporate participation that does not constitute a secondary distribution subject to prior registration with the CVM, in accordance with CVM Instruction No. 88/88 (Article 6).

§2. The notice referred to in item II must be published at least once in a widely circulated newspaper in the locality where the auction will be held and in the capital of the State where the public entity has its headquarters, at least five days in advance.

§3. The notice and notice mentioned in items I and II must refer to the act of the legislative or executive power of the respective federative entities, to the legal or statutory provision that authorizes the alienation of the shares;

Art. 3. The offer relating to the privatization of share participation determined by federal, state, district, or municipal law that presents requirements of pre-identification, pre-qualification, and special conditions for acquirers may be exempted from prior registration of secondary distribution, referred to in CVM Instruction No. 88/88, by request addressed to the CVM, provided that:

I - the registration of the company with the CVM is duly updated, when it is an open company;

II - the notice contains:

a) the main characteristics of the distribution and the shares to be offered;

b) relevant data about the issuing company and its status, whether closed or open, and, in that case, the market in which its shares are traded;

c) the warning, in the case of a closed company, that the shares may only be traded by their acquirers through private transactions and, if applicable, the obligation of the company to promote its registration as an open company with the CVM, in accordance with § 1 of Article 4.

III - the following documents and information are sent to the CVM, together with the request for exemption:

a) draft of the notice;

b) copy of the publication of the act of the legislative or executive power of the respective federative entities, legal or statutory provision that authorizes the alienation of the shares;

c) impact of the entry of a strategic partner;

d) configuration provided for the filling of positions on the Board of Directors and Executive Board;

e) clarification regarding the intervention of the Union, State, Federal District, or Municipality in the settlement of the operation;

f) shareholders' agreement, if any;

g) information on concession or permission contracts, or any other form of delegation for the execution of public services, if applicable;

h) possibility of entering into contracts for the provision of technical assistance and technology transfer services between the acquirers of the shares and the issuing company;

i) other information that the CVM deems necessary.

§1. Any relevant act or fact that may influence investors' decision, subsequent to the issuance of the notice or prospectus, must be immediately communicated to the CVM and disclosed through the press.

§2. The notice must be published at least once in a widely circulated newspaper in the locality where the auction will be held and in the location of the headquarters of the issuing company of the shares subject to the auction, at least ten days in advance.

§3. The following must appear prominently in the notice:

"The content of this notice was previously approved by the CVM, which granted the exemption from the registration of the open company (if applicable) and of public distribution for the present operation, having the (entity) authorized its realization in its premises."

Art. 4. The closed company whose shares are the subject of an offer under the terms of Article 3 is exempted from the registration referred to in Article 21 of Law No. 6,385/76.

§1. If the special auction of shares of a closed company results in a number of shareholders greater than one hundred, the company will have an irrevocable period of 180 days, counted from the date of settlement of the auction operations, to provide for the registration referred to in Article 21 of Law No. 6,385/76, presenting the necessary documents, in the form of CVM Instruction No. 202, of December 6, 1993, and its subsequent amendments, and such condition must appear in the notice.

§2. For the purpose of verifying the provisions of the preceding paragraph, stock exchanges and organized over-the-counter market entities must send to the CVM, on the day following the date of settlement of the auction operations, the list of bidders.

Art. 5. The notice referred to in Article 2, item II, and the request for exemption from secondary distribution registration provided for in Article 3 shall be deemed approved if not denied within thirty days after their presentation to the CVM, with protocol, with the documents and information required.

§1. The thirty-day period may be interrupted only once, if the CVM requests additional information or modifications to the relevant documentation.

§2. To meet any requirements, a period not exceeding sixty days will be granted, counted from the receipt of the respective correspondence.

§3. In the case of compliance with the CVM's requirements after fifteen days have passed since the request, a new thirty-day period will begin to run, counted from the date of compliance with the requirements.

Art. 6. When the alienation of corporate participation held by the Union, States, Federal District, Municipalities, and other entities of the Public Administration is registered under the terms of CVM Instruction No. 88/88, the auction notice must be published at least ten (10) days in advance, observing the conditions provided for in that Instruction for the announcement of the start of distribution.

- Caput with wording given by CVM Instruction No. 370, of June 18, 2002.

Sole Paragraph. In addition to the information and documents required in Article 10 of CVM Instruction No. 88/88, those related in Article 3, item III, shall be presented, insofar as applicable.

Art. 7. The provisions of this Instruction do not apply to participations held by financial institutions and by institutions part of the securities distribution system controlled directly or indirectly by the Union, States, Federal District, Municipalities, and other entities of the Public Administration, whose object is participation in the capital of other companies, which may be alienated according to usual market rules and procedures.

Art. 8. The norms of this Instruction apply, insofar as applicable, to the alienation of other securities convertible or exchangeable into shares that belong to the legal entities listed in Article 1.

Art. 9. CVM Deliberations Nos. 66, of June 14, 1988, 144, of April 3, 1992, and 217, of June 20, 1997, are repealed.

Art. 10. This Instruction enters into force on the date of its publication in the Official Gazette of the Union.

Signed original by
FRANCISCO DA COSTA E SILVA
President

Annex to CVM Instruction No. 286, of July 31, 1998. Alienation of Corporate Participations of the Union, States, Federal District, Municipalities, and other entities of the Public Administration

Type of Participation	Conditions
Alienation of shares or other securities convertible or exchangeable into shares that do not constitute a secondary distribution subject to prior registration with the CVM. (Art. 2)	A) Minority corporate participations in open companies with shares traded on a stock exchange or in an organized over-the-counter market (Art. 2, item I).<br>B) Minority corporate participations in closed companies and in open companies with shares not admitted to trading on a stock exchange or in an organized over-the-counter market. (Art. 2, item II).
	Special auction, preceded by a notice published in a daily information bulletin, with identification of the alienor, and disseminated via electronic means or fax to other exchanges or organized over-the-counter entities, with a minimum advance of five days.<br><br>Special auction, in a stock exchange venue or in an organized over-the-counter market, preceded by a notice, previously approved by the CVM, with identification of the alienor, published with a minimum advance of five days.
Alienation of shares or other securities convertible or exchangeable into shares exempted from secondary distribution registration, under the terms of CVM Instruction No. 88/88. (Art. 3)	Any corporate participations in open companies of the stock exchange, organized over-the-counter, and simple over-the-counter.
	Privatization determined by federal, state, district, or municipal law, carried out through an auction with requirements of pre-identification, pre-qualification, and special conditions for the acquirer, preceded by a notice, previously approved by the CVM, published with a minimum advance of ten days.
Alienation of shares or other securities convertible or exchangeable into shares registered under the terms of CVM Instruction No. 88/88. (Art. 6)	Any corporate participations in open companies of the stock exchange, organized over-the-counter, and simple over-the-counter.
	The notice or announcement of the start of distribution (Annexes I and II of CVM Instruction No. 88/88) must be published with a minimum advance of ten days.