CVM Instruction No. 290 of September 11, 1998

FULL TEXT OF CVM INSTRUCTION NO. 290, OF SEPTEMBER 11, 1998, WITH THE CHANGES INTRODUCED BY CVM INSTRUCTION NO. 291/98.
CVM INSTRUCTION NO. 290, OF SEPTEMBER 11, 1998.

Provides for the acquisition, by publicly held companies, of shares of their own issuance, through options transactions.

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Collegiate Body, in a meeting held on this date, in view of the provisions of art. 22, item III, of LAW NO. 6,385, of December 7, 1976, and art. 30, § 2, of LAW NO. 6,404, of December 15, 1976,

HAS DECIDED to issue the following Instruction:

Art. 1. The acquisition and issuance of put and call options by a publicly held company, referenced in shares of its own issuance, for purposes of cancellation, retention in treasury, or alienation, is authorized.

§1. The transactions described in the caput of this article may only be carried out if the company's bylaws grant the Board of Directors the power to authorize trading in its own shares, as provided in CVM INSTRUCTION NO. 10, of February 14, 1980. (NR)*

§2. The resolution of the Board of Directors authorizing the purchase or sale of options must be communicated immediately to the CVM and to the stock exchange where the company's securities are traded, accompanied by a copy of the respective minutes.

Art. 2. The company that utilizes the facility defined in art. 1 must observe the following:

I - The quantity of put options issued multiplied by their respective exercise price may not exceed thirty percent of the total balance of profit or capital reserves stated in the last annual balance sheet or quarterly financial statement, respecting the exceptions established in art. 7 of CVM INSTRUCTION NO. 10, of February 14, 1980;

II - The quantity of treasury shares resulting from options transactions may not be greater than five percent of each class of shares in circulation in the market, respecting the maximum limit established in art. 3 of CVM INSTRUCTION NO. 10/80;

III - The exercise price of put options, minus the premium value, may not be higher than the market value of the shares on the date the options are issued;

IV - The transactions must be carried out in an organized market; private transactions are prohibited;

V - The maturity period of the options may not exceed ninety calendar days, counted from the date of the transaction contract;

VI - Issued call options must be obligatorily backed by treasury shares during the validity period of the transaction;

VII - It is prohibited:
a) the issuance of call options if there are issued put options; b) the purchase of call options if there are purchased put options.

Art. 3. The company must indicate in an Explanatory Note attached to the financial statements and in the quarterly information form ITR:

I - The objective of carrying out options transactions; II - The quantity of options acquired, issued, and exercised during the fiscal year, including a description of the underlying shares, highlighting type and class; III - The premiums and exercise prices paid and received; IV - The changes in the quantity of shares existing in treasury, indicating the initial and final balances.

Art. 4. The result arising from premiums received from the issuance of options must be accounted for in a capital reserve account named "Option Premium - Own Shares," or another similar name that clearly indicates its nature.

Sole Paragraph. The capital reserve referred to in the caput of this article is considered available for the purposes of art. 7 of CVM INSTRUCTION NO. 10/80.

Art. 5. It is considered a serious offense, for the purposes of § 3 of art. 11 of LAW 6,385, of December 7, 1976, without prejudice to the fine provided for in § 1 of the same article, the transaction carried out without observing the provisions of art. 2 of this Instruction.

Art. 6. Non-compliance with the provisions of arts. 1 and 3 of this Instruction constitutes a hypothesis of objective nature offense, in which a summary administrative process procedure may be adopted.

Art. 7. The provisions of CVM INSTRUCTION NO. 10/80 apply, insofar as applicable, to the transactions governed by this Instruction.

Art. 8. 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

(NR)* = New Wording (altered by CVM Instruction No. 293, of October 30, 1998)

We emphasize that this text does not represent a formal consolidation of the normative instrument in question, having a merely informative character.