CVM Instruction No. 299 of February 9, 1999, as amended by CVM Instruction No. 345/00

FULL TEXT OF CVM INSTRUCTION NO. 299, OF FEBRUARY 9, 1999, WITH CHANGES INTRODUCED BY CVM INSTRUCTION NO. 345/00.

Public Companies - Provides for the disclosure of information in the alienation of shareholding control and in the increase of participation of controlling shareholders, administrators, and members of the audit committee, adds rules regarding the trading of shares of its own issuance, and regulates public offers for the acquisition of shares.

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Collegiate Body, in a meeting held on this date, and based on the provisions of arts. 4, items V, VI and VII, 8, items I and III, 18, item II, letter “a”, and 22, items III, V, VI and VIII, of Law no. 6,385, of December 7, 1976, and art. 30, § 2, of Law no. 6,404, of December 15, 1976, resolved to issue the following Instruction:

SCOPE AND PURPOSE

Art. 1. The provisions of this Instruction, relating to public companies, regulate:
I - Disclosure of information in the alienation of shareholding control and in the increase of participation of a controlling shareholder, administrator, and member of the audit committee, in the capital represented by shares of the company.
II - Events related to the trading of shares of its own issuance.
III - Public offers for the acquisition of shares.

Art. 2. The obligations provided for in this Instruction are subject to natural or legal persons and groups of persons linked in any way, who fall within the provisions now established.

INFORMATION IN THE ALIENATION OF CONTROL

Art. 3. Without prejudice to the provisions of CVM Instruction no. 31, of February 8, 1984, the operation that results in the alienation of shareholding control of a public company must be communicated immediately by the acquirer of the control to the CVM and to the Stock Exchanges or entities of the organized over-the-counter market in which the securities issued by the company are admitted to trading, as well as disclosed in the press, through immediate publication arranged by the same acquirer in the newspapers habitually used by the company.

Sole Paragraph. The communication and disclosure referred to must include, at a minimum, the following information:
I - Name and qualification of the acquirer(s), as well as a brief summary regarding the sectors of operation and activities developed by them.
II - Name and qualification of the seller(s), including indirect sellers, if any.
III - Price and other relevant characteristics and conditions of the business.
IV - Objective of the acquisition.
V - Number and percentage of shares acquired, by type and class, in relation to the voting and total capital.
VI - Information on any agreements or contracts regulating the exercise of voting rights or the purchase and sale of securities issued by the company.
VII - Declaration, positive or negative, regarding the intention to promote the cancellation of the registration of the public company involved.
VIII - Other relevant information regarding future plans in the conduct of the company's business, notably with respect to specific corporate events that are intended to be promoted in the company.

Art. 4. Within ten days, counted from the public disclosure of the operation referred to in art. 3, a copy of the documentation related to the respective alienation must be sent to the CVM by the acquirer of the control.

Sole Paragraph. The CVM may require other information and elements it deems necessary, as well as determine corrections and amendments to the information provided.

Art. 5. The signing of an agreement or contract aiming at the transfer of shareholding control of the company and the granting of an option or mandate for this purpose will also be subject to immediate communication and disclosure, to be carried out by controlling shareholders or by the persons representing them in any way, except for cases of confidentiality preservation for the legitimate interest of the company, regarding which the pertinent rules contained in CVM Instruction no. 31/84 will be observed, where applicable.

INCREASE OF PARTICIPATION

Art. 6. Whenever the participation of a controlling shareholder of a public company in the capital represented by shares of the same is elevated, effectively or potentially, by five percent of any type and/or class of share, such occurrence will be communicated, immediately, by the same controller, to the CVM and to the Stock Exchanges or entities of the organized over-the-counter market in which the securities issued by the company are admitted to trading.

§1. For the purposes of the provision in the “caput”, potential increase of participation is understood as that resulting from the acquisition of convertible debentures, subscription warrants, and/or other securities of the same nature.

§2. The communication referred to must contain, at a minimum, the following information:
I - Name and qualification of the communicating party(ies).
II - Quantity, price, type and/or class, in the case of shares acquired.
III - Quantity, price, and characteristics, in the case of other securities acquired.
IV - Form of the acquisitions.
V - Average quotes of the securities of the type and/or class of those acquired, in the last ninety days, within the Stock Exchanges or entities of the organized over-the-counter market in which they are admitted to trading.
VI - Reasons and objectives of the acquirer(s).
VII - Information on any agreements or contracts regulating the exercise of voting rights or the purchase and sale of securities issued by the company.

Art. 7. Administrators and members of the audit committee must also communicate the increase in their participation in the capital represented by shares of the company, under the terms and form of art. 6.

Sole Paragraph. The persons referred to, not holding share participation, will initially communicate the achievement, effective or potential, of the five percent percentage of any type and/or class of share, observing, from such occurrence, the provision in the “caput” of this article.

Art. 8. The CVM may, independently of the obligations provided for in arts. 6 and 7, determine that the occurrences governed by such provisions be disclosed in the newspapers habitually used by the company.

Art. 9. Arts. 6, 7, and 8 of this Instruction state special rules, not modifying, therefore, with respect to other persons or groups, the general rules contained in CVM Instruction no. 69, of September 8, 1987.

TRADING WITH SHARES OF ITS OWN ISSUANCE

Art. 10. It is prohibited for controllers, administrators, and members of the audit committee to trade shares issued by the company, when the acquisition or alienation of shares by the same, its controlled affiliates, affiliated companies, or another society under common control is underway.

Art. 11. The board of directors of the company may not deliberate the acquisition or alienation of shares of its own issuance, if any agreement or contract aiming at the transfer of respective shareholding control has been previously signed, and/or if an option or mandate for the same purpose has been granted, as well as if there is an intention to promote merger, total or partial spin-off, fusion, transformation, or corporate reorganization involving relevant investment in affiliated companies.

PUBLIC OFFERS FOR THE ACQUISITION OF SHARES

Art. 12. The acquisition of shares of any type and/or class, issued by public companies, will occur, obligatorily, through a public offer, when the acquirer is a controlling shareholder whose share participation, at the time of the business, has already been elevated, effectively or potentially, by ten percent of the shares of the same type and/or class of those that constitute the object of the acquisition, or, still, promissory buyer, holder of an option, or intermediary in a business of transfer of shareholding control corresponding, as well as a person linked to any of them, directly or indirectly, the following basic rules must be observed:

I - The offer directed to shareholders holding ordinary or preferred shares will be submitted to prior approval by the CVM.
II - The validity period of the offer may not be less than fifteen days, with the free interference of third parties being ensured.
III - The offer instrument will be published in the newspapers habitually used by the company.
IV - The offer may be conditioned on a minimum quantity of accepting shareholders.
V - If the offer is limited to a maximum number of shares, proportional allocation among acceptors will be ensured, except for the provision in item VI.
VI. When the qualification of minority shareholders holding, in their entirety, a quantity superior to one third of the shares in circulation is verified, the controlling shareholder or person linked to him in any way must adopt the conduct indicated by him in the offer instrument, under the terms of item VIII, letter “e”, of this instruction; (NR*)
VII - Public offers may only be formulated with the intermediation of an investment bank, securities brokerage or distribution company, or multiple bank with an investment portfolio, ensuring, in any case, the compliance with the conditions proposed by the offeror. VIII - The offer instrument must contain, at a minimum, the following information:
a) name, qualification, sectors of operation, and activities developed by the offeror; b) shareholding composition of the company, discriminating, quantitatively and percentually, the shares constituting shareholding control, those in the hands of the public, and those held in treasury; c) if a business of transfer of shareholding control is underway, the values and conditions of the operation, by estimate, with the corresponding explanation, with the informant being liable, upon the concretization of the business, if the actual values and conditions are substantially different, without objective justification for such; d) prices, characteristics, and conditions of the proposed business, including regarding payment; e) the minimum number of shares that the offeror proposes to acquire, and, if applicable, the maximum number, specifying, in the case of qualification of minority shareholders holding, in their entirety, a quantity superior to one third of the shares in circulation, if: (NR*)
i. will withdraw from the offer; (NR*)
ii. will make proportional acquisition of the number of shares owned by the acceptors of the offer, up to the limit of one third of the shares in circulation; or (NR*)
iii. will initiate a new public offer procedure, observing the rules of CVM Instruction no. 229/95, maintaining or not the registration of public company, dispensing with the compliance with item I of art. 1 of that Instruction in the case of opting to maintain the registration of public company. (NR*)
f) if the offer constitutes a condition of the business of transfer of shareholding control, specifying, in this case, the type of condition; g) the procedure to be adopted by shareholders to manifest acceptance and effect the transfer of shares; h) the validity period of the offer, as well as the date and other clarifications, regarding the auction; i) average quotes of the shares, in the last six months, within the Stock Exchanges or entities of the organized over-the-counter market in which they are admitted to trading; j) reasons and objectives of the offer; k) corporate object and future plans of the issuer; l) declaration of the offeror regarding its intention to promote, or not, the cancellation of the registration as a public company maintained by the issuer, and, in the case of a negative declaration, no public offer aiming at the cancellation of the registration may occur for a period of two years from the full settlement of the corresponding offer; m) declaration of the intermediary financial institution regarding the ownership of shares issued by the company, or the administration, in any way, of securities issued by the same. If it is a holder or administrator of shares, object of the offer, it must inform about the intention to accept them or not; n) declaration of the offeror, the controlling shareholder, and the intermediary institution regarding the knowledge, or not, of the existence of fact and/or circumstance, not revealed to the public, that may influence, in a relevant way, the results of the company or the quotes of its issued shares; o) economic-financial indicators in the last two fiscal years and in the last quarter of the current fiscal year; p) declaration regarding the situation of the issuer's registrations with the CVM; q) information regarding the possibility of occurrence of a request for cancellation of the registration of public company of the issuer, in the form of the sole paragraph of this article, in case total adherence provided for therein is verified; r) other elements that may be required by the CVM.

§1. The increase in share participation referred to in the “caput” of this article will be verified starting from the position of the controlling shareholder on the date of validity of this Instruction, or from the original participation, with respect to future control acquisitions.

§2. The publication containing the notice regarding the additional validity period of the offer established in item VI of this article will be carried out within two days, counted from the end of the original validity period, with the right to request the cancellation of the registration of the respective public company being ensured, in cases where there is adherence of all minority shareholders of the issuer, observing, for the concession, the provision in CVM Instruction no. 229, of January 16, 1995, with respect to other securities issued by the company.

§3. Offers made within periods of two years, counted from the publication of the result of the offer, will be subject to the aggregate limit of one third of the shares in circulation on the date of the first offer of each period. Once this limit is reached, new offers, before the two-year period expires, may only be carried out according to the rules of CVM Instruction no. 229/95, with the possibility of maintaining the registration of public company. (NR*)

Art. 13. Within ten days, counted from the end of the total validity period of the offer, the respective result will be communicated, by the intermediary institution, to the CVM and to the public, using, for the latter, the same newspapers in which the offer instrument was published.

Art. 14. If, within two years, counted from the financial settlement of a public offer, the offeror comes to formulate a new offer for the acquisition of shares of the same type and/or class that constituted its object, the difference, if any, in value, will be paid to the accepting shareholders of the first offer.

Art. 15. If the company deliberates, within one year counted from the financial settlement of a public offer, any corporate event that entails the exercise of the right of withdrawal, the payment of the difference, if any, between the value practiced in the acquisition of their shares, and the value determined for payment to dissenting shareholders of the deliberation, will be ensured to the accepting shareholders who would be reached, with the company being prohibited, during the period now fixed, from proceeding to alter the criterion for the calculation of the reimbursement value.

SERIOUS OFFENSE

Art. 16. Non-compliance with the provisions of this Instruction constitutes a serious offense, for the purposes of the provision in § 3 of art. 11 of Law no. 6,385/76.

VALIDITY

Art. 17. 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 (Changes introduced by Instruction no. 345, of September 4, 2000)

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