CVM Instruction No. 390 of July 8, 2003 (Revoked)

FULL TEXT OF THE INSTRUCTION CVM INSTRUCTION NO. 390, OF JULY 8, 2003, WITH CHANGES INTRODUCED BY INSTRUCTION 545/14.

Provides for the trading, by publicly-held companies, of shares of their own issuance, through operations with options, amends provisions of CVM Instruction No. 10, of February 14, 1980, and revokes CVM Instruction No. 290, of September 11, 1998, and CVM Instruction No. 291, of September 25, 1998.

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 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, resolved to issue the following Instruction:

SCOPE AND PURPOSE
Art. 1 This Instruction regulates the trading by the publicly-held company with options referenced in shares of its own issuance.

REQUIREMENTS FOR TRADING WITH OPTIONS
Art. 2 Trading with 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 operations described in the caput of this article may only be carried out if the company's bylaws attribute powers to the Board of Directors to authorize trading with its own shares, or, in the absence of such provision in the bylaws, if there is a specific resolution by the general assembly.

§2 The resolution of the Board of Directors, or of the general assembly, that authorizes the operations described in the caput of this article constitutes a relevant fact, in accordance with current regulations.

§3 The resolution of the Board of Directors, or of the general assembly, shall contain, in addition to those required in art. 8 of CVM Instruction No. 10, of February 14, 1980, at least the following information:

I – the quantity, by class and type of shares, of call or put options to be issued or acquired, as well as the settlement method and the parameters for determining the maturity dates and exercise prices;

II – the maximum period for carrying out the operations authorized in the caput of this article, which may not exceed 6 (six) months.

III – the destination of the resources raised through the issuance or trading of options;

IV – options already issued or held by the company;

V – a declaration, by the company, that there are no relevant facts that have not been disclosed.

§4 The resolution that authorizes trading with options may allow the company's management to carry out other operations with shares and options referenced in shares of its own issuance exclusively for the purpose of protecting open option positions or reversing them.

Art. 3 The company that utilizes the facility provided in art. 2 shall observe the following:

I - the total of treasury shares, including and considering those that the company may come to acquire through the exercise, by itself or by counterparties, of call or put options, may not exceed 10% (ten percent) of each type or class of shares in circulation in the market on the date of authorization by the Board of Directors or General Assembly;

II – the operations with options provided for in this Instruction must be carried out in the markets where the company's shares are traded, with private operations being prohibited, except for those referring to a stock purchase option plan, as provided in § 3 of art. 168 of Law No. 6.404/76;

III - the maturity of the options may not exceed 365 (three hundred and sixty-five) calendar days, counted from the date of the operation's contracting;

IV - options may only be exercised on the maturity dates;

V – issued call options and acquired put options must, obligatorily, be backed by treasury shares during the exercise period of the options, except for the facility provided in §4 of art. 2;

VI - it may not issue more than one series of call option and one series of put option for each maturity date.

VII – it may not, except as provided in § 4 of art. 2, carry out operations in the spot or options market in the opposite direction to that indicated by the options operations, in the period between the operation's authorization and the option's exercise date.

§1 Cash settlement exclusively is permitted for operations involving options issued or acquired referenced in shares of the company's own issuance, under this Instruction, upon their respective exercise, in the manner to be determined by the Stock Exchanges or organized over-the-counter entity, after prior approval by the Securities and Exchange Commission.

§2 Physical settlement of the options referred to in this Instruction shall be conditioned on the existence of profit balances or available reserves in the last approved balance sheet, in an amount sufficient to cover the operation.

§3 During the period between the authorization referred to in art. 2 of this Instruction and the settlement of the options operations, trading in securities issued by the company, or referenced therein, by controlling shareholders, direct or indirect, directors, and members of the board of directors, may only be carried out in accordance with the provisions of a trading policy referenced in CVM Instruction No. 358, of January 3, 2003, and provided that the company is prevented from acting as a counterparty in these operations.

§4 The resolutions that authorize the company to trade with options under this Instruction must be based on a study justifying the operations to be carried out and their conditions, notably regarding the timing and exercise price, and the company must keep such document available for the CVM.

DISCLOSURE IN FINANCIAL STATEMENTS AND PERIODIC INFORMATION Art. 4 The company shall disclose in the Notes to the Financial Statements and in the Quarterly Information Form – ITR:

I - the objective of carrying out the options operations;

II - the quantity, by class and type of shares, of options acquired or issued and exercised during the fiscal year;

III - the premiums and exercise prices paid and received;

IV - the changes in the quantity of treasury shares existing, including and considering those that the company may come to acquire through the exercise, by itself or by counterparties, of call or put options, indicating initial and final balances;

V - the dates on which the operations were carried out and the terms and maturity dates of the options;

VI - the net result of the alienation and acquisition operations occurring during the fiscal year resulting from the options operations;

VII - any positions issued or acquired in a previous exercise that are still open.

ACCOUNTING REGISTRATION OF OPTIONS OPERATIONS
Art. 5 The premiums received or paid in options operations shall be accounted for as follows:

I – when there is physical exercise of the option, the value of the premium will integrate the acquisition or sale cost of the treasury shares, as the case may be;

II – when there is financial exercise of the option, the value of the premium will integrate the net result of the operation, which will be accounted for in the manner provided in letters “a” and “b”, of art. 18, of CVM Instruction No. 10/80; and

III - in case there is no exercise of the option:

a) the received premium will be accounted for in a capital reserve account named “Option Premium – Own Shares” or another similar name that clearly indicates its nature; and

b) the paid premium will be deducted from the available reserves referred to in CVM Instruction No. 10/80.

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

GENERAL PROVISIONS
Art. 6 The CVM may, in special and fully circumscribed cases, authorize in advance operations that do not fit the other norms of this Instruction.

Art. 7 It is considered a serious offense, for the purposes of § 3 of art. 11 of Law No. 6.385, of December 7, 1976, the operation carried out without observance of the provisions of art. 3 of this Instruction.

Art. 8 Constitutes a hypothesis of objective nature offense, in which a summary administrative process procedure may be adopted, the non-compliance with the provisions of arts. 2 and 4 of this Instruction.

• Art. 8 revoked by CVM Instruction No. 545, of January 29, 2014.

Art. 9 The provisions of CVM Instruction No. 10/80 apply, insofar as applicable, to the operations referred to in this Instruction.

Art. 10. Arts. 8 and 21 of CVM Instruction No. 10/80 shall enter into force with the following wording:

"Art. 8 ...

c) the maximum period for carrying out the authorized operations, which may not exceed 365 (three hundred and sixty-five) days;

...... " (NR)

"Art. 21 The company shall disclose in the Notes to the Financial Statements and in the Quarterly Information Form – ITR:

...... " (NR)

Art. 11. CVM Instructions No. 290, of September 11, 1998, and No. 291, of September 25, 1998, are revoked.

Art. 12. This Instruction shall enter into force 30 days after the date of its publication in the Official Gazette of the Union.

Original signed by
LUIZ LEONARDO CANTIDIANO
President