CVM Instruction No. 408 of August 18, 2004 (Revoked)

CVM INSTRUCTION NO. 408, OF AUGUST 18, 2004.

Provides for the inclusion of Special Purpose Entities – SPEs in the consolidated financial statements of publicly held companies.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION – CVM makes public that the Collegiate Board, in a meeting held on this date, based on arts. 8, item I and 22, § 1 items II and IV, of Law No. 6,385, of December 7, 1976, and on arts. 177, § 3, and 249 of Law No. 6,404, of December 15, 1976, HAS DECIDED to issue the following Instruction:

Art. 1 For the purposes of the provisions of CVM Instruction No. 247, of March 27, 1996, the consolidated financial statements of publicly held companies shall include, in addition to controlled companies, individually or jointly, special purpose entities – SPEs, when the essence of their relationship with the publicly held company indicates that the activities of these entities are controlled, directly or indirectly, individually or jointly, by the publicly held company.

Sole Paragraph. It is considered that there are indicators of control of the activities of an SPE when such activities are conducted in the name of the publicly held company or substantially due to its specific operational needs, provided that, alternatively, directly or indirectly:

I – the publicly held company has the decision-making power or sufficient rights to obtain the majority of the benefits from the activities of the SPE, thereby being exposed to the risks arising from these activities; or

II – the publicly held company is exposed to the majority of the risks related to the ownership of the SPE or its assets.

Art. 2 The equity interests in SPEs included in consolidation shall be valued using the equity method, in accordance with CVM Instruction No. 247, of 1996.

Sole Paragraph. The adjustments resulting from the changes produced by the application of the equity method provided for in this article do not constitute prior period adjustments and shall be recorded as provided in Instruction No. 247, of 1996.

Art. 3 In a note to its consolidated financial statements, the publicly held company shall disclose, in addition to the information required in arts. 20 and 31 of CVM Instruction No. 247, of 1996, where applicable, the following information:

I – the nature, purpose, and activities of the SPE;

II – the nature of its involvement with the SPE;

III – the type of exposure to losses arising from this involvement with the SPE; and

IV – the type and value of consolidated assets that have been pledged as security for the obligations of the SPE.

Art. 4 The publicly held company that has sufficient rights to obtain relevant benefits from the activities of the SPE, or that is exposed to also relevant risks related to the activities of the SPE or its assets, without, however, falling under the provisions of Art. 1, shall disclose, in a note, the following information:

I – the nature, purpose, and activities of the SPE;

II – the nature of its involvement with the SPE;

III – the type of exposure to losses arising from this involvement with the SPE;

IV – the identification of the main beneficiary or group of main beneficiaries of the activities of the SPE; and

V – the information required in Art. 20 of CVM Instruction No. 247, of 1996, where applicable.

Sole Paragraph. For the purposes of the caput of this article, entities with operational and financial autonomy, such as customers and suppliers of the publicly held company, shall not be considered as SPEs, without prejudice to the provisions of CVM Deliberation No. 26, of February 5, 1986.

Art. 5 Publicly held companies with fiscal years ending by December 31, 2004, must disclose, in a note to their respective financial statements, at minimum, the following information:

I – name, nature, purpose, and activities developed by the SPE;

II – participation in the equity and results of the SPE;

III – nature of its involvement with the SPE and type of exposure to losses, if any, arising from this involvement;

IV – amount and nature of credits, obligations, revenues, and expenses between the company and the SPE, assets transferred by the company, and rights of use over assets or services of the SPE;

V – total assets, liabilities, and equity of each SPE;

VI – guarantees, sureties, mortgages, or other securities granted in favor of the SPE; and

VII – the identification of the main beneficiary or group of main beneficiaries of the activities of the SPE, in the case referred to in Art. 4.

Art. 6 Except as provided in the preceding article, publicly held companies shall observe the other provisions of this Instruction in the consolidated financial statements relating to fiscal years ending from January 1, 2005, with the option for immediate application.

Sole Paragraph. For comparability purposes, the consolidated financial statements of the previous fiscal year shall be disclosed including the SPEs existing at the time these statements were originally prepared.

Art. 7 This Instruction enters into force on the date of its publication in the Official Gazette of the Union.

Signed original by

MARCELO FERNANDEZ TRINDADE
President