CVM Instruction No. 432 of June 1, 2006

CVM INSTRUCTION NO. 432, JUNE 1, 2006.

Provides for the formation, administration, and operation of investment funds intended to guarantee real estate leases and the fiduciary assignment, as security for real estate leases, of shares issued by other investment funds.

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes it public that the Board, in a meeting held on May 26, 2006, in view of the provisions of Arts. 2 and 19 of Law No. 6,385, of December 7, 1976, and Arts. 88 and 90 of Law No. 11,196, of November 21, 2005, resolved to issue the following Instruction:

Art. 1 This Instruction provides for investment funds formed with the purpose of allowing the fiduciary assignment of shares as security for real estate leases, in the manner of Art. 88 of Law No. 11,196, of November 21, 2005, and for the fiduciary assignment, as security for real estate leases, of shares issued by other investment funds.

Art. 2 The formation, administration, operation, and disclosure of information of investment funds intended to guarantee real estate leases shall be governed by the provisions of CVM Instruction No. 409, of August 18, 2004, with the exception of the provisions of this Instruction.

Art. 3 Investment funds intended to guarantee real estate leases:
I – shall be constituted as investment funds or investment funds in shares of investment funds, in the form of an open-end condominium, with the redemption of the shares subject to fiduciary assignment being prohibited; II – in addition to the expression "investment fund" and the reference to the fund class, according to the classification contained in Art. 92 of CVM Instruction No. 409, of 2004, must present in their denomination the expression "Real Estate Lease Guarantee".

Art. 4 In funds intended to guarantee real estate leases, the regulations, the prospectus, and the disclosure material used by the administrator or by the institution responsible for the distribution of fund shares must contain a warning that the fund is intended to allow the fiduciary assignment of shares referred to in Art. 88 of Law No. 11,196, of 2005.

Art. 5 The fiduciary assignment of shares as security for real estate leases:
I – shall be carried out upon written request by the assigning shareholder, accompanied by the fiduciary assignment agreement and one copy of the lease contract, observing the provisions of §§ 1, 2, and 4 of Art. 88 of Law No. 11,196, of 2005; and II – shall be recorded by the fund administrator in the shareholder registry referred to in Art. 65, item I, letter "a", of CVM Instruction No. 409, of 2004.

§1 The recording referred to in item I of the caput constitutes the conditional ownership of the shares in favor of the fiduciary creditor, and renders them unavailable, inalienable, and unseizable, in the manner of § 3 of Art. 88 of Law No. 11,196, of 2005.

§2 The fiduciary assignment agreement must indicate the number of shares to be assigned, the value of which shall be determined in the manner of § 3 of Art. 10 of CVM Instruction No. 409, of 2004.

§3 In the absence of contrary provision in the fiduciary assignment agreement, the right to vote at shareholders' meetings shall belong to the assigning shareholder.

Art. 6 The assigning shareholder and the fiduciary owner of the fund shares shall receive, from the fund administrator, the information provided for in Art. 68, item II, of CVM Instruction No. 409, of 2004, without prejudice to the other periodic and occasional information addressed to shareholders, in the manner of that Instruction and the fund regulations.

Sole paragraph. In the regulations, the prospectus, and in any fund disclosure material, there must be a warning that the value of the fund shares will be subject to fluctuations resulting from the variation in the market value of the assets that make up the fund's assets.

Art. 7 The fund regulations must provide for the procedure for the extrajudicial execution of the assigned shares, in accordance with the provisions of §§ 6 and 7 of Art. 88 of Law No. 11,196, of 2005.

Art. 8 The merger and fusion of an investment fund intended to guarantee real estate leases and the division of a portion of the assets of a fund with this purpose are only permitted if the acquiring or resulting fund is also an investment fund intended to guarantee real estate leases.

§1 The merger, division, or fusion of an investment fund intended to guarantee real estate leases in which the acquiring or resulting fund is not an investment fund intended to guarantee real estate leases is permitted only if the shares of the acquired, divided, or merged fund are not subject to fiduciary assignment.

§2 The division of a portion of the assets of an investment fund intended to guarantee real estate leases is also permitted in the case referred to in item IV of Art. 16 of CVM Instruction No. 409, of 2004.

§3 The merger, fusion, or division of an investment fund intended to guarantee real estate leases must also observe the provisions of Art. 92 of CVM Instruction No. 409, of 2004.

Art. 9 In the event of the liquidation of the fund, the share assignment agreement may contain authorization for the fund administrator to use the proceeds from the payment of amounts due to the assigning shareholder in the subscription of shares of another fund formed in accordance with the provisions of this Instruction, indicated in the agreement itself or at any time by the assigning shareholder and the fiduciary owner, by mutual agreement.

Art. 10 The fiduciary assignment of shares as security for real estate leases of investment funds formed in accordance with the provisions of CVM Instruction No. 409, of 2004, and not exclusively intended for real estate lease guarantees is also admitted.

§1 The fiduciary assignment of shares, in the case referred to in the caput, shall observe the provisions of Art. 5 of this Instruction.

§2 In the case of the caput:
I – the fund administrator must observe the provisions of Art. 6 of this Instruction; II – the share assignment agreement may contain the authorization provided for in Art. 9 of this Instruction; and III – the administrator may not charge the investment fund any cost or expense related to the recording of the fiduciary assignment, the sending of the statement to the fiduciary owner, or any other expense related to the fiduciary assignment, including the remuneration charged for this service, but may charge such expenses directly to the assigning shareholder.

Art. 11 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