CVM Instruction No. 442 of December 8, 2006 (Revoked)

INSTRUÇÃO CVM Nº 442, DE 08 DE DEZEMBRO DE 2006.

Amends CVM Instructions No. 356, of December 17, 2001, and No. 400, of December 29, 2003.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION – CVM makes public that the Collegiate Board, in a meeting held on October 18, 2006, in view of the provisions of Articles 2, item IX, and 8, item I, of Law No. 6,385, of December 7, 1976, HAS RESOLVED to issue the following Instruction:

Art. 1º Articles 2, 8, 9, 10, 11, 20, 21, 22, 23, 24, 34, 38, 39 and 46 of CVM Instruction No. 356, of December 17, 2001, shall enter into force with the following wording:

“Art. 2º ...

I – credit rights: the rights and titles representing credit, originating from operations carried out in the financial, commercial, industrial, real estate, mortgage, leasing and service provision segments, and the warrants, contracts and titles referred to in § 8 of Art. 40 of this Instruction;

...... ” (New wording)

“Art. 8º ...

§ 1º Registration shall be automatically granted, within a period of up to 5 (five) business days after the date of filing with the CVM, for the following documents and information:

......

II – 3 (three) copies of the prospectus, when it concerns an open-end fund;

......

IX – registration of the fund in the National Registry of Legal Entities – CNPJ.

......

§ 3º The director or managing partner indicated, without prejudice to compliance with the determinations established in current regulation, must prepare quarterly statements evidencing:

I – that the operations practiced by the fund are in consonance with the investment policy provided for in its bylaws and with the composition and diversification limits applicable to it;

II – that the negotiations were carried out at market rates;

III – the procedures for collateral verification by sampling adopted by the custodian in the previous quarter, including the methodology for selecting the verified sample in the period, if applicable; and

IV – the results of the collateral verification, by sampling or not, carried out in the previous quarter by the custodian, specifying, among the analyzed universe, the quantity and relevance of any non-existent credits possibly found.

......

§ 6º The automatic registration referred to in § 1 of this article does not apply to funds:

I – that do not observe the provisions of § 8 of Art. 40 of this Instruction;

II – in which the custodians exercise the faculty provided for in § 3 of Art. 38; and

III – that make investments in credit rights assigned or originated by companies controlled by the public power.

§ 7º In the cases referred to in § 6 of this article, the registration request shall observe the deadlines established in Articles 8 to 10 of CVM Instruction No. 400, of December 29, 2003.

§ 8º In the funds referred to in item III of § 6 of this article, in addition to the documents and information provided for in § 1 of this article, a statement regarding the existence of a financial commitment that characterizes a credit operation, for the purposes of the provisions of Complementary Law No. 101, of May 4, 2000, must be presented, and, in case of a positive response, a competent authorization from the Ministry of Finance must be attached, in accordance with Art. 32 of said Complementary Law.” (New wording)

“Art. 9º ...

......

II – in the case of a closed-end fund, when, within a period of 180 (one hundred and eighty) days, counting from the date of publication of the announcement of the start of distribution, the total of the shares representing its initial patrimony is not subscribed, except in the case of cancellation of the unplaced balance, before the aforementioned deadline, provided there is express provision in the bylaws to that effect;

......” (New wording)

“Art. 10. The administrator shall inform the CVM, within a period of 10 (ten) days after the respective occurrence:

I – the date of the first installment of fund shares; and

II – the date of the closure of each share distribution, in the case of closed-end funds.” (New wording)

“Art. 11. ...

Sole paragraph. The administering institution may carry out the bookkeeping of the shares of the funds administered by it, even if it is not authorized by the CVM to provide third-party securities bookkeeping services.” (New wording)

“Art. 20. The public offering for distribution of closed-end fund shares shall be carried out in observance of the provisions of CVM Instruction No. 400/03.

§ 1º Registration shall be automatically granted within a period of 5 (five) business days after the date of filing with the CVM for the following documents and information, which shall be presented for each new distribution:

......

III – promotional material to be used in the distribution of fund shares;

IV – 3 (three) copies of the prospectus; and

V – any additional information that becomes available to potential investors.

§ 2º The closed-end fund may carry out simultaneous distribution of distinct classes and series of shares, in quantities and conditions previously established in the announcement of the start of share distribution and in the fund prospectus.” (New wording)

“Art. 21. The distribution of open-end fund shares is independent of prior registration with the CVM, and shall be carried out by intermediary institutions that are part of the securities distribution system.

§ 1º The distribution of open-end fund shares shall observe the provisions of Art. 20 of this Instruction, whenever the fund bylaws stipulate:

I – a waiting period for share redemption greater than 30 (thirty) days; or

II – a period for payment of the redemption value of shares is greater than the period referred to in item I of this paragraph.

§ 2º The provisions of § 1 shall also apply in cases where the sum of the waiting periods or for payment of the redemption value is greater than 30 (thirty) days.” (New wording)

“Art. 22. The acquisition of credit rights assigned or originated by companies controlled by the public power, which is not provided for in the bylaws presented to the CVM for the granting of fund registration, in the form of Art. 8 of this Instruction, shall depend on an amendment to the fund bylaws.

§ 1º The effectiveness of the assembly resolution to amend the bylaws referred to in the caput shall depend on prior approval of the amendment by the CVM, observing the deadlines applicable to the fund registration process.

§ 2º The request for approval of the bylaws amendment referred to in the caput shall prove compliance with the following formalities:

I – in a closed-end fund, the administrator and the intermediary institution shall include, in the documents and information provided for in § 1 of Art. 20, the statement and, if applicable, the authorization referred to in § 8 of Art. 8; and

II – in an open-end fund, the administrator shall present to the CVM the statement and, if applicable, the authorization referred to in § 8 of Art. 8 with 5 (five) business days of advance notice from the date of acquisition of the credit rights referred to in the caput.” (New wording)

“Art. 23. The prospectus shall be prepared in conformity with the provisions of CVM Instruction No. 400/03.

§ 1º The investor, upon joining as a co-owner of an open-end fund or subscribing to closed-end fund shares, must attest in writing, through a specific term, that he received the prospectus, and that he took note of the risks involved and the fund’s investment policy.

§ 2º The fund administrator shall keep available to the CVM the term containing the declaration referred to in § 1, duly signed by the investor, or registered in an electronic system that guarantees compliance with the provisions of § 1.” (New wording)

“Art. 24. ...

......

XVII – authorization for the custodian to perform collateral verification by sampling, if applicable, with specification of the parameters related to debtor diversification, quantity and average value of credits, to be observed for this purpose (Art. 38, § 1).

§ 1º ...

II – the segments in which the fund will operate;

......” (New wording)

“Art. 34. The following are included among the obligations of the administering institution:

I – ...

......

e) the prospectus referred to in Art. 23 of this Instruction, when it concerns an open-end fund;

......” (New wording)

“Art. 38. ...

......

§ 1º In funds where there is a significant quantity of assigned credits and expressive debtor diversification, the custodian may perform collateral verification of the credit rights referred to in item I by sampling, provided that such faculty is provided for in the fund bylaws.

§ 2º In the case referred to in § 1, the parameters of quantity of assigned credits and debtor diversification that will entail collateral verification by sampling must be explicitly stated in the fund bylaws and prospectus.

§ 3º In the cases described in § 1, if the reduced average value of the credit rights does not justify the performance of the sampling verification referred to therein, the fund bylaws may exempt the custodian from such responsibility.

§ 4º In funds where the custodian uses the faculty provided for in § 1, the reports of the risk rating agencies must necessarily analyze the adequacy of the procedures related to collateral verification by sampling and its impact on the granted classification.

§ 5º In funds where the custodian uses the faculty provided for in § 3:

I – automatic registration referred to in § 1 of Art. 8 shall not be granted, and the analysis deadlines provided for in Articles 8 to 10 of CVM Instruction No. 400/03 shall be observed; and

II – the reports of the risk rating agencies must, necessarily, analyze the impact of the absence of collateral verification by the custodian on the granted classification.” (New wording)

“Art. 39. ...

......

§ 2º It is prohibited for the administrator to provide custody services for the fund, and an institution accredited by the CVM to provide this service that is not part of the same economic group as the administrator must be hired.

......” (New wording)

“Art. 46...

§ 1º Without prejudice to other occurrences related to the fund, the following are examples of material events:

I – the change in risk classification of the classes or series of shares, as well as, if applicable, the other assets comprising the respective portfolio;

II – the change or substitution of third parties hired to provide custody, specialized consulting or portfolio management services for the fund (Art. 39);

III – the occurrence of subsequent events that have affected or may affect the composition criteria and diversification limits of the fund’s portfolio, as well as the behavior of the credit rights portfolio, with respect to the payment history;

IV – the occurrence of delays in the distribution of earnings to fund shareholders.

......” (New wording)

Art. 2º The following Articles 23-A, 40-A, 40-B and 57-A are added to CVM Instruction No. 356/01:

“Art. 23-A. The classification of the classes or series of shares by a risk rating agency operating in the Country shall be dispensed with in public offerings for distribution of shares in which:

I – the shares, or series of shares, issued by the fund are destined for a single shareholder, or group of shareholders linked by a unique and inseparable interest;

II – the shareholder, or group of shareholders linked by a unique and inseparable interest, subscribes to an adherence term declaring full knowledge of the risks involved in the operation, including the possibility of total loss of the invested capital, and the absence of risk classification of the subscribed shares; and

III – it is established in the Fund bylaws that, in the event of its subsequent modification, aiming to allow the transfer or negotiation of shares in the secondary market, prior registration with this CVM shall be mandatory, in accordance with Art. 2, § 2 of CVM Instruction No. 400/03, with the consequent presentation of the risk classification report now dispensed with.” (Added)

“Art. 40-A. The fund may acquire credit rights and other assets from the same debtor, or from the joint obligation of the same person or entity, up to a limit of 20% (twenty percent) of its net worth.

§ 1º The percentage referred to in the caput may be elevated when the debtor or co-obligor:

I – has registration as an open company;

II – is a financial institution or equivalent, authorized to operate by the Central Bank of Brazil; or

III – is a business company that has its financial statements relative to the social year immediately preceding the date of constitution of the fund prepared in accordance with the provisions of Law No. 6,404, of December 15, 1976, and the regulation issued by the CVM, and audited by an independent auditor registered with the CVM, except for the provisions of § 3 of this article.

§ 2º In the case of item III of § 1, the financial statements of the debtor or co-obligor, and the respective opinion of the independent auditor, shall be filed with the CVM by the administering institution, and must be updated annually:

I – until the date of closure of the fund; or

II – until the exercise in which the credit rights of responsibility of the debtor or co-obligor cease to represent more than 20% (twenty percent) of the credit rights that integrate the fund’s patrimony.

§ 3º The filing with the CVM of the financial statements and the opinion of the independent auditor referred to in item III of § 1 shall take place within a maximum period of 3 (three) months after the closure of the social year, or on the same day of their placement at the disposal of the partners, if this occurs on an earlier date.

§ 4º With respect to business companies responsible for more than 20% (twenty percent) of the credit rights that integrate the fund’s patrimony, the filing with the CVM and the preparation of financial statements in the form provided for in item III of § 1 of this article shall be dispensed with, provided that the fund shares:

I – are subject to a public distribution offering whose target audience is exclusively companies belonging to the same economic group, and their respective administrators and controlling shareholders, with the negotiation of shares in the secondary market being prohibited; or

II – have a unit value equal to or greater than R$ 1,000,000.00 (one million Reais), and are subject to a public offering intended for subscription by no more than 20 (twenty) investors.

§ 5º In the case provided for in item II of § 4 of this article, the subscribed shares may only be negotiated by the holder before 18 (eighteen) months have elapsed from the closure of the distribution, if the negotiation occurs between the holders of the shares, or if the holder alienates all the subscribed shares to a single investor.

§ 6º It is the duty of the intermediary institution to ensure compliance with the provisions of §§ 4 and 5 of this article in the negotiation of shares in the secondary market.

§ 7º For the purposes of this article, the controlling shareholder, the companies directly or indirectly controlled by them, their affiliates and companies under common control are equated to the debtor or co-obligor.” (Added)

“Art. 40-B. The provisions established in Art. 40-A, applicable to credit rights by reason of their debtors and co-obligors, shall also be observed with respect to the originators of the credit rights referred to in § 8 of Art. 40 of this Instruction, when they do not have the guarantee of a financial institution or insurance company.” (Added)

“Art. 57-A. In the cases of fund liquidation, the independent auditor shall issue an opinion on the statement of net worth movement, comprising the period between the date of the last audited financial statements and the date of the actual liquidation of the fund, manifesting on the movements that occurred during the period.

Sole paragraph. After the distribution of assets, the fund administrator shall promote the cancellation of the fund’s registration, by forwarding to the CVM, within a period of 15 (fifteen) days, the following documentation:

I – the closure term signed by the administrator in case of full payment to shareholders, or the minutes of the general assembly that deliberated the liquidation of the fund, if applicable;

II – the statement of net worth movement of the fund referred to in the caput of this article, accompanied by the opinion of the independent auditor; and

III – the proof of entry of the request for deregistration in the CNPJ.” (Added)

Art. 3º Art. 40 of CVM Instruction No. 400, of December 29, 2003, shall enter into force with the following wording:

“Art. 40. ...

Sole paragraph. In public offerings for distribution of securities resulting from securitization operations, in addition to the information and documents indicated in Annex III, the prospectus shall contain the information and documents indicated in Annex III-A.” (New wording)

Art. 4º Annex III-A is added to CVM Instruction No. 400/03, in the form of the annex to this Instruction.

Art. 5º In funds already constituted on the date of entry into force of this Instruction, the custodian may adopt the procedure for collateral verification by sampling, in the form of §§ 1 to 3 of Art. 38 of CVM Instruction No. 356/01, with wording given by this Instruction, provided that the adoption of the procedure is authorized by the general assembly, and the parameters of quantity, diversification and average value of the assigned credits that will entail collateral verification are included in the bylaws.

Art. 6º Art. 55 of CVM Instruction No. 356, of December 17, 2001, is revoked.

Art. 7º This Instruction enters into force within a period of 90 (ninety) days after its publication in the Official Gazette of the Union.

Signed original by

MARCELO FERNANDEZ TRINDADE
President

INSTRUÇÃO CVM Nº 442, DE 08 DE DEZEMBRO DE 2006.

Annex added to CVM Instruction No. 400, of December 29, 2003

ANNEX III-A

ADDITIONAL PROSPECTUS INFORMATION RELATING TO OFFERINGS RESULTING FROM SECURITIZATION OPERATIONS

1. INFORMATION ON THE STRUCTURE OF THE OPERATION:

1.1. Identification of the institutions hired by the offeror, including, as applicable, the manager, the custodian, the risk rating agency, the independent auditor, the trustee agent and other service providers, accompanied by a brief description of their respective functions.

1.2. Description of any types of corporate relations or relevant contractual links (such as business relations or commercial partnerships) that exist, as applicable, between the administrators and controlling shareholders of the offeror, the manager, the custodian, originators, assignors, credit enhancement providers, significant debtors, and other service providers.

1.3. Indication of the remuneration value or the formula used to calculate the remuneration of the administrators and, if applicable, the manager of the offeror, and the fees that the custodian and other service providers will receive for the provision of their services, identifying the source for payment of such expenses, as well as any priority of receipt granted to them.

1.4. Description of the criteria and procedures for the replacement of the offeror’s administrators, the independent auditor and, if applicable, the manager, the custodian, the risk rating agency, the trustee agent and other service providers.

1.5. Description of the rights attributed and the main characteristics of the offered securities, itemized by classes and series, if applicable, and covering, in particular:

1.5.1. identification of the guaranteed or expected yield;

1.5.2. conditions for the issuance, negotiation, amortization and redemption of the securities;

1.5.3. disclosure of the schedule provided for the distribution of resources to the holders of the offered securities, by amortization or redemption, by class, with description of the payment priorities and respective allocations by class of issued securities.

1.5.4. information on minimum investment requirements or demands, if any, as well as on any restrictions on the transfer of shares.

INSTRUCTION CVM NO. 442, OF DECEMBER 8, 2006.

1.6. Description of the relevant tax aspects regarding the securities offered, mentioning the main taxes levied on their subscription or transfer, as well as whether there is differentiated tax treatment according to the main types of investors who subscribe to them.

1.7. Possibility of the assigned credits being added, removed, or substituted, with indication of the conditions under which such events may occur and the effects they may have on the regularity of the payment flows to be distributed to the holders of the offered securities.

1.8. Information and description of credit enhancements and other existing guarantees, exposing how such mechanisms can help or facilitate payments to the holders of the offered securities, covering, among other relevant aspects, the structure and validity of the enhancements, any existing limits, and conditions that must be met for them to be triggered, informing how eventual losses not covered by the enhancements or guarantees provided will be borne.

1.9. Information on the eventual use of derivative instruments that may alter the payment flows provided for the holders of the offered securities. If derivatives are used as a form of portfolio protection, they must be disclosed in the same manner and under the same rules described in the two previous items.

1.10. Investment policy of the offeror, discriminating, among other things, the methods and criteria used for asset selection.

2. INFORMATION ON CREDIT RIGHTS:

2.1. Descriptive information on the relevant characteristics of the credit rights, such as: number of assigned credit rights and total value, expressed in Reais; interest rates (discriminating the regime, whether simple or compound) or returns incident on the assigned credits; maturity periods of the credits, amortization periods, purpose of the credits; description of the guarantees eventually provided for the set of assets, among others.

2.2. Description of how the assignment of credits to the offeror was or will be operated, highlighting the relevant passages of any contracts entered into for this purpose, and indication regarding the definitive or non-definitive nature of the assignment.

2.3. Indication of the levels of concentration of the credit rights, by debtor, in relation to the total value of the credits that serve as collateral for the offered securities.

2.4. Description of the criteria adopted by the originator or assignor for granting credit.

2.5. Collection and payment procedures, covering the frequency and conditions of payment.

INSTRUCTION CVM NO. 442, OF DECEMBER 8, 2006.

2.6. Statistical information on defaults, losses, or prepayment of credits of the same nature as the credit rights that will compose the offeror's assets, covering a period of 3 (three) years immediately preceding the date of the offer, accompanied by an exposition of the methodology used for the purpose of this calculation.

2.7. If the information required in item 2.6 above is not known to the administrators of the offeror or the offer intermediary, nor can it be obtained by them, this fact must be disclosed, together with a declaration that reasonable efforts were made to obtain them. Without prejudice, the information that the administrator and the intermediary have regarding them must be disclosed, even if partial.

2.8. Information on situations of prepayment of the credit rights, with indication of possible effects of this event on the profitability of the offered securities.

2.9. Identification of any events, provided for in the contracts entered into to structure the operation, that may result in the early liquidation or amortization of the credits assigned to the offeror, as well as any other facts that may affect the regularity of the payment flows provided for.

2.10. Description of the main contractual provisions, or, as the case may be, the regulations of the offeror or the issuance deed, which regulate the functions and responsibilities of the custodian or the fiduciary agent, as the case may be, and other service providers, with emphasis on:

2.10.1. procedures for receiving and collecting credits, as well as measures for segregating the values received upon the liquidation of the credit rights;

2.10.2. procedures of the custodian or the fiduciary agent, as the case may be, and of other service providers regarding defaults, losses, bankruptcies, recovery, including mention regarding the eventual execution of guarantees; and

2.10.3. procedures of the custodian or the fiduciary agent, as the case may be, and of other service providers regarding the verification of the collateral of the credit rights.

2.11. Information on any discount rates practiced by the administrators of the offeror in the acquisition of credit rights.

3. ADDITIONAL INFORMATION ON RISK FACTORS:

3.1. Risks arising from the criteria adopted by the originator or assignor for granting credit.

3.2. Risks arising from the business and the patrimonial and financial situation of the debtor or co-obligor classified under the hypotheses provided for in items 5.2 and 5.3 of this Annex.

INSTRUCTION CVM NO. 442, OF DECEMBER 8, 2006.

3.3. Possibility that the credit rights serving as collateral for the issuance may be reached by obligations of the originator or third parties, including as a result of requests for judicial recovery or bankruptcy, or extrajudicial recovery plans, or in another procedure of a similar nature.

3.4. Any restrictions of a legal or regulatory nature that may adversely affect the validity of the constitution and the assignment of the credit rights to the offeror, as well as the behavior of the set of assigned credits and the cash flows to be generated.

3.5. Specific events regarding the operation that may give rise to default or determine the advance, liquidation, or amortization of payments.

3.6. Risks inherent in issuances collateralized by real estate credits, in which the properties linked to real estate credits have not yet received the "habite-se" (occupancy permit) from the competent administrative body.

3.7. Any other risks arising from the structure of the operation and the characteristics and nature of the credit rights and other assets that will integrate the offeror's assets.

4. INFORMATION ON ORIGINATORS:

4.1. Identification of originators and assignors that represent or may come to represent more than 10% (ten percent) of the credits assigned to the offeror, their corporate type must be informed, and general characteristics of their business, and, if applicable, their previous experience in other securitization operations having as object the same asset object of the securitization must be described.

4.2. In the case of originators responsible for more than 20% (twenty percent) of the credit rights assigned to the offeror, when it comes to credit rights originated from warrants and commercial contracts for the purchase and sale of products, goods, or services for future delivery or provision, as well as in titles or certificates representative of these contracts, in addition to the information provided for in item 4.1, their financial statements prepared in accordance with Law No. 6,404/76 and the regulation issued by the CVM, audited by an independent auditor registered with the CVM, referring to the last fiscal year, must be presented. This information will not be required when the credit rights are originated by financial institutions or other institutions authorized to operate by the Central Bank of Brazil.

5. INFORMATION ON DEBTORS OR CO-OBLIGORS:

5.1. Main homogeneous characteristics of the debtors of the credit rights.

5.2. Name of the debtor or obligor responsible for the payment or liquidation of more than 10% (ten percent) of the assets that compose the offeror's assets; corporate type and

INSTRUCTION CVM NO. 442, OF DECEMBER 8, 2006.

general characteristics of their business; nature of the concentration of the assigned credits; relevant contractual provisions relating to them.

5.3. In the case of debtors or co-obligors responsible for more than 20% (twenty percent) of the credit rights, in addition to the information referred to in item 5.2, their financial statements, prepared in accordance with Law No. 6,404/76, and the regulation issued by the CVM, audited by an independent auditor registered with the CVM, referring to the last fiscal year, must be presented. This information will not be required when the debtor or co-obligor is a financial institution or equivalent, authorized to operate by the Central Bank of Brazil, and in the hypotheses where there is a waiver of presentation or filing with the CVM of the financial statements, in the form of the regulation in force.

6. ADDITIONAL ANNEXES:

6.1. Financial statements of debtors or co-obligors responsible for more than 20% (twenty percent) of the credit rights (items 4.2 and 5.3), except when it is a public company, in which case the financial statements may be incorporated by reference.

6.2. Financial statements of originators responsible for more than 20% (twenty percent) of the assigned credits, except when it is a public company, in which case the financial statements may be incorporated by reference.

6.3. Copy of the Real Estate Credit Securitization Term, when it comes to public distribution offers of Real Estate Receivable Certificates – CRI.