CVM Instruction No. 509 of November 16, 2011

CVM INSTRUCTION NO. 509, OF NOVEMBER 16, 2011
Adds articles to CVM Instruction No. 308, of May 14, 1999, and alters articles and annex of CVM Instruction No. 480, of December 7, 2009.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Board, in a meeting held on November 1, 2011, based on arts. 1, item VII, 21, 22 and 26 of Law No. 6.385, of December 7, 1976, and on art. 177, § 3, of Law No. 6.404, of December 15, 1976, APPROVED the following Instruction:

Art. 1. CVM Instruction No. 308, of May 14, 1999, shall enter into force with the addition of arts. 31-A, 31-B, 31-C, 31-D, 31-E and 31-F, with the following wording:

“Art. 31-A The period established in art. 31 of this Instruction is up to 10 (ten) consecutive years if:
I – the audited company has a Statutory Audit Committee - SAC in permanent operation; and II – the auditor is a legal entity.
§ 1. For the use of the prerogative provided in the main text, the SAC must be installed in the social exercise prior to the hiring of the independent auditor. § 2. Adopted the prerogative provided in the main text, the independent auditor must proceed with the rotation of the technical manager, director, manager, and any other member of the audit team with a management function, in a period not exceeding 5 (five) consecutive years, with a minimum interval of 3 (three) years for their return.” (NR)

“Art. 31-B The SAC must:
I – be provided for in the company’s bylaws;
II – be an advisory body directly linked to the board of directors; III – meet whenever necessary, but at least bimonthly, so that accounting information is always reviewed before its disclosure; IV – have its own internal regulations, approved by the board of directors, which detail its functions, as well as its operational procedures; V – have a coordinator, whose activities must be defined in the internal regulations; VI – have means to receive complaints, including confidential ones, internal and external to the company, on matters related to the scope of its activities; and VII – have operational autonomy and annual or project-based budget allocation, within limits approved by the board of directors, to conduct or determine the realization of consultations, evaluations, and investigations within the scope of its activities, including the hiring and use of independent external specialists. § 1. The meetings of the SAC must be recorded in minutes. § 2. The coordinator of the SAC, accompanied by other members of the SAC when necessary or convenient, must:
I – meet with the board of directors, at least quarterly; and II – attend the company’s ordinary general meeting.”(NR)

“Art. 31-C The SAC must be composed of, at least, 3 (three) members, nominated by the board of directors, who will serve their terms for, at most, 10 (ten) years, being:
I – at least, 1 (one) member of the company’s board of directors, who does not participate in the executive board; and II – a majority of independent members. § 1. The participation of the company’s directors, its controlled companies, holding company, affiliates, or companies under common control, directly or indirectly, in the SAC is prohibited.

§ 2. For the independence requirement referred to in item II of the main text to be met, the SAC member:
I – cannot be, or have been, in the last 5 (five) years:
a) director or employee of the company, its holding company, controlled company, affiliate, or company under common control, directly or indirectly; or b) technical manager of the team involved in the audit work of the institution; and II – cannot be a spouse, relative in a straight or collateral line, up to the third degree, and by affinity, up to the second degree, of the persons referred to in item I. § 3. The members of the SAC must meet the requirements provided in art. 147 of Law No. 6.404, of December 15, 1976. § 4. Having served a term for any period, the members of the SAC may only return to integrate such body, in the same company, after at least 3 (three) years have elapsed from the end of the term. § 5. At least 1 (one) of the members of the SAC must have recognized experience in corporate accounting matters. § 6. For the recognized experience in corporate accounting matters, provided in § 5 of the main text, to be met, the SAC member must possess:
I – knowledge of generally accepted accounting principles and financial statements; II – ability to evaluate the application of these principles regarding the main accounting estimates; III – experience preparing, auditing, analyzing, or evaluating financial statements that have a level of scope and complexity comparable to that of the company;

IV – educational background compatible with the corporate accounting knowledge necessary for the activities of the SAC; and V – knowledge of internal controls and corporate accounting procedures. § 7. Compliance with the requirements provided in § 6 of the main text must be proven by documentation kept at the company’s headquarters, available to the CVM, for a period of 5 (five) years counted from the last day of the term of the SAC member. § 8. The members of the SAC must maintain an impartial and skeptical stance in the performance of their activities, and especially regarding the estimates present in the financial statements and the management of the company. § 9. The replacement of an SAC member must be communicated to the CVM within 10 days counted from their replacement.” (NR)

“Art. 31-D It is the responsibility of the SAC:
I – to advise on the hiring and dismissal of the independent auditor for the preparation of independent external audit or for any other service; II – to supervise the activities:
a) of the independent auditors, in order to evaluate:

1. their independence;
2. the quality of the services provided; and
3. the adequacy of the services provided to the company’s needs;
   b) of the company’s internal controls area; c) of the company’s internal audit area; and

d) of the company’s financial statement preparation area; III – to monitor the quality and integrity:
a) of the internal control mechanisms; b) of the quarterly information, interim statements, and financial statements of the company; and c) of the information and measurements disclosed based on adjusted accounting data and non-accounting data that add elements not provided for in the structure of usual financial reports; IV – to evaluate and monitor the company’s risk exposures, possibly requesting detailed information on policies and procedures related to:
a) executive compensation; b) the use of the company’s assets; and c) the expenses incurred in the name of the company; V – to evaluate and monitor, together with management and the internal audit area, the adequacy of related party transactions carried out by the company and their respective disclosures; and VI – to prepare a summary annual report, to be presented together with the financial statements, containing the description of:
a) its activities, results, conclusions reached, and recommendations made; and b) any situations in which there is a significant divergence between the company’s management, the independent auditors, and the SAC regarding the company’s financial statements.”(NR)

“Art. 31-E The company must keep at its headquarters and available to the CVM, for a period of 5 (five) years, a detailed annual report prepared by the SAC, containing the description of:
a) its activities, results, conclusions reached, and recommendations made; and b) any situations in which there is a significant divergence between the company’s management, the independent auditors, and the SAC regarding the company’s financial statements.”(NR) “Art. 31-F The independent auditors must meet the demands of the SAC in all matters within its competence.”(NR)

Art. 2. § 1 of art. 25 of CVM Instruction No. 480, of December 7, 2009, shall enter into force with the addition of item VII:
“Art. 25. ......
§ 1. ......
V – declaration by the directors that they reviewed, discussed, and agreed with the opinions expressed in the independent auditors’ report, stating the reasons, in case of disagreement; VI – declaration by the directors that they reviewed, discussed, and agreed with the financial statements; and VII – summary annual report of the audit committee, if any. ......”(NR)

Art. 3. Art. 30 of CVM Instruction No. 480, of 2009, shall enter into force with the addition of items XXIX to XXXI:
“Art. 30. ......

XXVII – denying or granting sentence of the bankruptcy petition, on the same day of its knowledge by the issuer; XXVIII – decree of intervention or liquidation, with the indication of the appointed receiver or liquidator, on the same day of its knowledge by the issuer; XXIX – communication regarding the installation of a statutory audit committee, which must contain, at least, the name and curriculum of its members, within 7 (seven) business days counted from its installation; XXX – communication regarding changes in the composition or dissolution of the statutory audit committee, within 7 (seven) business days counted from the date of the event; and XXXI – internal regulations of the statutory audit committee and any amendments, within 7 (seven) business days counted from its installation or the approval of the amendments by the board of directors. ......”(NR)

Art. 4. Art. 31 of CVM Instruction No. 480, of 2009, shall enter into force with the addition of items XX to XXII:
“Art. 31. ......
XVIII – denying or granting sentence of the bankruptcy petition, on the same day of its knowledge by the issuer; XIX – decree of intervention or liquidation, with the indication of the appointed receiver or liquidator, on the same day of its knowledge by the issuer; XX – communication regarding the installation of a statutory audit committee, which must contain, at least, the name and curriculum of its members, within 7 (seven) business days counted from its installation;

XXI - communication regarding changes in the composition or dissolution of the statutory audit committee, within 7 (seven) business days counted from the date of the event; and XXII – internal regulations of the statutory audit committee and any amendments, within 7 (seven) business days counted from its installation or the approval of the amendments by the board of directors. ......”(NR)

Art. 5. Item 12.8 of Annex 24 of CVM Instruction No. 480, of 2009, shall enter into force with the following wording:
“12.8. Regarding each of the administrators, members of the statutory audit committee, and members of the statutory audit committee, provide:
......”(NR)

Art. 6. The use of the prerogative provided in the main text of article 31-A of Instruction No. 308, of 1999, as amended by this Instruction, is permitted for the company that, on December 31, 2011, has an installed and operating audit committee, which complies with the requirements of this Instruction, provided that it promotes the amendment of its bylaws to provide for the existence of the audit committee within 120 (one hundred and twenty) days counted from January 1, 2012.

Art. 7. This Instruction enters into force on the date of its publication.

Signed original by
MARIA HELENA DOS SANTOS FERNANDES DE SANTANA
President