CVM Instruction No. 565 of June 15, 2015 (Revoked)

SECURITIES AND COMMODITIES COMMISSION
Sete de Setembro Street, 111/2-5th and 23-34th Floors – Center – Rio de Janeiro - RJ – ZIP: 20050-901 – Brazil Tel.: (21) 3554-8686 - www.cvm.gov.br

CVM INSTRUCTION NO. 565, OF JUNE 15, 2015

Provides for merger, spin-off, incorporation, and share incorporation operations involving issuers of securities registered in Category A.

THE ACTING PRESIDENT OF THE SECURITIES AND COMMODITIES COMMISSION - CVM makes public that the Collegiate Body, in a meeting held on May 19, 2015, based on the provisions of Articles 8, I and III, and 22, §1, I, of Law No. 6,385, of December 7, 1976, and Articles 137, II, “a”, 226, §3, 252, §4, and 264 of Law No. 6,404, of December 15, 1976, APPROVED the following Instruction:

CHAPTER I – PRELIMINARY PROVISIONS

Art. 1 This Instruction is applicable to merger, spin-off, incorporation, and share incorporation operations involving at least one issuer of securities registered in Category A.

Art. 2 For the purposes of this Instruction, understand by:
I – circulating shares: those considered as such in the CVM regulation regarding public offers for the acquisition of shares; II – operation: is the merger, spin-off, incorporation, or share incorporation or a set of related mergers, spin-offs, incorporations, or share incorporations involving, at least, one issuer of securities registered in Category A; and III – issuer of securities registered in Category A: that defined as such in the CVM regulation regarding the registration of issuers of securities admitted to trading in regulated securities markets.

CHAPTER II – DISCLOSURE OF INFORMATION

Art. 3 Without prejudice to the information and documents necessary for the exercise of voting rights in a general meeting provided for in specific norms, the material fact regarding an operation must contain, at minimum, the provisions of Annex 3, to the extent that such information is known.

Art. 4 If the controlling shareholder or the company discloses to the market the proposed exchange ratio or the criterion for its determination that are still subject to changes, the following information must be provided to the market:
I – the reasons that led to the disclosure at that moment; II – the stage in which the negotiations are; III – the circumstances in which the disclosed exchange ratio or criterion may still be altered; and IV – in the case of a proposal from the controlling shareholder not yet evaluated by the company’s management:
a) whether the proposal is binding; b) the deadline for acceptance, if any; c) other relevant terms and conditions; d) the measures the management intends to take to evaluate the proposal; and e) the expected date for the conclusion of negotiations, if it is possible to estimate it.

Art. 5 The administrators of the open capital company involved in the negotiation of the operation must act with care and diligence to verify that all information provided by the other societies involved in the operation complies with the applicable regulation.

CHAPTER III – FINANCIAL STATEMENTS

Art. 6 For the purposes of the operation, the societies involved must disclose financial statements, whose base date:
I – is the same for all societies involved; and II – is not earlier than 180 (one hundred and eighty) days from the date of the meeting that will deliberate on the operation.

§ 1 Even if some of the societies involved in the operation are not joint-stock companies nor subject to the norms issued by the CVM, the financial statements referred to in the caput must be:
I – prepared in accordance with Law No. 6,404, of December 15, 1976, and with CVM norms; and II – audited by an independent auditor registered with the CVM.

§ 2 Open capital companies may use, for the purposes of the caput, the end-of-fiscal-year financial statements and quarterly information forms regularly required to comply with their periodic obligations to the CVM.

§ 3 The period referred to in item II of the caput may be extended to up to 360 (three hundred and sixty) days, at the discretion of the administrators of the open capital companies involved, provided that:
I - the economic-financial situation of the societies involved in the operation has not changed significantly after the base date of the statements; and II - the administrators of the society involved in the operation responsible for preparing the financial statements whose base date exceeds 180 (one hundred and eighty) days sign a declaration, to be disclosed along with the financial statements, attesting to the provision of item I.

Art. 7 The societies involved in the operation must prepare pro forma financial information for the societies that will survive or result from the operation, as if they already existed, referring to the date of the financial statements referred to in Art. 6, I. Sole Paragraph. The financial information referred to in the caput must be:
I – prepared in accordance with Law No. 6,404, of 1976, and with CVM norms; and II – submitted to reasonable assurance by an independent auditor registered with the CVM.

CHAPTER IV – VALUATION

Art. 8 The appraisal reports prepared for the purposes of Art. 264 of Law No. 6,404, of 1976, may use one of the following criteria:
I – net asset value at market prices; or
II – discounted cash flow.

§ 1 The criterion provided for in item II can only be used for the purposes of Art. 264 of Law No. 6,404, of 1976, if it has not been used as the determining criterion to establish the proposed exchange ratio.

§ 2 The reports referred to in the caput must observe, where applicable, the provisions of the CVM regulation regarding the valuation of companies subject to public offers for the acquisition of shares.

§ 3 The CVM may authorize, on a case-by-case basis and since the requests are duly justified, other criteria for the preparation of the appraisal reports required for the purposes of Art. 264 of Law No. 6,404, of 1976.

CHAPTER V – LIQUIDITY CRITERION

Art. 9 The liquidity condition provided for in Art. 137, II, “a”, of Law No. 6,404, of 1976, will be met when the species or class of share, or certificate representing it, integrates the Bovespa Index – IBOVESPA on the date of the material fact notice announcing the operation.

CHAPTER VI – FINAL PROVISIONS

Art. 10. The obligations provided for in Chapter III do not apply to share incorporations or share incorporations of closed companies by an issuer of securities registered in Category A if the operation does not represent a dilution greater than 5% (five percent).

§ 1 The dilution referred to in the caput will be considered greater than 5% (five percent) when the result of dividing the number of shares issued as a result of the operation by the total number of shares after issuance is greater than 0.05 (five hundredths).

§ 2 In reverse operations (incorporation or share incorporation of the parent company by the subsidiary when the parent company is an open capital company) or in mergers involving at least one open capital company, the dilution referred to in the caput will be considered greater than 5% (five percent) when the result of dividing the number of issuing shares of the acquiring society or resulting from the merger attributed to the original shareholders of the open capital company by the total number of issuing shares of the acquiring society or resulting from the merger after the operation is less than 0.95 (ninety-five hundredths).

§ 3 The financial information referred to in Art. 7 is due in operations considered relevant according to the criteria established by norms, orientations, and accounting interpretations regarding pro forma financial information, even if they do not imply dilution greater than 5% (five percent).

Art. 11. Violations of Arts. 3 to 9 of this Instruction are considered serious for the purposes of Art. 11, § 3, of Law 6,385, of December 7, 1976.

Art. 12. CVM Instruction No. 481, of December 17, 2009, shall enter into force amended with Art. 20-A, according to the wording below, and Annex 20-A, according to the wording of Annex 12 to this Instruction:
“Art. 20-A. Whenever the general meeting is convened to deliberate on merger, spin-off, incorporation, and share incorporation operations involving at least one issuer of securities registered in Category A, the company must provide, at minimum, the information indicated in Annex 20-A. Sole Paragraph. Capital increase or decrease operations resulting from the merger, spin-off, incorporation, or share incorporation referred to in the caput are not subject to the obligations provided for in Arts. 14 and 16 of this Instruction.” (NR)

Art. 13. Are revoked:
I – items I, III to VII of Art. 1, Arts. 2 to 5, 10 to 15, and 17 of CVM Instruction No. 319, of December 3, 1999; and II – CVM Instruction No. 320, of December 6, 1999.

Art. 14. This Instruction enters into force on the date of its publication.

Sole Paragraph. This Instruction does not apply to operations announced before the date of its publication.

Original signed by
ROBERTO TADEU ANTUNES FERNANDES
President
In Exercise

ANNEX 3 to CVM Instruction No. 565, of June 15, 2015.

ANNEX 3

1. Identification of the societies involved in the operation and brief description of activities performed by them
2. Description and purpose of the operation
3. Main benefits, costs, and risks of the operation
4. Exchange ratio of shares
5. Criterion for fixing the exchange ratio
6. Main active and passive elements that will form each portion of the equity, in case of spin-off
7. Whether the operation was or will be submitted to approval by Brazilian or foreign authorities
8. In operations involving controlling, controlled societies, or societies under common control, the exchange ratio of shares calculated according to Art. 264 of Law No. 6,404, of 1976
9. Applicability of the dissenting shareholder’s right and value of reimbursement
10. Other relevant information

ANNEX 12 to CVM Instruction No. 565, of June 15, 2015.

ANNEX 20-A

1. Protocol and justification of the operation, in accordance with Arts. 224 and 225 of Law No. 6,404, of 1976
2. Other agreements, contracts, and pre-contracts regulating the exercise of voting rights or the transfer of shares issued by the surviving or resulting societies, filed at the company’s headquarters or of which the company’s controller is a party
3. Description of the operation, including:
   a. Terms and conditions b. Indemnification obligations:
   i. Administrators of any of the companies involved
   ii. In case the operation does not materialize
   c. Comparative table of rights, advantages, and restrictions of shares of the involved or resulting societies, before and after the operation
   d. Possible need for approval by debenture holders or other creditors e. Active and passive elements that will form each portion of the equity, in case of spin-off f. Intention of the resulting companies to obtain registration as an issuer of securities
4. Plans for conducting business affairs, notably regarding specific corporate events intended to be promoted
5. Analysis of the following aspects of the operation:
   a. Description of main expected benefits 1, including:
   i. Synergies
   ii. Tax benefits

1 Whenever benefits are measured by administrators, estimates must be disclosed.

iii. Strategic advantages
b. Costs
c. Risk factors
d. In case of a transaction with a related party, possible alternatives that could have been used to achieve the same objectives, indicating the reasons why these alternatives were discarded 2 e. Exchange ratio f. In operations involving controlling, controlled societies, or societies under common control
i. Exchange ratio of shares calculated according to Art. 264 of Law No. 6,404, of 1976
ii. Detailed description of the negotiation process of the exchange ratio and other terms and conditions of the operation
iii. In case the operation was preceded, in the last 12 (twelve) months, by a control acquisition or acquisition of a block of control participation:

• Comparative analysis of the exchange ratio and the price paid in the control acquisition
• Reasons justifying possible differences in valuation in different operations
  iv. Justification for why the exchange ratio is commutative, with the description of procedures and criteria adopted to guarantee the commutativity of the operation or, in case the exchange ratio is not commutative, detailing the payment or equivalent measures adopted to ensure adequate compensation.

6. Copy of the minutes of all meetings of the board of directors, fiscal council, and special committees in which the operation was discussed, including any dissenting votes
7. Copy of studies, presentations, reports, opinions, appraisals, or valuation reports of the companies involved in the operation made available to the controlling shareholder at any stage of the operation
   7.1. Identification of possible conflicts of interest between the financial institutions, companies, and professionals who prepared the documents mentioned in item 7 and the societies involved in the operation
8. Draft statutes or statutory amendments of the societies resulting from the operation
9. Financial statements used for the purposes of the operation, in accordance with specific norms
10. Pro forma financial statements prepared for the purposes of the operation, in accordance with specific norms
11. Document containing information about the societies directly involved that are not open capital companies, including 3 :
    a. Risk factors, in accordance with items 4.1 and 4.2 4 of the reference form b. Description of main changes in risk factors occurring in the previous fiscal year and expectations regarding reduction or increase in exposure to risks as a result of the operation, in accordance with item 5.4 of the reference form 5
    c. Description of your activities, in accordance with items 7.1, 7.2, 7.3, and 7.4 of the reference form
    d. Description of the economic group, in accordance with item 15 of the reference form e. Description of share capital, in accordance with item 17.1 of the reference form
12. Description of capital structure and control after the operation, in accordance with item 15 of the reference form

3 It is unnecessary to provide the information referred to in this item regarding societies that meet the following conditions: (i) do not have liabilities of any nature; and (ii) have as their only asset shares of other societies involved in the operation. 4 Information on market risks must be provided in accordance with item 5.1 of the reference form until the changes made by CVM Instruction No. 552, of October 9, 2014, in Annex 24 of CVM Instruction No. 480, of December 7, 2009, enter into force on January 1, 2016. 5 Information on market risks must be provided in accordance with item 4.2 of the reference form until the changes made by CVM Instruction No. 552, of October 9, 2014, in Annex 24 of CVM Instruction No. 480, of December 7, 2009, enter into force on January 1, 2016.

13. Number, class, species, and type of securities of each society involved in the operation held by any other societies involved in the operation, or by persons linked to these societies, as defined by norms dealing with public offer for acquisition of shares
14. Exposure of any of the societies involved in the operation, or persons linked to them, as defined by norms dealing with public offer for acquisition of shares, in derivatives referenced in securities issued by the other societies involved in the operation
15. Report covering all transactions carried out in the last 6 (six) months by the persons indicated below with securities issued by the societies involved in the operation:
    a. Societies involved in the operation
    i. Private purchase operations

• average price
• quantity of shares involved
• security involved
• percentage relative to class and species of the security
• other relevant conditions
  ii. Private sale operations
• average price
• quantity of shares involved
• security involved
• percentage relative to class and species of the security
• other relevant conditions
  iii. Purchase operations in regulated markets
• average price
• quantity of shares involved
• security involved
• percentage relative to class and species of the security
• other relevant conditions
  iv. Sale operations in regulated markets
• average price
• quantity of shares involved
• security involved
• percentage relative to class and species of the security
• other relevant conditions
  b. Related parties to societies involved in the operation
  i. Private purchase operations
• average price
• quantity of shares involved
• security involved
• percentage relative to class and species of the security
• other relevant conditions
  ii. Private sale operations
• average price
• quantity of shares involved
• security involved
• percentage relative to class and species of the security
• other relevant conditions
  iii. Purchase operations in regulated markets
• average price
• quantity of shares involved
• security involved
• percentage relative to class and species of the security
• other relevant conditions
  iv. Sale operations in regulated markets
• average price
• quantity of shares involved
• security involved
• percentage relative to class and species of the security
• other relevant conditions

16. Document through which the Independent Special Committee submitted its recommendations to the Board of Directors, in case the operation was negotiated in accordance with CVM Orientation Opinion No. 35, of 2008.