CVM ORIENTING OPINION NO. 33, OF SEPTEMBER 30, 2005.

Intermediation of operations and offering of securities issued and admitted to trading in other jurisdictions.

This orienting opinion aims to clarify the Securities and Exchange Commission's (CVM) understanding regarding the interpretation (i) of Articles 19 and 21 of Law No. 6,385/76 and Article 4, §1 and §2 of Law No. 6,404/76 to characterize an offering of securities as public in Brazil, when the issuer of the securities is located in another jurisdiction, given, in particular, the need for registration of the issuer and the offering before this Commission; and (ii) of Article 16 of Law No. 6,385/76, regarding the need for registration, before this Commission, of agents who intend to exercise intermediation, in Brazil, of operations with securities issued and traded in other jurisdictions, for investors resident in Brazil.

The discussion on the need for registration of agents who intend to exercise intermediation of operations with securities issued and traded in other jurisdictions gained significant importance with the popularization of the Internet and, especially, when the services provided through its use began to include the intermediation of operations in the securities market (home broker). This created the necessary means for people resident in different countries to easily access markets located in distinct jurisdictions.

It is possible, however, that operations and offerings of securities issued and admitted to trading in other jurisdictions be carried out without the use of the Internet. For this reason, this Commission decided to issue another specific orienting opinion for the issues raised by the Internet (Orienting Opinion No. 32, also issued on this date). Thus, this orienting opinion will deal specifically with the offering of securities and the exercise of activities subject to authorization by the Securities and Exchange Commission by foreign issuers and intermediaries for investors resident in Brazil.

However, these two opinions must be read together whenever one intends to understand the Securities and Exchange Commission's understanding regarding offerings of securities and the exercise of activities subject to the authorization of the Securities and Exchange Commission itself, when the Internet is used as a means of communication (i) between an intermediary located abroad and investors resident, domiciled, or incorporated in Brazil (in this opinion, these investors will be referred to simply as "investors resident in Brazil") or (ii) for the offering of a security issued abroad to investors resident in Brazil.

1. Intermediation of Operations with Securities Carried Out in Other Jurisdictions and Authorization of the Securities and Exchange Commission.

Brazilian law determines that only members of the distribution system (Article 15 of Law No. 6,385/76) duly registered with the CVM (Article 16 of Law No. 6,385/76) are authorized to offer intermediation services for operations with securities in Brazil or exercise intermediation activity in Brazil. Among the conditions imposed for registration as a member of the Brazilian distribution system are: (i) the need for domicile or headquarters in Brazil, or (ii) specific authorization to exercise activity in Brazil by a legal entity incorporated abroad.

Thus, authorization to provide intermediation services for operations with securities, granted by a foreign regulatory body or resulting from applicable legislation in another jurisdiction, does not ensure the right to intermediate the trading of securities in the Brazilian market.

However, the intermediation of operations with securities issued and offered exclusively abroad, carried out for investors resident in Brazil by intermediaries incorporated abroad, does not constitute irregularity provided that (i) the investor prospecting activity was carried out abroad and (ii) the operation to be intermediated does not constitute a public offering in Brazil (see item 2 of this Opinion).

If, however, intermediaries incorporated abroad intend to offer securities issued abroad to residents in Brazil through investor prospecting in this Country, they must (a) register with the Securities and Exchange Commission as a member of the Brazilian distribution system, or (b) contract an institution that is a member of the Brazilian distribution system to conduct the intermediation in Brazil. Additionally, intermediaries must observe whether the issuer of the offered security or its offering is subject to registration with the CVM, as discussed in the next item of this opinion.

2. Public Offering of Distribution of Securities.

Brazilian law determines that the issuer of securities who intends to publicly issue securities in the Brazilian market must, prior to the distribution of these securities, register with this Commission (Article 4, §1, of Law No. 6,404/76 and Article 21 of Law No. 6,385/76).

In addition to this registration, it is also necessary to register the public offering of distribution itself (Article 4, § 2, of Law No. 6,404/76 and Article 19 of Law No. 6,385/76), except in cases where CVM regulation, based on §5, I, of the cited Article 19, dispenses with this registration.

In light of the growing internationalization of markets, but following legal principles regarding the registration of issuers and public offerings, the Securities and Exchange Commission, as well as other competent public bodies, issued regulations governing the issuance of securities in Brazil representative of securities issued by open companies, or similar, incorporated in other jurisdictions (Depositary Receipts or BDRs).

The regulation requires that the issuing company (or similar) also be registered with the CVM, except for Level I and II BDRs. Similarly, it is required that any public offering of these securities be registered.

On the other hand, the Securities and Exchange Commission issued Instruction 400/03, which, in its Article 4, IV, and Articles 5, 57, and 58, creates procedures to harmonize the rules applicable to public offerings that are carried out simultaneously in Brazil and in another jurisdiction.

Article 19, §5, item I of Law No. 6,385/76 allows the Securities and Exchange Commission to issue norms creating exceptions to the requirement of prior registration of public offerings. However, to date, no norm has been issued by this Commission that generally dispenses with the registration of public offering of distribution of securities issued by entities incorporated in other jurisdictions.

Thus, any public offering of securities issued by these companies, with prospecting in Brazil of investors resident here, that does not fall under the exemption cases applicable to public offerings in general already provided for in the current regulation, must be previously registered with this Commission.

However, for a distribution offering of securities issued abroad to be characterized as public in Brazil, it is necessary that one of the communication means provided for in Article 19, §3 of Law No. 6,385/76 be used, as detailed in Article 3 of Instruction 400/03, and the offering (or the offeror) does not fall under any of the exceptions existing in the CVM regulation.

It is important to note that it is not enough to use the communication means listed in the cited device, but that this communication means be used with the purpose of reaching the general public resident in Brazil. The definition of general public used here is the same as in Article 3, §1 of Instruction 400/03 (that is, a class, category, or group of people, even if individualized in this capacity, except those who have a prior commercial, credit, corporate, or labor relationship, close and habitual, with the issuer).

The offering may also be characterized as public, even when there is no intention to reach the general public resident in Brazil, the use of any communication means, provided they allow reaching this public and the due precautions to prevent this from occurring are not taken.

Regarding distribution offerings of securities issued abroad, carried out through the Internet, for them not to be characterized as directed to the public resident in Brazil and, consequently, subject to regulation, supervision, and registration by the Securities and Exchange Commission, in addition to the general factors contained in Orienting Opinion No. 32 of this same date, the following will be observed:

a) existence of a notice, displayed clearly and with easy access, stating that the distribution of securities is intended only for the countries in which the sponsor of the page – information provider – (or the entity that has the distribution of its securities announced on the page) is authorized to offer its securities (the list of these countries must be included in the advertisement itself);

b) effective measures taken by the sponsor of the page – information provider – of the page on the Internet to prevent investors resident in Brazil from having access to the content of the page;

c) direct or indirect indication, provided it is sufficiently clear, that the page was not created for investors resident in Brazil (the dissemination of economic projections in Brazilian currency or including Brazil among the countries listed in any form, or still, the comparison between the issuer of the securities and Brazilian issuers, are considered as an indication that the page is also directed at investors resident in Brazil); and

d) absence, even in a foreign language, of text to attract investors resident in Brazil.

Although they do not have the same importance as the factors mentioned in the previous paragraph, the Securities and Exchange Commission may also consider, to evaluate whether the offering was directed at investors resident in Brazil, the use of the Portuguese language and the physical location of the provider.

Approved by the Collegiate Body in a meeting on September 28, 2005.

Original signed by

MARCELO FERNANDEZ TRINDADE
President