CVM Orienting Opinion No. 29 of April 11, 1996

CVM ORIENTING OPINION NO. 29, OF APRIL 11, 1996.
Voluntary Disclosure of Information and Financial Statements in Constant Purchasing Power Currency.

This opinion aims to guide publicly held companies, real estate investment funds, and other entities regulated by the Securities and Exchange Commission (CVM) regarding the preparation and voluntary disclosure of financial statements and periodic information in constant purchasing power currency.

It should be noted initially that the basic principles for the disclosure of mandatory or voluntary information were established by the CVM in 1979, in a document entitled "Information Disclosure Policies," which originated from another document, "Securities Market Regulation: Fundamentals and Principles," approved on 12.21.78, through CMN Vote No. 426, by the National Monetary Council.

This document establishes that the CVM will guide, through norms and standards, publicly held companies regarding the disclosure of minimum information considered essential for the market. It also mentions that company administrators, as responsible for such disclosure, should promote the continuous assessment of additional information needs to the public, given their access and knowledge of facts and their greater capacity to evaluate their relevance, using the criterion of the possible reflection of events on the quotation of the securities issued by them.

In this sense, the principle of the need for prompt disclosure of relevant information is based on the idea that the public should have the opportunity to base their investment decisions on the best available information.

The CVM's concern is not limited only to the content of the information to be disclosed; it also covers the form, periodicity, and timing of disclosure, considering that its wide dissemination represents a way to provide the market with the necessary preconditions for efficiency.

In this dissemination process, some companies disclose only the information required by legislation, while others also disclose, of their own volition, additional information and clarifications, recognizing their responsibility and their interaction with the securities market.

In this context, the role played by market analysts, investment fund managers, and pension fund managers is fundamental in the process of obtaining and disseminating information considered useful so that their investment decisions can be adequately taken. By interpreting the available information quickly and transmitting it to the market, duly interpreted, these agents make the existence of an efficient market possible.

The document on Disclosure Policies, previously referred to, also mentions that the Securities and Exchange Commission may provide guidance on how to make this voluntary information more useful to the market.

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Considering these basic premises, the CVM, through this Orienting Opinion, establishes minimum standards regarding the presentation of voluntary statements and information in constant purchasing power currency, the disclosure of which to the market is considered relevant by publicly held companies.

Law No. 9.249, of 12.26.95, in consonance with the economic measures adopted, eliminated, through its articles 4 and 5, the adoption of any system of monetary balance correction, both for tax purposes and for corporate purposes.

The CVM, in turn, adapting its norms to the new legislation in force, issued CVM Instruction No. 248, of March 29, 1996, in which, in addition to requiring the presentation of quarterly information and statements in consonance with Law No. 9.249/95, it made optional their preparation and disclosure in constant purchasing power currency.

Therefore, from this moment on, the information presented in constant purchasing power currency, prepared in the form of the still in force CVM Instruction No. 191/92, has become voluntary in nature.

However, it is relevant to emphasize that publicly held companies must evaluate the importance of this information, including for comparative analysis purposes, and its disclosure, in order to meet, in a more complete manner, the demands of the market.

Thus, both publicly held companies and real estate investment funds and other entities subject to CVM norms that choose to voluntarily disclose information or complementary statements, prepared in constant purchasing power currency, must follow, as guidance, the following requirements:

a) Periodicity - the entities mentioned above, aiming to maintain a recommendable policy of interaction and information with the market, may, at their exclusive discretion, disclose this type of information on a monthly, quarterly, semi-annual, or even annual basis. However, in choosing the periodicity, the basic premise of the need to maintain this information consistently over time must also be considered. In other words, if there is an option to disclose this information in a given quarter, this disclosure must be maintained in subsequent quarters. This disclosure periodicity can only be discontinued when such information is justifiably considered irrelevant;

b) Minimum Content - the CVM understands that, in the voluntary disclosure of data in constant purchasing power currency, a minimum content of information must be presented, such as:

o Statement of Results: net operating revenue, gross profit, net financial expenses, net profit/loss;

o Balance Sheet: inventories and advances, permanent assets, total assets, and shareholders' equity; and

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o Reconciliation with the result and with the net assets determined in the commercial bookkeeping;

c) Criteria for preparation - given that the criteria provided for in CVM Instruction No. 191/92 are already completely disseminated, this should be the methodology adopted for the preparation of information and statements in constant purchasing power currency; and

d) Index - the choice of the price index for the preparation of voluntary information or statements is at the discretion of the entity, however, the justification for the chosen index must be disclosed. We also emphasize that, to preserve the methodology of CVM Instruction No. 191/92, a general price index must be used.

Still within the premises that guide the Information Disclosure Policy, it is recommendable that companies, together with their auditors, evaluate the convenience, not only of the voluntary presentation of this type of information. They must also consider the convenience of its insertion as explanatory notes to the published financial statements and to the quarterly information sent to this Commission or even the presentation of these complete statements and quarterly information, in constant purchasing power currency.

In this regard, Law No. 6.404/76 establishes that financial statements must be completed by explanatory notes and other analytical tables or accounting statements necessary to clarify the entity's financial situation and its results.

Thus, it is up to independent auditors, in the exercise of their activities in the securities market, to evaluate the convenience of disclosing this information, recording in their opinion or quarterly review report, when not revealed, the relevant effects resulting from it.

The guidelines and recommendations contained in this opinion also extend to consolidated financial statements, prepared in the form of article 249 of Law No. 6.404/76.

Finally, we clarify that the quarterly information and financial statements relating to the 1995 fiscal year, to be presented comparatively with those of 1996, must be presented in the form of corporate legislation, at historical values, and with evidence of this fact.

Originally signed by
ANTÔNIO CARLOS DE SANTANA
Superintendent of Accounting Standards and Auditing

Approved in a meeting of the Collegiate on 04.11.96.

Originally signed by
FRANCISCO AUGUSTO DA COSTA E SILVA
President