CVM Orienting Opinion No. 9

CVM ORIENTING OPINION NO. 9, OF OCTOBER 1, 1981.

SUMMARY: The CVM, in regulating access guarantees in capital increases by public subscription, sought to establish parameters within which it would be possible to increase the shareholding base of the open company, while simultaneously ensuring equitable treatment for potential investors (art. 4 c/c art. 32 of CVM INSTRUCTION NO. 13/80).

In consonance with this objective, and to reinforce it, Decree-Law No. 1841/80 admitted the reduction of Income Tax due, at a base of 30%, when that access guarantee is ensured to at least one-third of the issuance (art. 2, item III, letter "a").

The access guarantee, under the terms of CVM INSTRUCTION NO. 13/80, presupposes especially that:

1. in the General Shareholders' Meeting that deliberates the increase, the adoption of that system is declared;
2. occurs, in the same assembly, a waiver by shareholders of their preemptive rights, so as to make precise the quantity of shares that will be subject to the access guarantee. In the event that one intends to claim the incentive of 30% reduction in Income Tax due, referred to in the aforementioned Decree-Law No. 1,841/80, that amount cannot be less than one-third of the issuance;
3. there are detailed information in the prospectus, so as to provide the investor with adequate evaluation of their investment.

The Securities and Exchange Commission, in regulating the registration system for the distribution of shares by public subscription, in CVM INSTRUCTION NO. 13, in force since January 1 of this year, introduced a distribution system whose main objective is to enable the expansion of the shareholding base of open companies, as well as to broaden the still small set of companies that use the primary stock market as an alternative source of resource capture.

The vast majority of open companies still have strongly concentrated shareholding control, a situation that repeats itself in more extreme conditions in companies that are in the process of going public.

Therefore, the terms under which the distribution with access guarantee must be processed were meticulously established in this Instruction, from its deliberation and disclosure to the actual use of reserve and pro-rata mechanisms, whenever it is the intention of the issuing company, and the financial institution in the operation, to adopt it with the mentioned objective.

CVM ORIENTING OPINION NO. 9, OF OCTOBER 1, 1981.
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Otherwise, the adoption of more restrictive or directed distribution procedures was admitted, provided for in item II of article 31 of CVM INSTRUCTION NO. 13, that is, different, in any of the requirements in which the distribution with access guarantee as defined in the Instruction must be processed.

Thus, several of its provisions determine not only the procedures that must be followed by the competent corporate body to deliberate on the issuance, with a view to ensuring broad access, but also trace a roadmap to be followed by the company that aims to obtain the advantages of adopting this system.

In this sense, CVM INSTRUCTION NO. 13 provides, in its article 4, item VIII, letter "a", that in the case of public subscription, it will be up to the General Assembly of the issuing company, or its Board of Directors, when deliberating on the capital increase, to establish which procedure is to be adopted in the distribution, that is, to clarify whether there will be access guarantee to all investors or if a differentiated procedure will be adopted.

Such a provision makes express reference to article 32, which defines the access guarantee system, determining the conditions that characterize it, including the establishment by the company of the minimum percentage of the issuance destined for public distribution.

Thus, if this requirement is not met, that is, if the aforementioned minimum percentage is not previously reserved, the hypothesis of this procedure is discharacterized, since the amount to be placed publicly will not be fixed nor previously known, constituting mere surpluses from the exercise of the preemptive right, of random volume, thus being considered as a differentiated access system, which is dealt with in article 33 of the Instruction.

The doubts, if any, regarding the obligation of prior waiver of the exercise of the preemptive right by those who hold the respective share of the company's capital, are immediately dispelled in light of the combined interpretation of the norms contained in the cited articles 4 and 32. This is because the company can only ensure access guarantee, at the general meeting that decides to adopt it, if at that time it has already guaranteed the waiver of shareholders' preemptive rights, in the quantity of shares necessary.

Reinforcing this understanding, article 10, item VII, by listing the documentation necessary for the Instruction of the registration request for issuance in this Autarchy, establishes a clear distinction of situations, by registering as alternative obligations the declaration of the percentage of the issuance destined for public distribution, in the case of adoption of the access guarantee system, or of the surpluses, in other cases.

Given the prior definition of the minimum amount with guaranteed public access, the CVM can proceed with the requested registration, the company only needing to inform, before the public placement begins, any surpluses arising from the non-exercise of the preemptive right, which will necessarily be added to that initial amount, and distributed according to the aforementioned article 32.

In addition, it is necessary to highlight the need for faithful observance of the procedure detailed in this article 32, due to two aspects linked to it, of relevant repercussion.

CVM ORIENTING OPINION NO. 9, OF OCTOBER 1, 1981.
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The first refers to the major fiscal benefit (30% of the applied value), attributed by DECREE-LAW NO. 1841, of 12.29.80, to the subscription of shares originating from an issuance that, under the terms defined by this Commission, ensures guaranteed access to the public to at least one-third of the issuance. For other distribution hypotheses, a benefit of only 10% of the subscribed value is granted.

Such Decree-Law aims, in its Statement of Reasons, to especially stimulate, with this differentiated fiscal treatment, the democratization of capital, a proposition that is in perfect consonance with the basic guidelines of CVM INSTRUCTION NO. 13, which, as previously explained, aims to create conditions for obtaining greater share dispersion through the facilitation of investor access to public offerings.

Considering that the access guarantee system, referred to in DECREE-LAW NO. 1841, is already defined in CVM INSTRUCTION NO. 13, it is to be concluded that the public issuance, carried out in disagreement with the procedure established by it, will not entail, under the terms of the aforementioned Decree-Law, the right, to the subscribers of these shares, to the percentage of 30% reduction in tax, but only to the benefit of 10%.

The second aspect relates to the great importance of clearly detailing the information regarding the conditions of public access to the offering, including regarding the tax benefit to which the investor will be entitled in the subscription of the shares. Such information must be widely disseminated, both by the company and by the intermediary, in order to provide investors with exact and sufficient elements for the analysis of the offered alternative.

Signed Original by
ANTÔNIO PAULO DE AZEVEDO SODRÉ
Superintendent of Corporate Relations
Approved By the Collegiate Body On 01.10.81
Publish.
Signed Original by
HERCULANO BORGES DA FONSECA
President